KAMAL HAREN SHAH, MUMBAI V. ITO WD. 18(2)(1), MUMBAI

ITA 3848/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4948 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 133(6); 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SM C, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3847 / /201 9 ((. . 2010-11. ) ITA NO.3847/MUM/2019 (A.Y.2010-11) . 3848 / /201 9 ((. . 2011-12 ) ITA NO.3848/MUM/2019 (A.Y.2011-12) SHRI KAMAL H. SHAH, ROOM NO.8, 5 TH FLOOR, 133, GOPAL NIWAS, PRINCES STREET, MARINE LINES, MUMBAI 400 002 PAN: AAHPS 2365M ...... * / APPELLANT ( VS. ITO-18(2)(1), EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021 ..... +,/ RESPONDENT *-/ APPELLANT BY : NONE +,-/ RESPONDENT BY : SHRI SANJAY J. SETHI (., / DATE OF HEARING : 04/01/2021 /01 ., / DATE OF PRONOUNCEMENT : 01/04/2021 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) -29, MUMBAI (I N SHORT THE CIT(A)) DATED 18/03/2019 COMMON FOR ASSESSMENT YEARS 2010-11 AND 2011-12. SINCE, THE FACTS GERMANE TO BOTH THE APPEALS AND THE GROUNDS OF APPE AL ARE SIMILAR THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECI DED BY THIS COMMON ORDER. 2 ITA NO.3847/MUM/2019 (A.Y.2010-11) ITA NO.3848/MUM/2019 (A.Y.2011-12) 2. THE ASSESSEE IN APPEALS HAS ASSAILED THE ADDITIO N OF RS.30,80,585/- IN ASSESSMENT YEAR 2010-11 AND RS.31,75,554/- IN ASSES SMENT YEAR 2011-12 ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS A DEALER AND STOCKIST OF TOOLS AND ALLOY. THE ASSESS MENT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEARS 2010-11 AND 2011-12 WERE REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. AS PER INFORMATION RECEIVED THE ASSES SEE HAD OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS.2,46,44,676/- FROM VARIOUS HAWALA DEALERS IN ASSESSMENT YEAR 2010-11 AND BOGUS PURCHASE BILLS A GGREGATING TO RS.2,53,04,428/- FROM DEALERS DECLARED AS HAWALA OP ERATORS IN ASSESSMENT YEAR 2011-12. THE ASSESSING OFFICER MADE ADDITION BY ES TIMATING PROFIT EMBEDDED IN BOGUS PURCHASES @ 12.5% OF SUCH PURCHASES IN BOTH T HE IMPUGNED ASSESSMENT YEARS AND MADE ADDITION OF RS.3O,80,585/- IN AY 201 0-11 AND RS.31,75,554/-IN AY 2011-12. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A ) UPHELD THE ADDITION SAME AND DISMISSED THE APPEALS OF ASSESSEE. HENCE, THE PRES ENT APPEALS BY THE ASSESSEE. 4. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS ALONG WITH PAPER BOOK. THE CONTENTS OF THE WRITTEN SUBMISSIONS ARE UNDER:- I THE UNDERSIGNED MR. KAMAL H SHAH HAVE RESPECTFUL LY SUBMIT TO YOUR HONOUR AS UNDER:- 1. THE HON'BLE CIT A (29) CONFIRMED THE ADDITION @1 2.5% OF PURCHASED VALUE IN MY RETURNED INCOME IGNORING FOLLOWING RELEVANT FACTS: A. LIST OF PURCHASE CREDITORS WITH RELEVANT DETAILS W ERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. B. NO CONSTRUCTIVE INQUIRIES WERE CONDUCTED NOR ANY D ATA'S W.R.T. MY CREDITORS WERE BROUGHT ON RECORD TO PROVE THAT THE PURCHASE WERE B OGUS. C. NO CONCLUSIVE WORKING, EVIDENCES OR BASIS FOR ESTIM ATION WAS EVER DONE OR DISCUSSED THUS ESTIMATION @12.5% WAS MERELY OR PRESUMPTION & SURMISES WHICH CAN NEVER SUSTAIN AS PER SEVERAL JUDICIAL PRO NOUNCEMENTS. D. MY BUSINESS OF LAST MORE THAN 5 YEARS ARE OF SAME NATURE, SAME MATERIAL VIZ. TOOLS, STEEL AND ALLOY STEEL & WITH ALMOST SAME TRA DERS AND OR THEIR ASSOCIATES 3 ITA NO.3847/MUM/2019 (A.Y.2010-11) ITA NO.3848/MUM/2019 (A.Y.2011-12) SISTER CONCERNS WITH MORE OR LESS SAME MARGIN OF PR OFIT WITH NO SIGNIFICANT CHANGE IN MARKET CONDITION HENCE ESTIMATION IF AT ALL TO B E ADOPTED IT SHOULD BE BASED ON LAST 3 YEARS AVERAGE G P MARGIN AS SUBMITTED HEREWITH. E. MERELY RELYING ON STATEMENT OF CREDITORS BEFORE VAT AUTHORITY WITHOUT KNOWING THEIR OBJECTIVE OF SKIN SAVING EXERCISE & N OT MAKING INDEPENDENT INQUIRY VIZ. BANK STATEMENTS, PAN, IT RECORDS ETC LEADS TO INCORRECT ASSESSMENT OF INCOME. F. MAINTENANCE OF STOCK MOVEMENT RECORDS TOO A CONCLUS IVE EVIDENCE OF MY FIRM DOING REAL BUSINESS HENCE ANY ADDITION BASED ON ESTIMATIO N IS UNCALLED FOR & NEEDS TO BE DELETED. G. MY AUDITED BOOKS OF ACCOUNTS & ESPECIALLY CL 17 (H) OF AUDIT REPORT WHICH DOESN'T QUALIFY ANY CASH PAYMENT ABOVE PERMISSIBLE LIMIT TO THE PURCHASE CREDITOR. THUS IT'S ESTABLISHED THAT PAYMENT FOR PURCHASES WE RE MADE BY A/C PAYEE CHEQUES AS REFLECTED IN BANK STATEMENT PROBING WITHOUT ANY DOUBT THE SELLERS GENUINETY WITHOUT PREJUDICE MY GP IF AT ALL IS TO BE ESTIMATE D THE LOGICAL METHODOLOGY SHOULD BE AVERAGE OF LAST 3 YEARS. I THEREFORE BASED ON MY ABOVE FACTS & ARGUMENTS HAV E TO REQUEST HONOUR TO DELETE THE ESTIMATED ADDITION OR RESTRICT ADDITION TO AVER AGE G. P. OF LAST 3 YEARS LESS DECLARED G P OFF YEAR IN QUESTION & OBLIGE. 5. SHRI SANJAY J. SETHI, REPRESENTING THE DEPARTMEN T VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING BOTH THE A PPEALS BY THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ADDITION IN RESPECT OF BOGUS PURCHASES BY PLACING R ELIANCE ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S IMIT P. SHETH, 356 ITR 451. THE ADDITION SUSTAINED BY THE CIT(A) IS FAIR AND REASON ABLE THEREFORE SHOULD BE UPHELD. 6. THE SUBMISSION MADE BY LD. DEPARTMENTAL REPRESEN TATIVE HEARD, WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND ORDERS OF AUT HORITIES BELOW EXAMINED. UNDISPUTEDLY, THE ASSESSEE HAS FAILED TO PROVE GENU INENESS OF PURCHASES AND THE AUTHENTICITY OF THE DEALERS IN BOTH THE IMPUGNED AS SESSMENT YEARS. THE NOTICES SENT TO THE DEALERS UNDER SECTION 133(6) OF THE ACT ON THE ADDRESSES FURNISHED BY THE ASSESSEE BY THE ASSESSING OFFICER WERE RECEIVED BACK UNSERVED BY THE POSTAL 4 ITA NO.3847/MUM/2019 (A.Y.2010-11) ITA NO.3848/MUM/2019 (A.Y.2011-12) AUTHORITIES WITH THE REMARK LEFT OR NOT KNOWN. NO CONFIRMATIONS FROM THE DEALERS WERE FILED BY THE ASSESSEE. FURTHER, THE AS SESSEE HAS FAILED TO SUBSTANTIATE TRAIL OF GOODS. PAYMENTS MADE THROUGH CHEQUE/BANKIN G CHANNELS ARE NOT SACROSANCT AND DOES NOT PROVE AUTHENTICITY OF TRANS ACTIONS. SINCE, THE REVENUE HAS ACCEPTED THE SALES DECLARED BY THE ASSESSEE, IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH BOGUS TRANSACTIONS THAT HAS TO BE BROUGHT TO TAX. THE ASSESSEE HAS FILED A CHART AT PAGE 70 OF THE PAPER BOOK GIVI NG TABULATING G.P. RATIO IN PRECEDING THREE ASSESSMENT YEARS, THE SAME IS REPRO DUCED HEREIN BELOW: ASSESSMENT YEAR G.P.RATIO (%) 2009 - 10 4.65% 2008 - 09 5.99% 2007 - 0 8 4.76 % AVERAGE G.P. RATIO 5.13% 7. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, I A M OF THE CONSIDERED VIEW THAT ESTIMATION OF G.P BY CIT(A) AT 12.5% ON BOGUS PURCH ASES IS ON HIGHER SIDE. TO MEET THE ENDS OF JUSTICE, ADDITION IS RESTRICTED TO 6% OF THE BOGUS PURCHASES IN EACH OF THE ASSESSMENT YEARS. THE IMPUGNED ORDER IS MODIFIED, ACCORDINGLY. THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED IN THE T ERMS AFORESAID. 8. IN THE RESULT, BOTH APPEALS BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSD AY, THE 01ST DAY OF APRIL, 2021. SD./- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3(/ DATED: 01/04/2021 VM , SR. PS (O/S) 5 ITA NO.3847/MUM/2019 (A.Y.2010-11) ITA NO.3848/MUM/2019 (A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. * / THE APPELLANT , 2. +, / THE RESPONDENT. 3. 4, ( )/ THE CIT(A)- 4. 4, CIT 5. 56+,( , . . . , / DR, ITAT, MUMBAI 6. 6789: / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI