SHIVPRAKASH SHARMA, MUMBAI V. ITO 25(1)(2), MUMBAI

ITA 3815/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9670 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: MANISH J SHETH
• Keywords: Bogus purchase
• Section: 133(6); 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 3815 /MUM/ 2017 (ASSESSMENT YEAR 20 1 0 - 1 1 ) SHRI SHIVPRAKASH SHARMA D - 18, SAKSARIA BUILDING NO. 59, J.B. NAGAR ANDHERI EAST MUMBAI - 400 059. PAN : ANSPS8650F VS. ITO 25(1)(2) ROOM NO. 403/406, C - 10 PRATYAKSHAKAR BHAVAN, BKC MUMBAI - 400 51. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI MANISH J. SHETH DEPARTMENT BY SHRI RAM TIWARI DATE OF HEARING 2 1 .9. 201 7 DATE OF PRONOUNCEMENT 21 . 9 . 201 7 O R D E R T HE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) - 44, MUMBAI AND IT RELATE S TO A.Y. 2010 - 11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE RELATING TO BOGUS P URCHASES. 2. THE ASSESSEE IS A DEALER IN PLASTIC GRANULES AND POWDERS. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT CERTAIN DEALERS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING MATERIALS AND UPON N OTICING THAT THE ASSESSEE HAS PURCHASED GOODS FROM SUCH HAWALA DEALERS TO THE TUNE OF RS.85,19,628/ - , THE ASSESSING OFFICER REOPENED THE ASSESSMENTS OF THE YEAR UNDER CONSIDERATION BY ISSUING NOTICES U/S. 148 OF THE ACT. IN THE REOPENED ASSESSMENT, THE AS SESSING OFFICER ASKED THE ASSESSEE TO FURNISH ALL RELEVANT DETAILS TO PROVE THE GENUINENESS OF THE PURCHASES. THE AO ALSO ISSUED NOTICES U/S 133(6) OF THE ACT TO THE SUPPLIERS, BUT ALL OF THEM WERE RETURNED BACK UNSERVED. THE ASSESSEE SUBMITTED PURCHASE BILLS, PAYMENT DETAILS AND RECONCILIATION STATEMENT CORRELATING PURCHASES WITH SALES. AFTER CONSIDERING THE REPLIES, THE ASSESSING OFFICER HELD THAT THE GENUINENESS OF SHRI SHIVPRAKASH SHARMA 2 PURCHASES WERE NOT VERIFIABLE. ACCORDINGLY HE REJECTED THE BOOKS AND ALSO CONCLUDED THA T THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM SOME OTHER SOURCE. THE AO FOLLOWED THE DECISION RENDERED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHETH (ITA NO.553 OF 2012) AND ALSO THE DECISION RENDERED BY MUMBAI BENCH OF ITAT IN THE CASE OF SHRI MADHUKANT B GANDHI (ITA NO.1950/MUM/2009 DATED 23.2.1010) AND HELD THAT A PORTION OF PURCHASES SHOULD BE DISALLOWED AS THE ASSESSEE MIGHT HAVE INFLATED THE PURCHASES. ACCORDINGLY, THE AO DISALLOWED 25% OF THE VALUE OF ALLEGED BOGUS PURCHASES, WHICH WORKED OUT TO RS.21.29 LAKHS. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF 12.50% OF THE VALUE OF IMPUGNED PURCHASES. STILL AGGRIEVED, THE ASSESSEE HAS FILED THESE APPEALS BEFORE THE TRIBUNAL. 3. LEARNED AR S UBMITTED THAT THE ASSESSEE HAS FURNISHED TO THE AO THE DETAILS OF PURCHASES AND DETAILS OF SALES MADE OUT OF THOSE PURCHASES. HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED COPIES OF INVOICES, DELIVERY CHALLANS AND PAYMENT DETAILS TO PROVE THE GENUINENESS O F PURCHASES. HE SUBMITTED THAT THE ASSESSEE IS DECLARING G.P @ 5% AND N.P @ 2%. HE SUBMITTED THAT THE APPLICABLE VAT RATE ON THE PRODUCTS IS 4%. ACCORDINGLY, LEARNED AR SUBMITTED THAT THERE IS NO JUSTIFICATION FOR LD CIT(A) IN PARTIALLY CONFIRMING THE AD DITION. THE LD A.R ALSO SUBMITTED THAT THE ADDITION @ 12.50% IS ON THE HIGHER SIDE. 4. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, SUBMITTED THAT THE AO AS WELL AS LEARNED CIT(A) HAS GIVEN PROPER REASONING FOR CONFIRMING THE ADDITION AND THE LD CIT(A) HAS ALREADY GIVEN SUBSTANTIAL RELIEF. ACCORDINGLY, HE SUBMITTED THAT THE ORDER PASSED BY LD CIT(A) SHOULD BE SUSTAINED. 5. I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. I NOTICED THAT THE ASSESSEE HAS FURNISHED COPIES OF PURCHASE BILLS AND P AYMENT DETAILS. THE ASSESSEE HAS ALSO CORRELATED PURCHASES WITH SALES. THE ASSESSEE HAS, HOWEVER, FAILED TO FURNISH ANY PROOF TO SHOW THAT THE MATERIALS WERE PHYSICALLY TRANSPORTED TO THE PREMISES OF THE ASSESSEE. SINCE THE ASSESSEE HAS RECONCILED SHRI SHIVPRAKASH SHARMA 3 THE PU RCHASE AND SALES, I AM OF THE VIEW THAT THE TAX AUTHORITIES HAVE RIGHTLY ADDED THE PROFIT ELEMENT EMBEDDED IN THE PURCHASES, AS GOODS CANNOT BE SOLD WITHOUT MAKING CORRESPONDING PURCHASES. SINCE THE IMPUGNED SUPPLIERS HAVE BEEN NAMED AS HAWALA DEALERS AND SINCE THE ASSESSEE COULD NOT PRODUCE THOSE PARTIES BEFORE THE AO, ONE OF THE POSSIBLE VIEWS IS THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIALS FROM SOME OTHER PERSON. 6. THE LD A.R SUBMITTED THAT THE ESTIMATION OF PROFIT AT 12.50% IS ON THE HIGHE R SIDE, SINCE THE VAT RATE APPLICABLE TO THE ITEMS DEALT WITH BY THE ASSESSEE IS ONLY 4%. CONSIDERING THIS FACT AND ALSO THE RATE OF G.P DECLARED BY THE ASSESSEE AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL AT LOWER RAT E, I AM OF THE VIEW THAT THE ADDITION MAY BE SUSTAINED TO THE EXTENT OF 8% OF THE VALUE OF ALLEGED BOGUS PURCHASES. ACCORDINGLY I MODIFY THE ORDERS OF THE LEARNED CIT(A) ON THIS ISSUE IN BOTH THE YEARS UNDER CONSIDERATION AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION IN BOTH THE YEARS TO THE EXTENT OF 8% OF THE VALUE OF ALLEGED BOGUS PURCHASES. I ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 1 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 1 / 9 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPON DENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI