DINESHKUMAR CHUNNILAL MEHTA, Mumbai V. ITO 18(1)(4), Mumbai

ITA 3974/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4900 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY SETHI
• Keywords: Bogus purchase
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3974 / / 2019 (%. .2010-11 ) ITA NO. 3974/MUM/2019 (A.Y.2010-11) DINESHKUMAR CHUNNILAL MEHTA, PROP. OF M/S. BALAJI STEEL & ENGG.CO. OFFICE NO.15, 1 ST FLOOR, OLD SONAWALA BLDG., 47, C.P TANK ROAD, MUMBAI 400 004 PAN: AAJPM7644K / VS. : / APPELLANT INCOME TAX OFFICER 18(1)(4), EARNEST HOUSE, 1 ST FLOOR, NARIMAN POINT, MUMBAI 400 021. : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI SANJAY SETHI / DATE OF HEARING : 02/12/2020 / DATE OF PRONOUNCEMENT : 03/02/2021 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-53, MUMBAI ( IN SHORT THE CIT (A)) DATED 02/04/2019 FOR THE ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM R ECORDS ARE: THE ASSESSEE IS A TRADER IN FERROUS AND NON-FERROUS METALS. THE ASSE SSEE FILED HIS RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEAR ON 26/06/2010 DECLARING TO TAL INCOME OF RS.3,49,540/-. 2 ITA NO. 3974/MUM/2019 (A.Y.2010-11) THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SEC TION 143(1) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). ON THE BASIS OF INF ORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA BY DGIT(INV.) , MUMBAI, THE ASSESSMENT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2010-11 WA S REOPENED. AS PER INFORMATION RECEIVED THE ASSESSEE HAD OBTAINED BOGUS PURCHASE B ILLS AGGREGATING TO RS.21,72,700/- FROM VARIOUS HAWALA DEALERS. IN RE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH DOCUMENTS TO SUBSTANT IATE PURCHASE OF GOODS FROM HAWALA DEALERS. SINCE, THE ASSESSEE FAILED TO FURN ISH VITAL DOCUMENTS VIZ. DELIVERY CHALLANS, TRANSPORT RECEIPTS, EXCISE GATE PASS, STO CK REGISTER, ETC. TO PROVE TRAIL OF GOODS AND ALSO THE CONFIRMATIONS FROM THE HAWALA DE ALERS, THE ASSESSING OFFICER HELD THAT THE PURCHASES MADE FROM HAWALA DEALERS WERE BO GUS. THE ASSESSING OFFICER MADE ESTIMATED ADDITION @ 12.5% ON INFLATED PURCH ASES. AGGRIEVED BY THE ORDER DATED 24/02/2016 PASSED UNDER SECTION 143(3) R.W. S 147 OF THE ACT, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A). THE FIRST APPELLATE AUTHORITY AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE CONFIRMED THE ADDITION MA DE IN ASSESSMENT ORDER. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNA L AGAINST THE ADDITION CONFIRMED BY CIT(A). 3. SHRI SANJAY SETHI, REPRESENTING THE DEPARTMENT V EHEMENTLY DEFENDED THE IMPUGNED ORDER . THE LD. DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF THE SUPPLIERS AND TRANSACTIONS WITH DECLARED HAWALA DEALERS. THE ASSESSING OFFICER FOLLOWING THE DECISION RENDERED IN THE CASE OF CIT VS.SIMIT P. SHETH, 356 ITR 451 (GUJ) ESTIMATED PROFIT @ 12.5% ON INFLATED PURCHASES AND THUS, MADE ADDITION OF RS.2,71,588/-. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDITION MADE BY ASSESSING OFFICER IN RESPECT OF BOGUS PURCHASES IS FAIR AND REASONABLE. THE CIT(A) AFTER EXAMINING THE FACTS AND SUBMISSIONS OF ASSESSEE HAS UPHELD THE ADDITION. 3 ITA NO. 3974/MUM/2019 (A.Y.2010-11) 4. THE SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRES ENTATIVE HEARD AND THE ORDERS OF AUTHORITIES BELOW EXAMINED. THE ADDITION OF RS.2,71,588/- HAS BEEN MADE IN THE CASE OF ASSESSEE ON ACCOUNT OF BOGUS PURCH ASE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE DURING THE PERIOD RELEVANT TO ASSESS MENT YEAR UNDER APPEAL. UNDISPUTEDLY, THE ASSESSEE FAILED TO AMPLIFY GENU INENESS OF PURCHASES MADE FROM HAWALA DEALERS. THE ASSESSEE COULD NOT FURNISH COG ENT DOCUMENTS TO PROVE THAT THE GOODS WERE INDEED DELIVERED TO THE ASSESSEE OR AT T HE DESIGNATED PLACE AT THE INSTRUCTIONS OF ASSESSEE. EVEN CONFIRMATIONS FROM THE HAWALA DEALERS WHO HAD ALLEGEDLY SUPPLIED THE GOODS WERE NOT FILED. HENCE , THE ASSESSING OFFICER MADE ADDITION OF RS.2,71,588/- BY ESTIMATING GP @12.5% O N INFLATED PURCHASES. THE SAME WAS UPHELD BY THE CIT(A). CONSIDERING THE NATURE O F ASSESSEES BUSINESS ( TRADING IN FERROUS AND NON-FERROUS METALS) ESTIMATION OF GP @ 12.5% ON BOGUS PURCHASES IS ON HIGHER SIDE. THE AVERAGE G.P IN TRADING OF FE RROUS AND NON-FERROUS METALS IS GENERALLY BETWEEN 5% TO 8%. TAKING INTO CONSIDERAT ION ENTIRETY OF FACTS, IF THE ADDITION IS RESTRICTED TO 6.5% THE SAME WOULD SERVE THE ENDS OF JUSTICE. I HOLD AND DIRECT ACCORDINGLY. 5. IN THE RESULT, IMPUGNED ORDER IS MODIFIED AND A PPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY THE 03 RD DAY OF FEBRUARY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 03/02/2021 VM , SR. PS(O/S) 4 ITA NO. 3974/MUM/2019 (A.Y.2010-11) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -. *+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI