ITO 32(2)(4), MUMBAI V. NISHA MAYUR KAMDAR, MUMBAI

ITA 405/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0020 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA LD SR
• Assessee Lawyers: ANIL THAKRAR LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NOS.405/MUM/2016 & ITA 5742/MUM/2015 NISHA MAYUR KAMDAR ASSESSMENT YEAR- 2009-2010 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.405/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER 32(2)(4) ROOM NO. 306, 3 RD FLOOR C-11, PRATYAKSHAR KAR BHAWAN BKC, BANDRA, MUMBAI-400 051 / VS. NISHA MAYUR KAMDAR 705, SHASHI APARTMENT DEVIDAS LANE, BORIVALI (W) MUMBAI 400 092 ./ ./PAN/GIR NO. APDPK-8142-F ( /APPELLANT ) : ( / RESPONDENT ) & ./I.T.A. NO.5742/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) NISHA MAYUR KAMDAR 705, SHASHI APARTMENT DEVIDAS LANE, BORIVALI (W) MUMBAI 400 092 / VS. INCOME TAX OFFICER 32(2)(4) ROOM NO. 306, 3 RD FLOOR C-11, PRATYAKSHAR KAR BHAWAN BKC, BANDRA, MUMBAI-400 051 ./ ./PAN/GIR NO. APDPK-8142-F ( /APPELLANT ) : ( / RESPONDENT ) A SSESSEE BY : ANIL THAKRAR, LD. AR RE VENUE BY : AARJU GARODIA, LD. SR. AR / DATE OF HEARING : 26/02/2018 / DATE OF PRONOUNCEMENT : 28/02/2018 ITA NOS.405/MUM/2016 & ITA 5742/MUM/2015 NISHA MAYUR KAMDAR ASSESSMENT YEAR- 2009-2010 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEAL FOR ASSESSMENT YEAR [AY] 2009-10 WHICH CONTEST STAND OF LD. COMMISSIONER OF INCOME-TAX (AP PEALS)-44 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-44/ITO.32(2)(4)/ITA-134/2014-15 DATED 01/12/2015 QUA ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER- 32(2)(4) [AO] U/S 143(3) READ WITH SECTION 147 OF T HE INCOME TAX ACT, 1961 ON 27/02/2015 WHEREIN THE ASSESSEE HAS BEEN SADDLE D WITH ADDITION OF RS.1,38,57,521/- ON ACCOUNT OF CERTAIN ALLEGED BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF BUILDING MATERIAL UNDER PROPRIETARY CONCERN NAMELY N.M.REALTORS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR IMPUGNED AY VIDE ISSUA NCE OF NOTICE U/S 148 DATED 11/03/2014 WHICH WAS FOLLOWED BY STATUTOR Y NOTICES U/S 143(2) AND 142(1). THE ORIGINAL RETURN OF INCOME WA S FILED BY THE ASSESSEE AT RS.2,83,740/- WHICH WAS PROCESSED U/S 1 43(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA & DGIT (INVESTIGATION) REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SU CH BOGUS PURCHASE BILLS TO THE TUNE OF RS.1,38,57,521/- FROM TEN SUCH PARTI ES. THE ASSESSEE DEFENDED THE PURCHASES MADE BY HIM BUT NOTICES ISSU ED U/S 133(6) TO CONFIRM THE TRANSACTIONS REMAINED UN-SERVED WITH REMARKS LIKE LEFT / NOT ITA NOS.405/MUM/2016 & ITA 5742/MUM/2015 NISHA MAYUR KAMDAR ASSESSMENT YEAR- 2009-2010 3 KNOWN . AFTER CONSIDERING ASSESSEES SUBMISSIONS, DOCUMEN TARY EVIDENCES AND CERTAIN JUDICIAL PRONOUNCEMENTS, LD. AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 23/03/2 015 WHERE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 6.54% BY MAKI NG FOLLOWING OBSERVATIONS:- IT HAS BEEN HELD IN THE CASE OF M/S NIKUNJ ENTERPRISES 372 ITR 69 (BOM) BY THE HONBLE BOMBAY HIGH COURT THAT MERELY BECAUSE THE S UPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT(A), ONE