ITO 29(3)(1), MUMBAI V. RAVINDRA HASTIMAL JAIN, MUMBAI

ITA 3862/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1207 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Bogus purchase
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.3862/M/2016 (AY 2011 - 2012) ITO - 29(3)(1), R.NO.305, C - 10, 3 RD FLOOR, PRATYAKSHA KAR BHAVAN, BKC BANDRA, MUMBAI - 400051. / VS. SHRI RAVIDRA HASTIMAL JAIN, FLAT NO.A/403, ANANT APARTMENTS, JAIN MANDIR ROAD, MULUND (W), MUMBAI - 400 080. ./ PAN : AGKPJ9581H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. BEENA SANTOSH, DR / RESPONDENT BY : SHRI AJAY SINGH / DATE OF HEARING : 29.03.2017 / DATE OF PRONOUNCEMENT : 12 .04.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 07.06.2016 IS AGAINST THE ORDER OF THE CIT (A) - 40, MUMBAI DATED 2.3.2016 FOR THE ASSESSMENT YEAR 2011 - 2012. 2. IN THIS APPEAL, REVENUE RAISED FOUR GROUNDS IN TOTO AND THEY REVOLVE AROUND THE SOLITARY ISSUE RELATING TO THE ADDITION ON ACCOUNT OF BOGUS PURCHASES. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THE PURCHASES AMOUNTING TO RS. 43,25,288/ - FROM THREE PARTIES VIZ (I) KAMAL TRADING CORPORATION (RS. 10,16,157/ - ); (II) JAYNI TRADING COMPANY (RS. 9,45,480/ - ) AND (I II) SHREEJI ENTERPRI SE (RS. 23,38,351/ - ) CONSTITUTE BOGUS PURCHASES . T HEREFORE, AO INVOKED THE PROVISIONS OF SECTION 69C OF THE ACT. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER EXAMINING THE ARGUMENTS AND EVIDENCES AVAILABLE ON RECORD, CIT (A) NOTICED THAT THE GP RATE S OF THE ASSESSEE OVER THE AYS VARY FROM 6.95% , 9.07% TO 9.17%. EVENTUALLY, CIT (A) HELD THAT APPLYING RATE OF 15% ON THE SAID BOGUS PURCHASES CONSTITUTES A REASONABLE AND FAIR . ACCORDINGLY, CIT (A) RESTRICTED THE ADDITION TO 15% OF THE SAID 2 BOGUS PURCHASES AMOUNTING TO RS. 43,25,288/ - . AGGRIEVED WITH THE ABOVE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DURING THE PROCEEDINGS BEFORE TH E TRIBUNAL, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH , ITA NO. 553 OF 2012, DATED 16.1.2013 READ WITH THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NICKUNJ EXIMP ENTERPRISES PVT LTD VS. ACIT VIDE WRIT PETITION NO. 2860 OF 2012, DATED 18 TH JUNE, 2014 WHEREIN RESTRICTING THE ADDITION TO THE GP RATE OF 12.5% IS APPROVED. 5. ON THE OTHER HAND, LD DR FOR THE REVENUE HEAVILY RELIED ON THE ORDER OF THE AO. 6. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED PRECEDENTS , I AM OF THE OPINION, THE GP RATE OF 15% INVOKED BY THE CIT (A) IS MUCH HIGHER THAN THAT OF THE 12.5% APPROVED B Y THE ABOVE CITED PRECEDENTS. CONSIDERING THE A B O V E C I T E D B I N D I N G J U D G M E N T S ( S U P R A ) , I AM OF THE OPINION, THERE IS NO CASE FOR MAKING ENTIRE BOGUS PURCHASES AS ADDITION U/S 69C OF THE ACT. THEREFORE, IN MY CONSIDERED VIEW, THE DECISION OF THE ON THIS ISSUE CIT (A) VIDE PARA 7.3.1 OF HIS ORDER IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 1 2 T H APRIL, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 12.04.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI