VITHAL R. POOJARY, MUMBAI V. DCIT - 30(3), MUMBAI

ITA 3983/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7799 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: R N VASANI
• Keywords: Bogus purchase
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER ITA NO. 3983 / M/2017 ASSESSMENT YEAR: 20 0 9 - 1 0 ITA NO.398 4 /M/2017 ASSESSMENT YEAR: 201 0 - 1 1 ITA NO.3985/M/2017 ASSESSMENT YEAR: 2011 - 12 SHRI VITH AL R. POOJARY, ROYAL ELECTRIC CONTRACTORS, B - 315, WESTERN EDGE - II, MAGATHANE VILLAGE, WE HIGHWAY, BORIVALI - EAST MUMBAI 400 0 57 PAN: A GNPP7177J VS. DCIT - 30(3), BKC, BANDRA, MUMBAI - 400 051 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.N. VASANI , A.R. & SHRI HITEN DEDHIA, A.R. REVENUE BY : SHRI RAM TIWARI, D.R. DATE OF HEARING : 2 3 .11 .201 7 DATE OF PRONOUNCEMENT : 19 .12 .201 7 O R D E R PER R.C. SHARMA , ACCOUNTANT MEMBER: TH E S E ARE THE APP EALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 200 9 - 1 0 , 2010 - 11 & 2011 - 12 IN THE MATTER OF ORDER PASSED UNDER SECTION 27 1 ( 1 ) (C) OF THE ACT. 2. IN THESE THREE YEARS UNDER CONSIDERATION PENALTY HAS BEEN IMPOSED WITH REGARD T O THE ESTIMATED ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. ITA NO.3983/M/2017 , ITA NO.3984/M/2017 & ITA NO.3985/M/2017 SHRI VITHAL R. POOJARY 2 4. FACTS IN BRIEF FOR THE ASSESSMENT YEAR 2010 - 11 ARE THAT THE ASSESSEE'S CASE WAS REOPENED BASED ON THE INFORMATION RECEIVED FROM D GIT(INV.), MUMBAI AND SALES TAX DEPARTMENT REGARDING BOGUS PURCHASES AND THAT THE ASSESSEE WAS ONE OF THE BENEFICIARI ES WHO CLAIMED PURCHASES OF RS. 55,13,682/ - FROM 10 PARTIES WHO WERE DECLARED AS HAWALA DEALERS BY SALES TAX DEPARTMENT. THESE PARTIES HAD I SSUED ACCOMMODATION BILLS WITHOUT ACTUAL SALE AND DELIVERY OF GOODS. DURING THE COURSE OF THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE'S SUBMISSIONS WERE NOT ACCEPTED. THE AO RELIED UPON THE CONFESSIONS MADE BY SAID 10 PARTIES BEFORE THE SALES TAX AUTHORITI ES THAT THEY HAD NOT DONE ANY GENUINE BUSINESS AND THERE WAS NO ACTUAL DELIVERY OF GOODS. THE ASSESSEE FAILED TO PROVE THE ONUS CAST UPON HIM TO PROVE THE GENUINENESS OF THESE PURCHASE TRANSACTIONS. THE AO HAD OBSERVED THAT THE GP RATIO OF 8.73% DECLARED B Y THE ASSESSEE WAS LOW AND ESTIMATED THE GP RATIO AT 11.00% AND ACCORDINGLY RS. 12,00,590/ - [BEING THE DIFFERENCE IN THE GP RATIO] WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . THE AO ALSO LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS C ONFIRMED BY THE LD. CIT(A). 5. IT IS CLEAR FROM THE ORDERS OF THE LOWER AUTHORITIES THAT AO HAS REJECTED THE GROSS PROFIT OF 8.93%, 8.73% AND 11.11% SHOWN BY THE ASSESSEE IN THE ASSESSMENTS YEAR 2009 - 10, 2010 - 11 AND 2011 - 12 RESPECTIVELY. AS AGAINST THI S, AO HAS ESTIMATED PROFIT @ 10.5%, 11% AND 11.75 % IN THE ASSESSMENT YEAR 2009 - 10 , 2010 - 11 AND 20 1 1 - 12 RESPECTIVELY. FOR THE ADDITION MADE IN RESPECT OF ESTIMATION OF GROSS PROFIT, AO ALSO LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. I FOUND THAT WITH REGARD TO THE ADDITION MADE BY ESTIMATING GP ON THE SALES, THE ASSESSEE HAS NEITHER CONCEALED THE PARTICULARS OF HIS INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. I FOUND THAT THE ADDITIONS HAVE BEEN MADE BY REJECTING THE BOOKS OF ACCOUNT AN D ESTIMATING THE GROSS PROFIT RATIO. FURTHER, NO JUSTIFICATION HAS BEEN GIVEN BY HIM FOR ESTIMATING THE PROFIT. ITA NO.3983/M/2017 , ITA NO.3984/M/2017 & ITA NO.3985/M/2017 SHRI VITHAL R. POOJARY 3 FURTHER, THE ASSESSEE ACCEPTED THE QUANTUM ADDITIONS AND DID NOT CONTEST THE SAME ANY FURTHER IN VIEW OF THE FACT THAT IT COULD NOT MAKE AVAILAB LE THE PRESENCE OF SUPPLIERS AS THEY COULD NOT BE TRACED AT THE RELEVANT TIME. NEVERTHELESS, THE ASSESSEE WAS IN POSSESSION OF PURCHASE INVOICES, DELIVERY CHALLANS, LEDGER EXTRACTS THEREOF AND ALL THE PAYMENTS WERE THROUGH BANKING CHANNELS. THEREFORE, THE ASSESSEE ACCEPTED THE QUANTUM ADDITIONS IN GOOD FAITH, TO BUY PEACE AND TO AVOID ANY FURTHER LITIGATION . TH E ASSESSEE MADE A CLAIM WHICH WAS BONA FIDE AND THE SAME WAS COUPLED WITH DOCUMENTARY, EVIDENCES BUT THE SAME REMAINED INCONCLUSIVE FOR WANT OF PERSO NAL PRESENCE OF SUPPLIERS. MERELY BECAUSE IN QUANTUM PROCEEDINGS THIS MATTER HAS BEEN DECIDED AGAINST THE ASSESSEE THAT DOES NOT MEAN THAT IN PENALTY PROCEEDINGS IT CAN BE HELD THAT ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM, BECAUSE, NONE OF THE EXPLANATIONS AND EVIDENCES FILED BY THE ASSESSEE HAVE BEEN FOUND TO BE FALSE. THEREFORE, IT CANNOT BE HELD THAT ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED THE PARTICULARS OF HIS INCOME. THEREFORE, OVERALL FACTS OF THE CAS E DO NOT JUSTIFY IMPOSITION OF PENALTY. IN SUPPORT OF THE FACTS AND CIRCUMSTANCES ENUMERAT ED HEREIN ABOVE THERE ARE NUMEROUS JUDICIAL PRONOUNCEMENTS , INCLUDING THAT OF THE HONBLE SUPREME COURT ON THE FOLLOWING JUDGMENTS. 1. CIT(A) V. RELIANCE PETRO PRODUCTS P. LTD (322 ITR 158) 2. CIT V. WHITELENE CHEMICALS [2014] 360 ITR 385 (GUJARAT HC) 3. NARESH CHAND AGARWAL V. CIT - I, LUCKNOW [2013] 38 TAXMANN.COM 397 (ALLAHABAD HC) 4. EARTHMOVING EQUIPMENT SERVICE CORPORATION V. DY. CIT , 22(2), MUMBAI [2017] 84 TAXMANN.COM 51 (MUMBAI - TRIB.) 5. SAHYOG SAHKARI SHRAM SAMVIDA SAMITI LTD. V. ASSISTANT CIT [2008] 25 SOT 23 (LUCKNOW - TRIB) 6. DY. CIT, CIRCLE 5(1), NEW DELHI V. KALINDI RAIL NIRMAN ENGG. LTD . [2 012] 21 TAXMANN.COM 24 (DELHI - TRIB) 7. ANITA BUILDERS V. ASST. CIT [2002] 74 TTJ 364 (JODHPUR TRIB) 8. RUCHI DEVELOPERS V. THE INCOME TAX OFFICER - 9(1), AHMEDABAD (ITA 3348/AHD/2010) ITA NO.3983/M/2017 , ITA NO.3984/M/2017 & ITA NO.3985/M/2017 SHRI VITHAL R. POOJARY 4 6. IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY MERIT IN THE PENALTY SO IMPOSED. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 .1 2. 201 7 . SD/ - (R.C. SHARMA) ACCOUNTANT MEMBER MUMBAI, DATED : 19 . 12 . 201 7 . * KISHORE C OPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C B ENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.