Appeal details
Counselvise Citation
[2019] 115 COUNSELVISE.COM (IT) 4528 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-03-2019
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2010-2011
Appeal Filed On
29-05-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3772/M/2018 ASSESSMENT YEAR: 2011-12 & ITA NO.3773/M/2018 ASSESSMENT YEAR: 2010-11 SHRI KIRTI MURLIDHAR MUNI, 402, SHUBHAM BUILDING, RAJAWADI NO.1, BEHIND BANK OF BARODA, GHATKOPAR (EAST), MUMBAI 400 077 PAN: AAAPM9268Q VS. ITO 19(2)(2), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI HIRAL SHAH, A.R. REVENUE BY : SHRI MANISH KUMAR SINGH, D.R. DATE OF HEARING : 20.03.2019 DATE OF PRONOUNCEMENT : 22.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE ASSESSEE AGAINST THE ORDER DATED 09.03.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12 & 2 010-11. 2. THE ONLY ISSUE RAISED IN THE GROUNDS OF APPEAL I N BOTH THE YEARS IS AGAINST THE CONFIRMATION OF ADDITION OF R S.3,99,957/- IN A.Y. 2010-11 AND RS.11,68,248/- A.Y. 2011-12 BY LD. CIT(A) AS MADE BY THE AO TOWARDS BOGUS PURCHASES. ITA NO.3772/M/2018 & ITA NO.3773/M/2018 SHRI KIRTI MURLIDHAR MUNI 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT WAS F RAMED IN THE CASE OF THE ASSESSEE UNDER SECTION 143(3) ON 28 .12.2012 ACCEPTING THE RETURNED INCOME. THEREAFTER, THE AO RECEIVED INFORMATION FROM THE DGIT (INV.) MUMBAI THAT ASSESS EE IS BENEFICIARY OF BOGUS PURCHASE TRANSACTIONS TO THE T UNE OF RS.31,99,653/- FROM SIX PARTIES AS STATED IN PARA 3 OF THE ASSESSMENT ORDER. THEREAFTER, THE CASE OF THE ASSES SEE WAS REOPENED UNDER SECTION 147 OF THE ACT BY ISSUING NO TICE UNDER SECTION 148 OF THE ACT DATED 15.03.2016. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE T O PROVE THE GENUINENESS OF THE PURCHASE BY FILING BILLS, VOUCHE RS, PAYMENT DETAILS AND OTHER EVIDENCES. THE AO ALSO ISSUED NO TICES UNDER SECTION 133(6) OF THE ACT TO THE BOGUS SUPPLIERS WH ICH WERE RETURNED UNSERVED WITH THE REMARK NOT KNOWN. FIN ALLY, THE AO CAME TO THE CONCLUSION THAT PURCHASES FROM THE SAI D SIX PARTIES WERE BOGUS AND NON GENUINE AS THE ASSESSEE FAILED T O FILE THE DELIVERY CHALLAN, TRANSPORT RECEIPTS, RECEIPT OF WE IGH BRIDGE AND STOCK REGISTER ETC. AND ADDITION TO THE TUNE OF RS. 3,99,957/- BY APPLYING THE RATE OF 12.5% OF THE BOGUS PURCHASES W AS MADE TO THE INCOME OF THE ASSESSEE. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER OF AO ON THE GROUND THAT THE ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES. THE LD. CIT(A) JUSTI FIED THE ORDER OF THE AO ON THE GROUND THAT THE ASSESSEE HAS FAILE D TO DISCHARGE THE ONUS CAST UPON IT BY THE STATUTE AND THEREFORE ASSESSMENT ORDER IS RIGHTLY PASSED BY THE AO. ITA NO.3772/M/2018 & ITA NO.3773/M/2018 SHRI KIRTI MURLIDHAR MUNI 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A TRADERS OF IRON, STEEL AND GENERAL ITEMS. DURING THE YEAR, THE ASSESSEE WAS FOUND TO BE BENEF ICIARIES OF BOGUS PURCHASE ENTRIES TO THE TUNE OF RS. 31,99,653 /-. THE CASE OF THE ASSESSEE WAS REOPENED AFTER THE AO RECE IVED INFORMATION FROM THE DGIT (INV.) TO THIS EFFECT. WE OBSERVE FROM THE FACTS BEFORE US THAT THE AO HAS ACCEPTED THE SA LE OF THE ASSESSEE AND MADE ADDITION ON ACCOUNT OF GP ON THE ALLEGED BOGUS PURCHASES TO BRING TO TAX THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES THEREIN @ 12.50%. IN THE ASSESSEES CASE WE NOTE THAT THE APPLICABLE VAT RATE IS 4% AND FIND MERIT IN THE CONTENTIONS OF THE LD. A.R. THAT 12.5% GP ON THE ST EEL ITEM IS UNREASONABLE AND EXCESSIVE AND IF CONFIRMED, WOULD LEAD TO ABSURD AND UNREALISTIC GP RATE OF THE ASSESSEE WHIC H IS NOT PRACTICABLE IN THE STEEL TRADING. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF LD. CIT(A) BY SUBMITTING THAT THE FIRST APPELLATE AUTHORITY HAS TAKEN A VERY BALA NCED VIEW BY UPHOLDING THE ORDER OF AO WHEREIN ADDITION WAS MADE ONLY @ 12.5% AND THEREFORE PRAYED BEFORE THE BENCH THAT TH E APPEAL OF THE ASSESSEE MAY BE DISMISSED. HOWEVER, WE CAN NOT IGNORE THE FACT THAT IN THE ASSESSEES CASE THE GP MARGIN IS V ERY MEAGER AND THUS WE ARE NOT IN AGREEMENT WITH THE CONCLUSI ON DRAWN BY THE LOWER AUTHORITIES ON THE RATE OF G.P. TO BE APP LIED. IN THE CASE OF THE ASSESSEE, THE VAT RATE IS ONLY 4% AND M ARGIN IS ALSO VERY THIN. WE HAVE ALSO EXAMINED THE DECISIONS OF THE CO- ORDINATE BENCHES OF THE TRIBUNAL WITH SIMILAR FACT S WHEREIN GP RATE RANGING FROM 3% TO 5% HAVE BEEN HELD TO BE R EASONABLE. ITA NO.3772/M/2018 & ITA NO.3773/M/2018 SHRI KIRTI MURLIDHAR MUNI 4 ACCORDINGLY WE DIRECT THE AO TO APPLY GP RATE OF @ 5% TO THE BOGUS PURCHASES. THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ITA NO.3772/M/2018 6. THE ISSUE RAISED IN THIS APPEAL IS IDENTICAL TO THE ONE AS STATED ABOVE IN ITA NO.3773/M/2018 FOR A.Y. 2010-11 . THEREFORE, OUR FINDING IN NO.3773/M/2018 FOR A.Y. 2 010-11 WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WE LL. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2019. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.
