NAVDEEP METALS, MUMBAI V. ITO 19(2)(4), MUMBAI

ITA 3790/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4301 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AASITA KHAN
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SM C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO .3790 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) NAVDEEP METALS MOTI MANSION BUILDING 5 TH FLOOR, ROOM NO.69 5 TH KHETWADI, BACK ROAD MUMBAI 400 004 PAN AABFN5375N . APPELLANT V/S INCOME TAX OFFICER WARD 1 9 (2)(4), MUMBAI . RESPONDENT ASSESSEE BY : MS. AASITA KHAN REVENUE BY : SHRI VIVEK ANAND OJHA DATE OF HEARING 07 .0 3 .201 9 DATE OF ORDER 13.03.2019 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 1 ST FEBRUARY 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10 . 2 . THE ISSUE IN DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) ON ACCOUNT OF NON GENUINE PURCHASES. 2 NAVDEEP METALS 3 . BRIEF FACTS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON FERROUS METAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 4,06,991. INITIALLY, THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX ACT , 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON RECEIVING THE INFORMATION FROM DGIT (INV.), MUMBAI, AND THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT PURCHASES WORTH ` 23,75,757, CLAIMED TO HAVE BEEN MADE FROM SIX PARTIES ARE NON GENUINE, THE AS SESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH VARIOUS DETAILS TO PROVE THE GENUINENESS OF PURCHASES. FURTHER , TO VERIFY THE GENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER CONDUCTED INDEPENDENT ENQUIRY BY ISSUING NOTICE UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES. AS OBSERVED BY TH E ASSESSING OFFICER , ALL SUCH NOTICES RETURNED BACK UN SERVED BY THE POSTAL AUTH ORITIES. FURTHER, THE ASSESSING OFFICER OBSERVED , THOUGH THE ASSESSEE FURNISHED LEDGER ACCOUNT COPIES , COPY OF PURCHASE INVOICE, BANK STATEMENT EVIDENCING PAYMENT, QUANTITATIVE DETAILS OF PURCHASES AND CORRESPONDING SALES, HOWEVER, THE ASSESSEE COULD NOT F URNISH THE DELIVERY CHALLAN S , TRANSPORTATION RECEIPT S , ETC. HE ALSO ALLEGED THAT THE ASSESSEE FAILED TO PRODUCE THE CONCERNED PARTIES BEFORE HIM. THUS, HE 3 NAVDEEP METALS ULTIMATELY CONCLUDED THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE CONCERNED P ARTIES ARE NON GENUI NE. H OWEVER, CONSIDERING THE FACT THAT THE PURCHASES WERE RECORDED IN THE BOOKS OF ACCOUNT AND CORRESPONDING SALES HAVE BEEN EFFECTED, THE ASSESSING OFFICER OBSERVED , ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES SHOULD HAVE TO BE CONSIDERED FOR ADDIT ION. ACCORDINGLY, HE ESTIMATED THE PROFIT ELEMENT @ 12.5% ON THE NON GENUINE PURCHASE OF ` 23,35,757 AND ADDED BACK AN AMOUNT OF ` 2,91,970. 4 . THOUGH, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE AFORESAID ADDITION, HOWEVER , IT WAS UNSUCCESSFUL. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE IS A TRADER IN FERROUS AND NON FERROUS METALS WHERE THE PROFIT ELEMENT AS PER THE INDUSTRY TREND RANGES BETWEEN 2% AND 3%. THEREFORE, THE ESTIMATION OF PROFIT @ 12.5% IS HIGH AND UNREASONABLE. SHE, THEREFORE, SUBMITTED , THE PROFIT ELEMENT SHOULD BE REDUCED TO A REASONABLE RATE. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED CIT(A) AND THE A.O. 7 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS REVEALED FROM THE FA C TS ON RECORD, THE ASSESSEE H AS FAILED TO CONCLUSIVELY PROVE THE GENUINENESS OF PURCHASES THROUGH PROPER 4 NAVDEEP METALS DOCUMENTARY EVIDENCES. THAT BEING THE CASE, THE CLAIM OF THE ASSESSEE THAT PURCHASES ARE GENUINE CANNOT BE ACCEPTED. HOWEVER, IT IS A FACT ON RECORD THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FURNISHED QUANTITATIVE DETAILS OF PURCHASES AND SALES AND THE ASSESSING OFFICER HIMSELF HAS STATED THAT ALL THE PURCHASES WERE ENTERED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. FOR THAT REASON ALONE, THE ASSESSING OFFICER HAS ADDED THE PROFIT ELEMENT EMBEDDED IN THE NON GENUINE PURCHASES BY ESTIMATING IT @ 12.5%. THE LEARNED COMMISSIONER (APPEALS) HAS ALSO CO NFIRMED THE AFORESAID ADDITION. HOWEVER, CONSI DERING THE NATURE OF TRADE CARRIED ON BY THE ASSESSEE AND THE SPECIFIC FACTS INVOLVED IN THE PRESENT APPEAL, I AM OF THE OPINION THAT THE ESTIMATION OF PROFIT @ 5% ON THE NON GENUINE PURCHASES WOULD BE REASONAB LE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF THE NON GENUINE PURCHASES. GROUNDS RAISED ARE PARTLY ALLOWED. 8 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.03.2019 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 13.03.2019 5 NAVDEEP METALS COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI