BIPIN MANGALJI SANGHVI, MUMBAI V. ITO 17(1)(2), MUMBAI

ITA 4115/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0510 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.4115/M/2016 ASSESSMENT YEAR: 2009-10 MR. BIPIN MANGALJI SANGHVI, PROP: DARSHAN STEEL CORPORATION 16, AMINABAI BUILDING NO.3, ISRALLI MOHALLA, KHOJA GALLI, MUMBAI-400 009 PAN: ALQPS4462B VS. ITO WARD 17(1)(2), AAYKAR BHAVAN, MAHARSHI KARVE ROAD, CHURCHGATE, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : MS. N. HEMALATHA, D.R. DATE OF HEARING : 08.01.2018 DATE OF PRONOUNCEMENT : 31.01.2018 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 24.05.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND PROPRIETOR OF M/S.DARSHAN STEEL CORPORATION TRA DING IN FERROUS AND NON FERROUS METALS AND ELECTRONIC GOODS. THE AS SESSEE FILED ROI DECLARING INCOME AT RS.13,48,635/- ON 24/08/2009. T HE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) RECEIVE D INFORMATION FROM THE INVESTIGATION WING THAT THE ASSESSEE HAS ENTERE D INTO BOGUS ITA NO.4115/M/2016 MR. BIPIN MANGALJI SANGHVI 2 PURCHASE TRANSACTIONS WITH 20 PARTIES TOTALING TO R S.1,56,26,375/-. AFTER RECORDING REASONS, THE ASSESSMENT WAS REOPENE D BY ISSUE OF NOTICE U/S 148. DURING REASSESSMENT PROCEEDINGS, TH E AO ISSUED NOTICE U/S.142(1) TO THE ASSESSEE REQUIRING HIM TO PRODUCE DETAILS OF PURCHASES MADE FROM THESE 20 PARTIES AS ALSO DETAIL S SUCH AS EVIDENCE INCLUDING PURCHASE BILLS, PROOF OF DELIVERY OF GOOD S, LEDGER ACCOUNTS, BANK ACCOUNTS, TRANSPORT/LORRY RECEIPTS, MODE OF PA YMENTS AND BANK STATEMENTS. THE ASSESSEE IS ALLEGED TO HAVE MADE BO GUS PURCHASES FROM 20 PARTIES VIZ. STHAPNA TRADE IMPEX PVT LTD RS .13,03,280/-, SAILEELA TRADING PVT LTD RS.1378883, JIGAN ENTERPRI SES RS.48,568/-, MIHIR SALES P. LTD RS.706688, MEETI TRADE IMPEX RS. 7166, MONISH ENTERPRISES RS.37440, SMARTLINK TRADEX P. LTD RS.67 9043, MOTION TRADERS P LTD RS.1821042, MONIL IMPEX RS.104936, NA VPAD EXPORTS P LTD RS.735278, SIVAMANI TRADERS P LTD RS.735278, TOP SHOP TRADING CO PVT LTD RS.196200, JINKUSHAL EXPORTS PVT LTD RS.953814, MAULIK EXPORTS PVT LTD RS.14560, CHANDRA NAND TRADING PVT LTD RS.400 134, MERIDIAN SALES AGENCY PVT LTD R S.402686, RIDLIAM MERCANTILE PVT LTD RS.700650, SHIDSHILA TRA DELINKS PVT LTD RS.920419, KALPATARU MERCANTILE PVT LTD RS.1592494, PAKSHAL TRADELINK P LTD RS.1595700 TOTALING TO RS.15626375. THE AO ISSUED NOTICE U/S.133(6) OF THE ACT TO ALL THE ABOVE PARTI ES WHICH WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES IN ALL CASES. THE AO REQUIRED THE ASSESSEE TO PRODUCE THE PARTIES BEFORE HIM ALONG WITH RELEVANT DETAILS AS DETAILED IN THE NOTICE. THE ASS ESSEE PRODUCED CONFIRMATION, PURCHASE BILLS, SALES BILLS, COPY OF LEDGER ACCOUNT AND COPY OF BANK STATEMENT. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ITA NO.4115/M/2016 MR. BIPIN MANGALJI SANGHVI 3 ANY LORRY RECEIPTS, TRANSPORTATION DETAILS OR CONFI RMATIONS FROM THE ALLEGED PURCHASERS. THE ASSESSEE COULD NOT PRODUCE THESE PARTIES BEFORE THE AO FOR EXAMINATION NOR DID HE PROVIDE TH E LATEST ADDRESSES OF THESE PARTIES. THE AO THEREFORE DISALL OWED 12.5% OF THE TOTAL BOGUS PURCHASES OF RS. RS.15626375 FROM THESE 20 PARTIES AS UNVERIFIABLE/BOGUS FOLLOWING CERTAIN JUDICIAL PRONO UNCEMENTS. THIS RESULTED IN AN ADDITION OF RS.1953297/-. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL BY OBSERVING AS UNDER: 5.12 IN THE INSTANT CASE, THE APPELLANT IS NOT IN A POSITION TO PROVE THE EXISTENCE OF THE SUPPLIERS. THERE IS ENOUGH CIRCUMS TANTIAL EVIDENCE CASTING A DOUBT ON THE NATURE OF THE TRANSACTION. I AM OF THE FIRM BELIEF THAT THE APPELLANT HAD MADE CASH PURCHASES FROM OTHER PA RTIES WHICH WERE NOT RECORDED IN THE BOOKS. THE APPELLANT TOOK ONLY BILL S FROM THESE 20 PARTIES AS ACCOMMODATION TO EXPLAIN THE PURCHASES. HOWEVER, TH E ENTIRE PURCHASE FROM THESE 20 PARTIES CANNOT BE ADDED AS BOGUS AND WHAT NEEDS TO BE TAXED IS THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTION. THE AO HAS DISALLOWED 12.5% OF THESE BOGUS PURCHASES. HOWEVER THE AO HAS OVERLOOKE D THE FACT THAT THE APPELLANT HAS ALREADY DISCLOSED A CERTAIN GP IN HIS BOOKS ON THESE VERY TRANSACTIONS DURING THE YEAR. IT IS ONLY FAIR THAT CREDIT FOR THE GP ALREADY RECORDED IN THE BOOKS ON THESE TRANSACTIONS BE GIVE N TO THE APPELLANT. THE APPELLANT STATED BEFORE ME THAT HIS GP VARIES FROM 8.73% TO 7.95%. ON A CONSPECTUS OF FACTS, I AM OF THE OPINION THAT THE D ISALLOWANCE MADE BY THE AO SHOULD BE REASONABLY RESTRICTED TO THE DIFFERENCE B ETWEEN 12.5% AND THE GP RECORDED IN THE BOOKS BY THE APPELLANT. THE AO IS T HEREFORE DIRECTED TO VERIFY THE GP IN THE BOOKS AND ALLOW CREDIT FOR THE SAME. TO CLARIFY, I DIRECT THE AO TO ESTIMATE THE DISALLOWANCE BY ADOPTING A % BEING THE DIFFERENCE OF 12.5% AND GP RECORDED IN THE BOOKS ON THE TOTAL BOGUS PURCHASES OF RS.15626375. THE DISALLOWANCE MADE BY THE AO IS RESTRICTED ACCORDING LY. GROUND NO 4 & 5 ARE PARTLY ALLOWED. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE ME. 5. BEFORE ME, WHEN THE MATTER WAS CALLED OUT NONE A PPEARED ON BEHALF OF THE ASSESSEE. I HAVE GONE THROUGH THE OR DER OF THE LD. ITA NO.4115/M/2016 MR. BIPIN MANGALJI SANGHVI 4 CIT(A) AND FOUND THAT THE LD. CIT(A) HAS PARTLY ALL OWED THE APPEAL AND HAS ALSO DIRECTED TO ALLOW THE GP WHICH WAS SHO WN IN BOOKS OF ACCOUNT. THEREFORE, IN MY OPINION THE LD. CIT(A) I S JUSTIFIED AND MY INTERFERENCE IS NOT REQUIRED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2018. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 31.01.2018. * 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.