S.V. TRADERS, MUMBAI V. ITO 32(3)(4), MUMBAI

ITA 3938/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8697 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: HITESH M SHAH
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 3938 / MUM/20 17 ( ASSESSMENT YEAR : 2009 - 10 ) M/S. S.V.TRADERS B - 209, BHAKTI APARTMENT AMBLI GALLY BORIVALI (W) MUMBAI 400 092 VS. ITO 32(3)(4) BKC, BANDRA MUMB AI PAN/GIR NO. ABIFS2716A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI HITESH M. SHAH REVENUE BY MS. N. HEMALATHA DATE OF HEARING 04 / 10 /201 7 DATE OF PRONOUNCEME NT 25 / 10 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 44, MUMBAI DATED 02/03/2017 FOR A.Y. 2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE IT ACT. 2. IN THIS APPEAL, ASSESSEE IS AG GRIEVED FOR UPHOLDING ADDITION OF 10% ON THE BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF SUPPLY OF BUILDING MATERIAL. THE AO HAS RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS SHOWN PURCHASES FROM 19 BOGUS CONCERNS. THE NAME OF THESE CONCERNS ARE MENTIONED IN PARA 2 OF THE ASSESSMENT ORDER. THE TOTAL PURCHASES FROM THESE 19 PARTIES COMES ITA NO. 3938/MUM/2017 M/S. S.V. TRADERS 2 TO RS. 1,20,81,023 / - . IT IS THE CONTENT ION OF THE A.O. THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF PURCHASES. SINCE THE A.O. DID NOT DOUBT THE GENUINENESS OF SALES HE CAME TO THE CONCLUSION THAT THE ASSESSEE MUST HAVE MADE PURCHASES FROM GREY MARKET AND THEREFORE THE PURCHASE RATE MENTIONED IN THE ALLEGED BILLS CANNOT BE ACCEPTED. AFTER CONSIDERING THE TOTALITY OF FACTS, THE A.O. STATED THAT THE ASSESSEE HAS ARRANGED BILLS WORTH RS. 1,20,81,023/ - TO SUPPRESS ITS TRUE PROFIT. THE AO THEREAFTER ESTIMATED ITS TRUE PROFIT BY TAKING 10% OF THE BOGUS PURCHASE AS ADDITIONAL PROFIT. THE AO ACCORDINGLY MADE AN ADDITION OF RS.12,08,102/ - . 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. IT WAS ARGUED BY LEARNED AR THAT WITHO UT ANY BASIS, AO HAS ESTIMATED PROFIT OF 10% IN ADDITION TO THE REGULAR PROFIT SHOWN BY THE ASSESSEE AT 18.08%. HE INVITED OUR ATTENTION TO CLAUSE NO. 4.3 OF BODY OF ASSESSMENT ORDER WHICH AO HAS ACCEPTED THAT THERE CANNOT BE SALES WITHOUT PURCHASES. FURTH ER NO EVIDENCE PUT FORTH BY ASSESSING OFFICER TO BELIEVE THAT ASSESSEE MADE PURCHASES AT LOWER PRICE SO AS TO INCREASE ITS OVERALL PROFITS BY RECORDING THE BOGUS PURCHASES AT A HIGHER LEVEL & THEREBY SIPHON OFF THE PROFIT TO THE EXTENT OF DIFFERENCE BETWEE N THE ACTUAL PURCHASES AND BOGUS PURCHASES. COMPARATIVE CHART SHOWING RATES (ANNEXURE A), GROSS MARGIN ON PURCHASES EFFECTED FROM SAID HAWALA DEALERS & OTHER PARTIES (ANNEXURE B) WAS ALSO PLACED ON RECORD. ON PERUSAL OF SAID STATEMENT YOU WILL APPRECIATE T HAT ASSESSEE HAS SUBMITTED PURCHASE /SALES DISPOSAL BILL WISE OF EACH PARTIES GIVING MARGIN ON SALES & PURCHASES. FINAL SUMMARY CHART ITA NO. 3938/MUM/2017 M/S. S.V. TRADERS 3 OF EACH PARTIES PURCHASE/SALES DISPOSAL WITH MARGIN ON SALES /PURCHASES IS GIVEN IN ANNEXURE C WHICH CLEARLY DEPICTS THAT GROSS MARGIN ON PURCHASES EFFECTED FROM HAWALA PARTIES & OTHER PARTIES IS MORE OR LESS IN THE SAME RANGE OF GROSS PROFIT DECLARED RULING OUT THE POSSIBILITY OF SIPHON OFF THE PROFIT TO THE EXTENT OF DIFFERENCE BETWEEN THE ACTUAL PURCHASES & BOGUS PURCHASES .' 6. ON THE OTHER HAND. LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 7. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FACTS IN BRIEF ARE THAT ASSESSEE IS IN THE BUSINESS OF SUPPLY OF BUILDI NG MATERIAL AND IT CARRIES ON BUSINESS IN PARTNERSHIP FIRM UNDER THE NAME & STYLE OF M/S S V TRADERS. 8. I HAD ALSO PERUSED COMPARATIVE CHART SHOWING RATES OF GROSS MARGIN OF PURCHASES AFFECTED FROM SAID HAWALA DEALERS VIS - - VIS OTHER PARTIES. I FOUND THAT THE ASSESSEE HAS ALREADY DECLARED GROSS PROFIT OF 18.08%. THE TOTAL PURCHASES AS PER PROFIT & LOSS A/C AMOUNTED TO RS. 1,84,57,717/ - AS AGAINST THE SAME, THE SALE RECEIPTS AMOUNTED TO RS.2,25,31,813/ - . WHEN THE ASSESSEE HAD ALREADY SHOWN GP OF 18.08% AND THEN CONSIDERING THE FINDING RECORDED BY THE AO, IT WILL NOT BE REASONABLE TO ADD FURTHER 10% OVER AND ABOVE 18.08% ALREADY SHOWN BY THE ASSESSEE. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 5 % (FIVE PERCENT) OF ALLEGED PURCHASES. I DIRECT ACCORDINGLY. ITA NO. 3938/MUM/2017 M/S. S.V. TRADERS 4 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 25 / 10 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 25 / 10 /201 7 KARUNA SR. PS 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//