CAN NOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT-ASSESSEE. FURTHER I T HAS BEEN HELD IN THE CASE OF SARASWATHI OIL TRADERS VS. CIT 254 ITR 259 (SUPREME COURT) THAT WHEN THE SALES HAVE NOT BEEN DOUBTED THEN THERE WAS NO QUEST ION TO DOUBT THE PURCHASES AND THE ADDITION SHOULD HAVE BEEN MADE ONLY TO THE EXTENT OF GROSS PROFIT. TO THIS EXTENT I AM IN AGREEMENT WITH THE APPELLATE THAT IF THE APPELLANT HAS FULFILLED ITS ONUS OF MAKING THE PAYMENTS BY CHEQUE AND HAS SUPPLIED T HE ADDRESS OF THE SELLERS, THEN IT CANNOT BE PRESUMED THAT THE SUPPLIERS WERE BOGUS SIMPLY BECAUSE THE SELLERS WERE NOT FOUND AT THE GIVEN ADDRESSES. HOWE VER, AT THE SAME TIME, IT CANNOT BE SAID THAT THE INFORMATION PROVIDED BY THE SALES TAX DEPT. SHOULD NOT BE TAKEN COGNIZANCE BY THE A.O. THEREFORE, AFTER CONSIDERING THE TOTALITY OF FACTS AND AFTER FOLLOWING THE RATIO OF SARASWATHI OIL TRADERS VS. C IT (SC) CITED SUPRA, I AM OF THE OPINION THAT IT IS THE PROFIT ELEMENT IN THE TOTAL COMPONENT IN DISPUTE WHICH NEEDS TO BE ADDED TO THE INCOME OF THE APPELLANT. THE TOTAL AMOUNT WHICH IS BEING TREATED AS BOGUS BY THE A.O. IS RS.1,38,57,521/-. THE APPELLAN T HAS SHOWN A GROSS PROFIT RATE OF 6.54%. THUS 6.54% OF RS.1,38,57,521/- WHICH IS R S.9,06,282/- IS TAKEN AS PROFIT OF THE APPELLANT ON PURCHASES THAT ARE NOT FULLY AN D PROPERLY EXPLAINED. ADDITION OF RS.9,06,282/- IS ACCORDINGLY CONFIRMED OUR OF AN ADDITION OF RS.1 ,38,57,521/- AND THE BALANCE IS DELETED. GROUND OF APPEAL NOS. 1 & 2 ARE THEREFORE PARTLY ALLOWED. AGGRIEVED, THE ASSESSEE AS WELL AS REVENUE IS IN AP PEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITT ED THAT THE ADDITION WAS ON LOWER SIDE WHEREAS LD. AUTHORISED R EPRESENTATIVE FOR ASSESSEE [AR] PLEADED FOR SOME MORE RELIEF. 5. AFTER CONSIDERING RIVAL CONTENTIONS, WE FIND NO REASON TO INTERFERE WITH THE STAND OF LD. CIT(A) SINCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES AND COULD NOT ACHIEVE THE SALES TURNOVER WITHOUT PURCHASE OF ITA NOS.405/MUM/2016 & ITA 5742/MUM/2015 NISHA MAYUR KAMDAR ASSESSMENT YEAR- 2009-2010 4 MATERIAL. THE TURNOVER OF THE ASSESSEE HAS NOT BEEN DOUBTED BY THE REVENUE AND THE ASSESSEE IS IN POSSESSION OF PRIMAR Y PURCHASE DOCUMENTS & FURTHER, THE PAYMENTS ARE THROUGH BANKI NG CHANNELS. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY SINGL E PARTY TO CONFIRM THE TRANSACTIONS AND NOTICES ISSUED U/S 133(6) WERE RETURNED BACK UN- SERVED WHICH CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THE REFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE , WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTI ONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. THEREF ORE, FINDING THE SAME QUITE FAIR AND REASONABLE, WE DISMISS BOTH THE APPEALS. 6. RESULTANTLY, BOTH THE APPEALS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR A GGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28. 02.2018 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' ( ) / THE CIT(A) 4. ' / CIT CONCERNED 5. % , % , / DR, ITAT, MUMBAI 6. &' / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI