SHRI BHAVIN V VORA, MUMBAI V. INCOME TAX OFFICER WARD 2(1), MUMBAI

ITA 4071/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4904 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: M N VAISHANV
• Keywords: Bogus purchase; Reassessment proceedings; Set aside
• Section: 143(3); 133(6); 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4071/MUM/2018 ASSESSMENT YEAR: 2010 - 11 SHRI BHAVIN V. VORA, PROP. M/S VORA ISPAT, SHOP NO. 12, NARMADA COMPLEX, CABIN ROAD, NR. PUBLIC FLYOVER BRIDGE, BHAYANDER (E), THANE - 401105. VS. INCOME TAX OFFICER WARD 2(1), ROOM NO. B - 25, 6 TH FLOOR, ASHAR I.T. PARK, ROAD NO. 16 - Z, WAGLE INDUSTRIAL ESTATE, THANE WEST - 400604. PAN NO. ACMPV8532C APPELLANT RESPONDENT ASSESSEE BY : MR. M.N. VAISHANV, AR REVENUE BY : MR. CHAITANYA ANJARIA, DR DATE OF HEARING : 16/05/2019 DATE OF PRONOUNCEMENT: 27/05/2019 ORDER PER N.K. PRADHAN, A M THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 1 , THANE [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). 2 . BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE, TRADING IN IRON AND STEEL FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 15.10.2010 DECLARING TOTAL INCOME OF RS.4,54,841 / - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE AO RECEIVED SHRI BHAVIN V. VORA ITA NO. 4071/MUM/2018 2 INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS.91,20,342/ - FROM FIVE ENTRY PROVIDERS . ON THE BASIS OF THE SAID INFORMATION, THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, IN ORDER TO VERIFY THE GENUINENESS OF PURCHASES, THE AO ISSUED NOTICE U/S 133(6) TO THE SAID FIVE P ARTIES IN THE ADDRESS GIVEN BY THE ASSESSEE. HOWEVER, THE NOTICES WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK UN - SERVED. IN RESPONSE TO A QUERY RAISED BY THE AO TO EXPLAIN AS TO WHY THE ABOVE BOGUS PURCHASES SHOULD NOT BE TREATED AS UN ACCOUNTED INCOME, THE ASSESSEE FILED A REPLY STATING THAT THE PURCHASES MADE FROM THE FIVE PARTIES ARE GENUINE AND CLAIMED THAT THE PAYMENTS TO THE SAID PARTIES WERE MADE THROUGH CHEQUES. FURTHER, THE ASSESSEE SUBMITTED COPIES OF INVOICE BILLS TO SUBSTANTI ATE THESE PURCHASES. HOWEVER, THE AO WAS NOT CONVINCED WITH THE SAID REPLY OF THE ASSESSEE FOR THE REASON THAT THOSE PARTIES HA VE ADMITTED BEFORE THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THEY HAD NOT MADE ANY SALES OR PURCHASE TRANSACTION. THE AO RELYING ON THE DECISION IN CIT V. SIMIT P. SHETH 356 ITR 451 (GUJ), ESTIMATED THE PROFIT @ 12.5% ON DISPUTED PURCHASES OF RS.91,20,342/ - AND THEREBY BROUGHT TO TAX RS.11,40,043/ - . IN APPEAL, THE LD. CIT(A) AGREED WITH THE REASONS GIVEN BY THE AO A ND CONFIRMED THE DISALLOWANCE OF RS.11,40,043/ - . SHRI BHAVIN V. VORA ITA NO. 4071/MUM/2018 3 3 . BEFORE US, THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE DECISION IN (I) THE PR. CIT - 17 V. M/S MOHAMMED HAJI ADAM & CO . BOMBAY H.C. ITA NO. 1004, 1013, 1059, 1064, 1075, 1095, 1204, 1012 OF 2016, (II) CIT V. BHOLENATH POLY FAB PVT. LTD . ITA NO. 63 OF 2012, (III ) ITO - 19(4) V. M/S DINAL DIAMONDS ITA NO. 6102/MUM/2017, (IV) SHRI HIRALAL CHUNNILAL JAIN V. ITO 14(1)(4) ITA NO. 4547/MUM/2014, SHRI MADHUKANT B. GANDHI V. IT O 25(1)(3) ITA NO. 1950/MUM/2009. RELYI NG ON THE ABOVE DECISIONS, THE LD. COUNSEL SUBMITS THAT IN MOST OF THE CASES, THE PROFIT MARGIN WAS RETAINED AS ADDITION. 4 . ON THE OTHER HAND, THE LD. DR SUBMITS THAT IN THE INSTANT CASE, THE NOTICES ISSUED BY THE AO U/S 133(6) IN THE ADDRESS PROVIDED BY THE ASSESSEE WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK UN - SERVED. IT IS SUBMITTED BY HIM THAT THE AO RIGHTLY RELIED ON THE INQUIRIES CONDUCTED BY THE SALES TAX DEPARTMENT AND ESTIMATED THE PROFIT @ 12.5% ON THE DISPUTED PURCHASES OF RS.91, 20,342/ - . THE LD. DR THUS SUBMITS THAT THE ORDER PASSED BY THE CIT(A) BE CONFIRMED. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, THE NATURE OF BUSINESS OF THE APPELLANT IS TRADING IN IRON AND ST EEL. HAVING CONSIDERED THE NATURE OF BUSINESS OF THE APPELLANT; THE FINDINGS OF THE INQUIRIES CONDUCTED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA ; THE DETAILS FILED BY THE APPELLANT BEFORE THE AO, WE ARE OF THE CONSIDERED VIEW THAT THE ESTIMAT ION @ 12.5% DONE BY THE AO IS NOT COMMENSURATE WITH THE FACTS OF THE CASE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT SHRI BHAVIN V. VORA ITA NO. 4071/MUM/2018 4 THE AO TO ESTIMATE THE PROFIT @ 5% ON THE DISPUTED PURCHASES OF RS.91,20,342/ - AND BRING TO TAX RS.4,56,017/ - ONLY. THE CHARGING OF INTEREST IS CONSEQUENTIAL. 6 . IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/05/2019. SD/ - SD/ - (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/05/2019 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI