RAMNIKLAL KUNVERJI VORA HUF, MUMBAI V. ITO WD 18(2)(2), MUMBAI

ITA 3984/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0645 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: MATHURIA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3984/M/2016 ASSESSMENT YEAR: 2011-12 M/S. RAMNIKLAL KUNVERJI VORA HUF, 702, PALAI HOUSE, NEW ANANT CO-OP HSG. SOCIETY, PLOT NO.390, SHANKAR MATHAM MARG, TELANG ROAD, MATUNGA C.R., MUMBAI 400 019 PAN: AAAHV3842H VS. INCOME TAX OFFICER 9(2)(3), WARD-18(2)(2), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI M.S. MATHURIA, A.R. REVENUE BY : SHRI M.C. OMI NINGSHEN, D.R. DATE OF HEARING : 04.01.2018 DATE OF PRONOUNCEMENT : 09.02.2018 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 31.03.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) FOUND THAT ASSESSEE HAD MADE BOGUS PURCHASES FROM FOLLOWING PA RTIES: ITA NO.3984/M/2016 M/S. RAMNIKLAL KUNVERJI VORA HUF 2 SR. NO. NAME OF THE PARTY AMOUNT OF PURCHASE (RS) 1. POOJA TRADERS 5,25,000 2. TRADE LINK 6,44,998 3. MAYUR TRADING CO. 9,56,250 4. AADHESHWR ENTERPRISES 18,73,125 5. SHREE AMBIKA TRADERS 22,57,500 6. RUSHABH SALES CORPN. 23,60,626 TOTAL 86,17,499 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UND ER SECTION 133(6). THEREFORE, THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.86,17,499/-. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS PARTLY ALLOWED THE CLAIM OF THE GROUND NO.1 OF THE ASSESSE E BY OBSERVING AS UNDER: 20. AS STATED IN THE PRECEDING PARAGRAPHS, IN THE INSTANT CASE TOO, ALL THE FACTS AND CIRCUMSTANCES OUTLINED ABOVE LEADS TO THE CONCLUSION THAT ALTHOUGH THE PURCHASES MADE BY THE APPELLANT F ROM THE SIX PARTIES MENTIONED ABOVE DURING THE YEAR UNDER CONSI DERATION CANNOT BE SUMMARILY REJECTED BUT AT THE SAME TIME IT DIFFI CULT TO ACCEPT THAT THE PURCHASES SHOWN ON THE INVOICES/BILLS ISSUED BY THESE PARTIES ARE AS PER THE PREVAILING MARKET PRICE OF THOSE MATERIALS OR ACTUALLY BEEN MADE FROM SUCH PARTIES AND MI G HT HAVE BEEN PURCHASED IN THE GREY MARKET. THE APPELLANT HAS NOT PLACED ANY EVIDENCE ON RECORD THAT THE GOODS PURCHASED FROM THE ABOVE PARTIES WERE AT ARMS' LENG TH PRICE. THE APPELLANT HAS ALSO NOT PLACED ON RECORD ANY COMPARA BLE BILLS/INVOICES FOR PURCHASES OF SIMILAR ITEMS MADE FROM OTHER PARTIES TO ESTABLISH THAT THE PURCHASES FROM THE SIX PARTIES I N QUESTION WERE AT PAR WITH THE PURCHASES MADE FROM OTHER PARTIES DURI NG THE PERIOD UNDER CONSIDERATION. THE POSSIBILITY OF SUCH PURCHA SES FROM UNREGISTERED DEALERS WITHOUT INVOICES CANNOT BE RUL ED OUT. IN VIEW OF THE ABOVE, THE CORRECTNESS OF THE PURCHASE PRICES MENTI ONED ON SUCH BILLS/INVOICES ISSUED BY THE SIX PARTIES IN QUESTIO N CANNOT BE ACCEPTED AND SOME ADDITIONAL PROFIT NEEDS TO BE ESTIMATED ON SUCH PURCHASES. AS STATED ABOVE, FOLLOWING THE GUIDELINES LAID DOWN IN THE CASE OF VIJAY PROTEIN P LTD., DISALLOWANCE OF 25% ON SUCH ALLEGED BOGUS PURCHASES OF RS. 86,17,499/- I.E., RS. 21,54,375/- IS CONFIRMED THAT NEEDS TO BE ADDED ITA NO.3984/M/2016 M/S. RAMNIKLAL KUNVERJI VORA HUF 3 TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF A LLEGED BOGUS PURCHASES FOR THE YEAR UNDER CONSIDERATION AND THE BALANCE ADDITION OF RS.64,63,1241- IS HEREBY DELETED. HENCE, GROUND NO. 1 IS PARTLY AL LOWED. 5. DURING THE COURSE OF HEARING, THE LD. A.R. SUBMI TTED THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL AND T HE TRIBUNAL HAS ALLOWED SUCH CLAIM, THEREFORE, THIS CLAIM SHOULD BE ALLOWED. HE RELIED UPON THE FOLLOWING DECISIONS: 1. ACIT VS. TARLA R. SHAH IN ITA NO.5295/M/2013 2. FANCY WEAR VS. ITO IN ITA NO.1596/M/2016 3. HEERALAL MEGHRAJ DOSHI VS. ACIT IN ITA NO.3015 AND 3016/M/2015 4. ITO VS. KARSAN NANDU IN ITA NO.2651/M/2016 6. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND ALSO HAVE GONE THROUGH THE ORDERS OF THE TRIBUNAL SUBMIT TED BY THE ASSESSEE. LOOKING TO THE FACTS AND CIRCUMSTANCES O F THE CASE WE FIND THAT THE ASSESSEE HAS ALREADY DECLARED THE GP. HEN CE, AO IS DIRECTED TO ALLOW THE CREDIT OF GP DECLARED BY THE ASSESSEE AND DEDUCT THE SAME FROM 25% AND ESTIMATE THE GP @ 8% OF TOTAL BOG US PURCHASES WHICH COMES TO RS.6,89,400/-. 8. IN THE RESULT THIS GROUND OF THE APPEAL IS PARTL Y ALLOWED. 9. THE NEXT ISSUE RELATES TO DISALLOWANCE OF 20% OF TELEPHONE EXPENSES OF RS.1,89,140 AND SUNDRY EXPENSES OF RS.1 ,26,796/- TOTALING TO RS.63,187/- ON ADHOC BASIS. ITA NO.3984/M/2016 M/S. RAMNIKLAL KUNVERJI VORA HUF 4 THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE T O FURNISH DOCUMENTARY EVIDENCE IN SUPPORT OF VARIOUS EXPENSES IN P & L A/C. SINCE NO PROOF WAS SUBMITTED BY THE ASSESSEE, THE G ENUINENESS AND AUTHENTICITY OF THE EXPENSES COULD NOT BE VERIFIED AND ESTABLISHED. THEREFORE, THE AO DISALLOWED 20% OF TELEPHONE EXPEN SES AND SUNDRY EXPENSES I.E. RS.63,187/- WAS DISALLOWED AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERA TION. 10. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS DISMISSED THIS GROUND BY OBSERVING AS UNDER: IT IS OBSERVED THAT NO WRITTEN OR VERBAL ARGUMENT WAS MADE DURING APPELLATE PROCEEDINGS. NOTHING IS BROUGHT ON RECORD BY THE APPELLANT THAT THE ADDITION MADE BY THE AO IS UNJUSTIFIED. HENCE, I DO NOT HAVE ANY OPTION BUT TO CONFIRM THE ABOVE ADDITION OF RS. 63, 187/-. HENCE, THE GROUND OF APPEAL NO. 2 IS DISMISSED. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ASSESSEE HAS ALREADY DECLARED THE GP. HENCE, AO IS DIRECTED TO ALLOW THE CREDIT OF GP DECLARED BY THE ASSESSEE AND DEDUCT THE SAME FROM 20% AND ESTIMATE THE GP @ 10% OF TOTAL ADDITIO N WHICH COMES TO RS.31,593/-. 12. IN THE RESULT, THIS GROUND OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.3984/M/2016 M/S. RAMNIKLAL KUNVERJI VORA HUF 5 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.02.2018. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 09.02.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.