ITO WD 3(5), MUMBAI V. RAJESH AMBALAL SHAH, KALYAN

ITA 3853/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0047 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 69C; 143(3); 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 3626 / MUM/ 20 1 5 ( / ASSESSMENT YEAR: 20 10 - 11 ) SHRI RAJESH AMBALAL SHAH , 28/6, TAPASYA BUILDING, G M ROAD, OPP. SHOPPING STOP, CHEMBUR, MUMBAI - 400089 / VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE - 3, KALYAN, THANE. ( / APPELLANT) : ( / RESPONDENT ) ITA NO. 3853/ MUM/ 2015 ( / ASSESSMENT YEAR: 20 10 - 11 ) DY.COMMISSIONER OF INCOME TAX, CIRCLE - 3, KALYAN, THANE. / VS. SHRI RAJESH AMBALAL SHAH, MUMBAI. ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : ANLPS6347J ( / APPELLANT) : ( / RESPON DENT ) / A SSESSEE BY : NONE /R E SPONDENT BY : SHRI AARSI PRASAD / DATE OF HEARING : 20.6. .2017 / DATE OF PRONOUNCEMENT : 21. 6 . 201 7 2 ITA NO. 3826 AND 3626/MUM/2015 / O R D E R PER RAJESH KUMAR, A. M: TH E CAPTIONED ARE CROSS - APPEAL S BY THE ASSESSEE AND REVENUE PERTAINING TO ASSESSMENT YEAR 20 10 - 11 . THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 1, THANE , DATED 30.3.2015 WHICH IN TURN HAS ARISE N FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 2 8 . 3 .20 1 3 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEALS WERE NOT CALLED FOR HEARING NOR WAS ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD ON THE PREVIOUS HEARING ON 4.5.2017 . THEREFORE, WE PROCEED TO DISPOSE OF THE APPEALS OF THE ASSESSEE EX - PARTE A FTER HEARING THE LD.DR. 3. THE ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE ESTIMATION OF NET PROFIT ON THE ENTIRE TURNOVER WHEREAS THE ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION TO THE TUNE OF 75% OF BOGUS PURCHASES B Y THE LD.CIT(A). 3 ITA NO. 3826 AND 3626/MUM/2015 4 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.9.2010 DECLARING TOTAL INCOME OF RS.27,59,580/ - INCLUDING SHORT TERM CAPITAL GAINS OF RS.22,69,283/ - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) DATED 27.8.2011 AND 4.1.2012 RESPECTIVELY WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO IN ORDER TO VERIFY PU RCHASES ISSUED NOTICES TO NINE PARTIES AS STATED IN PARA 4 OF THE ASSESSMENT ORDER , HOWEVER, THESE NOTICES WERE NOT SERVED I N THE MEANTIME, THE AO FOUND ON THE OFFICIAL WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THESE PARTIES WER E OPERAT ING HAWALA RACKET AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. A ND AFTER CONSIDERING THE SUBMIS SIONS AND REPLY OF THE ASSESSEE, THE AO ADDED THE ENTIRE PURCHASES FROM THESE PARTIES A SUM OF RS.1,57,47,282/ - TO THE TOTAL INCOME OF THE ASSESSEE U /S 69C OF THE ACT BY FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 28.3.2013. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE TOTAL DISALLOWANCE OF PURCHASES U/S 69C OF THE ACT. T HE LD.CIT(A) AFTER CONSIDERING THE REPLY OF THE ASSESSEE SUSTAINED THE ADDITION TO THE EXTENT OF RS.33,25,458/ - AND DELETED RS.1,24,21,824/ - BY OBSERVING AND HOLDING AS UNDER: 4 ITA NO. 3826 AND 3626/MUM/2015 5.6. KEEPING IN VIEW THE FACT THAT THE APPELLANT IS NOT IN A POSITION TO PROD UCE THESE PARTIES AND OTHER FACTS, LD. AR, VIDE ORDER SHEET NOTING DATED 22.01.2015, REQUESTED TO BE ASSESSED, AT DISALLOWANCE OF 20% OF BOGUS PURCHASES. THE DISALLOWANCE @ 20% I.E.RS.31,49,4561 - (OF RS.L,57,47,282/ - ) OF BOGUS PURCHASES, WILL RESULT INTO NET PROFIT OF RS.37,24,S!3I - (RS.5,75,057 NP AS SHOWN + RS. 31,49,4561 - ) I.E. 11.94%, AS AGAINST 5.89%, DECLARED BY THE APPELLANT. KEEPING IN VIEW THE FACT THAT THE APPELLANT IS ENGAGED IN THE TRADING OF BUILDING MATERIAL AND SALES AGAINST HAWALA PURCHASES HAVE ALSO BEEN CREDITED IN THE P&L A/C., THE ESTIMATION OF N.P. @ 12.5% OF THE TOTAL PURCHASES I.E.RS.39,00,515/ - (12.5% OFRS.3,12,04,282/ - ), IN THIS LINE OF BUSINESS WILL BE REASONABLE , AS AGAINST 11.94% OFFERED I AGREED BY THE LD. AR. THE ADDITION TO TH E EXTENT OF RS.33,25,458/ - (RS. 39,00,515 - RS.5,75,057/ - ) I.E. DIFFERENCE BETWEEN NP ESTIMATED AND NP DECLARED, IS CONFIRMED AND THE BALANCE AMOUNT OFRS.L,24,21,824/ - (RS.L,57,47,28 2 - 33,25,458/ - ) , IS HEREBY DELETED. THIS GROUND OF APPEAL IS DECIDED, ACCORD INGLY. 5 . WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF THE TRIBUNAL RELIED UPON BY THE REVENUE. WE FIND THAT THE ASSESSEE COULD NOT PRODUCE NECESSARY EVIDENCES IN ORDER TO PROVE GENUINENESS OF THE PURCHASE S MADE FROM THE EIGHT PARTIES. THE AGGREGATE PURCHASE FROM TH ES E PARTIES WERE MADE TO THE TUNE OF RS.1 , 57,47 , 282/ - AND THE AO DISALLOWED THE ENTIRE PURCHASES U/S 69C OF THE ACT WHEREAS THE LD.CIT(A) APPLIED OVERALL 12 . 5% OF THE TOTAL PURCHASES OF , RS.3,12,04,282/ - WHICH WORKED OUT TO RS.39,00,515/ - AND AFTER ALLOWING THE DEDUCTION OF RS.5,75,057/ - BEING NET PROFIT DECLARED BY THE ASSESSEE , SUSTAINED THE ADDITION T O THE EXTENT OF RS.33,25,258/ - WHILE DELETING THE ADDITION OF RS.1,24,21,824/ - . IN OUR OPINION, THE ORDER PASSED BY THE 5 ITA NO. 3826 AND 3626/MUM/2015 LD.CIT(A) IS A QUITE REASONABLE ORDER . M OREOVER, NOTHING HAS BEEN BROUGHT ON RECORD DURING THE COURSE OF HEARING BEFORE US BY THE LD. DR TO REVERSE THE FINDINGS OF THE FAA. WE, THEREFORE, CONFIRM THE ORDER OF THE FAA B Y DISMISSING BOTH THE APPEALS. 6 . IN SUM AND SUBSTANCE, THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST JUNE , 2017. SD SD ( MA HAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 6 .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI