ACIT - 20(1), MUMBAI V. ANIL J AHUJA, MUMBAI

ITA 3904/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3487 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase
• Section: 13; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ) , A BENCH MUMBAI BEFORE SHRI RAJESH KUMAR , AM & SHRI RAM LAL NEGI , JM ITA NO. 3904 /MUM/ 20 19 ( ASSESSMENT YEAR : 2010 - 11 ) ASSISTANT COMMISSIONER OF INCOME TAX - 20(1) ROOM NO.113, 1 ST FLOOR PIRAMA L CHAMBERS LALBAUG, MUMBAI 400 012 VS. SHRI ANIL JAGDISHCHANDRA AHUJA 1406, TOWER - C ASHOK TOWERS DR.S.S. RAO ROAD, PAREL (E) MUMBAI 400 012 PAN/GIR NO. AAABPA1016B (APPELLANT ) .. (RESPONDENT ) CO NO.75/MUM/2020 (ARISING OUT OF ITA NO. 3904 /MUM/ 2019) ( ASSESSMENT YEAR : 2010 - 11 ) SHRI ANIL JAGDISHCHANDRA AHUJA 1406, TOWER - C ASHOK TOWERS DR.S.S. RAO ROAD, PAREL (E) MUMBAI 400 012 VS. ASSISTANT COMMISSIONER OF INCOME TAX - 20(1) ROOM NO.113, 1 ST FLOOR PIRAMAL CHAMBERS LALBAUG, MUMBAI 400 012 PAN/GIR N O. AAABPA1016B (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI BRAJENDRA KUMAR ASSESSEE BY SHRI VIMAL PUNMIYA DATE OF HEARING 30 / 12 /202 0 DATE OF PRONOUNCEMENT 02 / 03 / 202 1 ITA NO . 3904/MUM/2019 & CO NO.75/MUM/2020 SHRI ANIL J AHUJA 2 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 13/03/2019, PASSED BY THE CIT(A) - 32 , MUMBAI, FOR THE ASSESSMENT YEAR 20 10 - 11 . 2. THE REVENUE IN ITS APPEAL HAS CHALLENGED THE ORDER OF LD. CIT(A) ON THE GROUND THAT LD. CIT(A) HAS WRONGLY DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES TO THE TUNE OF RS.87.5% OF THE BOGUS PURCHASES WHEREAS THE ASSESSEE BY W AY OF CROSS OBJECTION HAS CHALLENGED THE PARTLY SUSTENANCE OF ADDITION OF 12.5% OF THE BOGUS PURCHASES BY LD. CIT(A). 3. THE F ACTS IN BRIEF ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 15/10/2010 DECLARING TOTAL INCOME AT RS.52,16,260/ - . THE CASE W AS REOPENED UNDER SECTION 147 OF THE ACT BY ISSU ING NOTICE U/S.14 8 ON 08/03/2017 AFTER THE AO RECEIVED INFORMATION FROM DGIT(INV.) MUMBAI THAT ASSESSEE IS A BENEFICIARY OF BOGUS HAWALA ENTRIES . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE W AS CALLED UPON TO PROVE THE GENUINENESS OF THE PURCHASES WHICH WAS COMPLIED BY THE ASSESSEE BY FURNISHING THE COPIES OF BILL , VOUCHERS, EVIDENCES OF PAYMENTS BEING MADE ITA NO . 3904/MUM/2019 & CO NO.75/MUM/2020 SHRI ANIL J AHUJA 3 THROUGH BANKING CHANNELS BY WAY OF CROSS CHEQUE S , DETAILS OF PURCHASE WITH CORRESPONDI NG SALES. THE AO ALSO ISSUED NOTICES U/S.133(6) OF THE ACT TO THE SUPPLIERS, HOWEVER, NO RESPONSE WAS RECEIVED OR THE NOTICES REMAIN UNSERVED. AS A RESULT, T HE AO ADDED THE ENTIRE BOGUS PURCHASES OF RS. 53,58,291/ - MADE FROM TWO PARTIES TO THE INCOME OF TH E ASSESSE BY TREATING THE SAME AS NON - GENUINE BY FRAMING ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT . 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION TO THE EXTENT OF 87.5% BY OBSERVING TH AT THE PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASES HAS TO BE ASSESSED AND THEREFORE, THE ENTIRE PURCHASES CANNOT BE BROUGHT TO TAX THEREBY PARTLY SUSTAINING THE ADDITION AT 12.5%. THE LD. CIT(A) WHILE PASSING THE ORDER DISTINGUISHED THE DECISION S REL IED UPON BY THE LD. AO. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT IN THIS CASE UNDISPUTEDLY, THE ASSESSEE HAD MADE PURCHASES FROM HAWALA DEALERS TO THE TUNE OF RS. 53,58,291/ - WHICH W ERE ADDED BY THE AO TO THE INCOME OF THE ASSESSEE BY ALLEGING THE SAME AS NON - GENUINE FOR THE REASONS THAT ASSESSEE COULD NOT OFFER ANY PLAUSIBLE EXPLANATION . H OWEVER, THE LD. CIT(A) PARTLY DELETED THE ADDITION TO THE TUNE OF 87.50% THEREBY PARTLY SUSTAINING THE AD DITION AT 12.5%. IN THIS CASE, WE NOTE THAT ASSESSEE HAS PRODUCED BILLS AND VOUCHERS, PROOF OF IDENTITY AND PAYMENT S THROUGH ACCOUNT PAYEE CHEQUES, CO - RELATION BETWEEN PURCHASES AND SALES AND STOCK TALLY ETC. THE ITA NO . 3904/MUM/2019 & CO NO.75/MUM/2020 SHRI ANIL J AHUJA 4 LD. CIT(A) HAD RIGHTLY DRAWN THE PRESUMPTI ON THAT ONLY PROFIT ELEMENT EMBEDDED IN THE PURCHASES ARE TO BE TAXED. IN THIS CASE, WE NOTE THAT THE GP OF THE ASSESSEE FROM A.Y.2008 - 09 TO 2012 - 13 RANGES BETWEEN 17.27% TO 19.60%. PERTINENT TO STATE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RE - SELL ING AND INSTALLING AIR CONTROL AND POLLUTION CONTROL EQUIPMENT S AND ASSESSEE HAS OFFERED GP WHICH IS QUITE SATISFACTORY RANGING FROM 17.27% TO 19.60 % DURING THE ABOVE PERIOD . UNDER THESE CIRCUMSTANCES, WE NOTE THAT TO MAKE AN ADDITION @12.5% OVER AND ABOVE THE GP RATE DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS WOULD BE UNFAIR AND UNREASONABLE. IN THIS CASE, WE ARE OF THE VIEW THAT IT WOULD SERVE THE ENDS OF JUSTICE IF THE GP RATE OF 5 % IS APPLIED ON ACCOUNT OF BOGUS PURCHASES OVER AND ABOVE THE GP D ISCLOSED IN THE BOOKS OF ACCOUNTS . ACCORDINGLY, WE MODIFY THE FINDINGS OF OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO APPLY THE RATE OF PROFIT @ 5 % ON THE BOGUS PURCHASES . 7. IN THE RESULT, THE APPEAL OF THE R EVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 02 / 03 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( RAM LAL NEGI ) SD/ - ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 02 / 03 / 2021 KARUNA , SR.PS ITA NO . 3904/MUM/2019 & CO NO.75/MUM/2020 SHRI ANIL J AHUJA 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//