ITO 19(2)(5), Mumbai V. PRATAPCHAND PRABHUJI PUROHIT , Mumbai

ITA 3774/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3857 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH RAI
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI VIKAS AWASTHY , JUDICIAL MEMBER ./ ITA NO. 3774 / MUM/ 2019 ( / ASSESSMENT Y EARS 2009 - 10 ) AND ./ ITA NO. 3775 / MUM/ 2019 ( / ASSESSMENT YEARS 2010 - 11 ) INCOME TAX OFFICER WARD 19(2)(5), O/O. INCOME TAX OFFICER 19(2)(5) ROOM NO. 217, 2 ND FLOOR, MATRU MANDIR, TARDEO, MUMBAI - 400 007 / VS. P RATAPCHAND PRA BHUJI PUROHIT 101/ 103, 5 TH KUMBHARWADA, MUMBAI - 400 004 ( / APPELLANT) ( / RESPONDENT) . / PAN NO. AABPP 3598 B / APPELLANT BY : SHRI SAURABH RAI , DR / RESPONDENT BY : NONE / DATE OF HEARING : 27.10. 2020 / DATE OF PRONOUNCEMENT : 29 .10.2020 / O R D E R THESE APPEAL S BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [IN SHORT THE CIT(A) ] FOR THE AS SESSMENT YEAR S 2009 - 10 AND 2010 - 11 RESPECTIVELY . BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 22.02.2019. PAGE | 2 ITA NOS. 3774 & 3775/MUM/2019 PRATAPCHAND PRABHUJI PUROHIT; AY 09 - 10 TO 10 - 11 S INCE, THE FACTS IN BOTH THE APPEALS ARE SIMILAR AND IDENTICAL GROUNDS HAVE BEEN RAISED BY THE REVENUE IN BOTH THE APPEALS , THEREFORE, THESE APPEAL S ARE TAKEN UP TOGETHER FOR ADJUDICATION AND DISPOSED OFF BY THIS COMMON ORDER. 2. FOR THE SAKE OF CONVENIENCE, THE FACTS ARE EXTRACTED FROM ITA NO.3774/MUM/2019 FOR ASSESSMENT YEAR 2009 - 10. ITA NO. 3774/MUM/2019 - AY 2009 - 10 3. THE BRIEF FACTS OF THE CASE AS EM ANATING FROM RECORDS ARE : THE ASSESSEE IS A DEALER IN FERROUS AND NON - FERROUS MATERIALS. THE ASSESSMENT FOR ASSESSMENT YEAR 2009 - 10 WAS REOPENED IN THE CASE OF ASSESSEE ON THE BASIS OF INFORMATION RECEIVED BY DGIT (INV), MUMBAI FROM SALE TAX DEPARTMENT , GO VERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS INDULGED IN OBTAINING BOGUS PURCHASE BILLS TO THE TUNE OF 70 ,26,403/ - FROM NOTIFIED HAWALA DEALERS. IN REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE IS IN PRACTICE OF PURCHASING GOODS FROM GREY MARKET AND THEREAFTER OBTAINING BOGUS PURCHASE BILLS FROM ENTRY PROVIDERS. SINCE, THE SAL ES MADE BY THE ASSESSEE WERE NOT DISPUTED, THE ASSESSING OFFICER ESTIMATED GROSS PROFIT AT THE RATE OF 12 .5 % ON BOGUS PURCHASES AND MADE ADDITION OF 8,78,300/ - . AGGRIEVED BY THE ASSESSMENT ORDER DATED 08.03.2015 PASSED UNDER SECTION 143(3) READ WITH SECT ION 147 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) , THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE DECISION S OF TRIBUNAL ON IDENTICAL ISSUE RESTRICTED THE ADDITION TO 5% OF ALLEGED NON PAGE | 3 ITA NOS. 3774 & 3775/MUM/2019 PRATAPCHAND PRABHUJI PUROHIT; AY 09 - 10 TO 10 - 11 GENUINE PURCHASE S . AGAINST THE FINDING S OF CIT(A) , THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI SAURABH RAI REPRESENTING THE DEPARTMENT, VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDING OF CIT(A). THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HE ASSESSEE COULD NEITHER PRODUCE PARTIES NOR THE ASSESSEE COULD SHOW TRAIL OF GOODS. THE LEARNED DEPARTMENTAL REPRESENTATIVE ASSERTED THAT WHILE PASSING THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS POINTED VARIOUS DEFECTS IN THE DOCUME NTS PRODUCED BY THE ASSESSEE. THE CIT(A) IN THE IMPUGNED ORDER WHILE GRANTING RELIEF TO THE ASSESSEE HAS NOT REBUTTED THE FINDINGS OF THE ASSESSING OFFICER. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER POINTED THAT IN ASSESSMENT PROCEEDINGS, THE ASSESSE E VOLUNTARILY AGREED FOR 12 .5 % DISALLOWANCE ON NON - GENUINE PURCHASES. ONCE, THE ASSESSEE HAS AGREED FOR THE ADDITION THERE WAS NO QUESTION OF GRANTING FURTHER RELIEF TO THE ASSESSEE. 5. SUBMISSIONS MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE HEARD AND TH E ORDERS OF THE AUTHORITIES BELOW EXAMINE D . THE ASSESSEE IS ENGAGED IN TRADING OF FERROUS AND NON - FERROUS METALS. UNDISPUTEDLY, THE ASSESSEE HAS INDULGED IN OBTAINING ACCOMMODATION ENTRIES FROM HAWALA OPERATORS . AS HAS BEEN OBSERVED BY THE ASSESSING OFFICE R THE MODUS OPERANDI OF THE ASSESSEE WAS TO MAKE PURCHASE FROM GREY MARKET AND THEREAFTER OBTAIN CORRESPONDING BOGUS PURCHASE BILLS FROM HAWALA DEALERS. THE SALES MADE BY THE ASSESSEE ARE NOT DISPUTED BY THE REVENUE. THUS, IN SUCH TRANSACTIONS, IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN BOGUS ENTRIES THAT HAS TO BE BROUGHT TO TAX. THE ASSESSEE PAGE | 4 ITA NOS. 3774 & 3775/MUM/2019 PRATAPCHAND PRABHUJI PUROHIT; AY 09 - 10 TO 10 - 11 IS A TRADER OF FERROUS AND NON - FERROUS METALS. THE AVERAGE GP IN THIS TRADE IS APPROXIMATELY 4 - 5%. THE ESTIMATION OF GP AT 12 .5 % BY THE ASSESSING OFFICER IS ON THE HIG HER SIDE. I CONCUR WITH THE FINDINGS OF CIT(A) IN RESTRICTING THE GROSS PROFIT AT 5% ON BOGUS PURCHASES. I FIND NO ERROR IN THE ORDER OF CIT(A) , THE SAME IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED. ITA NO. 3775/MUM/2019 FOR AY 2010 - 11 6. THE FACTS LEADI NG TO REOPENING AND MAKE ADDITION IN RESPECT OF BOGUS PURCHASES IN AY 2010 - 11 ARE SIMILAR TO AY 2009 - 10. THEREFORE, THE FINDINGS GIVEN , WHILE SUSTAINING THE IMPUGNED ORDER IN ASSESSMENT YEAR 2009 - 10 WOULD MUTATIS MUTANDIS APPLY TO THE ASSESSMENT YEAR 2010 - 11 AS WELL. FOR THE REASON S STATED ABOVE, THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010 - 11 IS DISMISSED. 7. IN THE R ESULT, BOTH THE APPEALS BY REVENUE ARE DISMISSED. ORDER P RONOUNCED IN THE OPEN COURT ON THURSDAY , THE 29 TH DAY OF OCTOBER, 202 0 SD/ - ( / VIKAS AWASTHY ) ( / JUDICIAL MEMBER ) , / MUMBAI, DATED 29 . 10 .2020 , . / SUDIP SARKAR, SR.PS PAGE | 5 ITA NOS. 3774 & 3775/MUM/2019 PRATAPCHAND PRABHUJI PUROHIT; AY 09 - 10 TO 10 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI