PRAVIN THANMAL SHAH HUF, MUMBAI V. ASST CIT RG 13(1), MUMBAI

ITA 4162/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9110 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Bogus purchase
• Section: 234B; 133(6)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 4162/MUM/2017 ( / ASSESSMENT YEAR: 2009 - 10 ) PRAVIN THANMAL SHAH HUF 202, SHREENATH KRUPA, 5 TH CARTER ROAD, BORIVALI (E), MUMBAI - 400 066 / VS. ASST. CIT(A), RANGE - 32(2), C - 11, ROOM NO. 308, PRATYAKSHA KAR BHAVAN, BANDRA KURLA C OMPLEX, BANDRA (E), MUMBAI - 400 051 ./ ./ PAN/GIR NO. AAGHP 2293 A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI JITENDRA SINGH / RESPONDENT BY : MS. N. HEMALATHA / DATE OF HEARING : 10.10.2017 / DATE OF PRONOUNCEMENT : 12 .10.2017 / O R D E R PER SHAMIM YAHYA , A. M.: THIS IS AN A PPEAL BY THE ASSESSEE WHEREIN REOPENING AS WELL AS 100% ADDITION FOR THE BOGUS PURCHASES HAS BEEN CHALLENGED. 2. THE ASSESSING OF FICER IN THIS CASE HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.9,61,350/ - FOR TWO PARTIES, AS UNDER: TIN NAME OF THE PARTY AMOUNT (IN RS.) 27650556128V SHUBHLABH TRADING CO. 2,38,844 27890361220V AAYUSHI ENTERPRISES 7,22,506 TO TAL 9,61,350 2 ITA NO. 4162/MUM/2017 (A.Y. 2009 - 10) PRAVIN THANMAL SHAH HUF VS. ASST. CIT(A) 3. UP ON THE ASSESSEES APPEAL , THE LD. CIT(A) GRANTED PART RELIEF AS UNDER: FROM THE FACTS OF THE CASE, IT IS CLEAR THAT ONE OF THE SUPPLIER NAMELY M/S . AYUSHI ENTERPRISES HAS CONFIRMED IN WRITING THAT IT HAD NOT MADE ANY TRANSACTION WITH T HE APPELLANT DURING THE F.Y. 2008 - 09 RELEVANT TO THE IMPUGNED A.Y. 2009 - 10. IN THE WRITTEN SUBMISSION, NOTHING HAS BEEN STATED TO COUN TER THE DIRECT EVIDENCE COLLECTED BY THE AO BY HIS OWN ENQUIRY CON DUCTED U/S. 133(6) OF THE ACT. THUS, AS FAR AS THE TRANS ACTION AMOUNTING TO RS 2,506/ - FROM M/S . AYUSHI ENTERPRISES IS CONCERNED IT IS HELD THAT THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASES. THE ADDITION OF RS 7,22,506/ - IS ACCORDINGLY CONFIRMED. AS FAR AS THE TRANSACTION FRO M M/S SHUBHLABH TRADING CO. IS CONCERNED, I AM IN AGREEMENT WITH THE APPELLANT THAT IF THE APPELLANT HA S FULFILLED HIS ONUS OF MAKING TH E PAYMENTS BY BANKING CHANNELS AND HAS SUPPLIED THE ADDRESS OF THE SELLER 1 , THEN IT CANNOT BE PRESUMED THAT THE SELLER W AS BOGUS SIMPLY BECAUSE THE NAMES OF SELLER WAS MENTIONED IN THE LIST OF HAWALA OPERATORS. THEREFORE, AFTER CONSIDERING THE TOTALITY OF FACTS I AM OF AN OPINION THAT IT IS THE PROFIT ELEMENT ON THE TOTAL COMPONENT IN DISPUTE WHICH NEEDS TO BE ADDED TO THE INCOME OF THE APPELLANT. THE APPELLANT HAS SHOWN GROSS PROFIT RATE OF 8.7%. THE AMOUNT OF TRANSACTION WITH M/S SHUBHLABH ENTERPRISES IS RS 2,38,844/ - . THUS 8.7% OF RS. 2,38 / 844/ - WHICH IS RS. 20,779/ - IS TAKEN AS PROFIT OF THE APPELLANT ON PURCHASES THAT A RE NOT FULLY AND PROPERLY EXPLAINED. A DDITION OF RS. 7,43,285/ - (722506 + 20779) IS ACCORDINGLY CONFIRMED OUT OF AN ADDITION OF RS. 9,61,350 / - AND THE BALANCE IS DELETED. GROUNDS OF APPEAL NO. 3 IS THEREFORE PARTLY ALLOWED. THE GROUNDS OF APPEAL NO. 4 RELAT ES TO CHARRING OF INTER E ST U/S. 234B & 234C AND IS THEREFORE CONSEQUENTIAL IN NATURE. THE A.O. IS DIRECTED TO RECOMPUTED INTEREST AFTER GIVING APPROPRIATE APPEAL EFFECT OF THIS ORDER. 4. AGAINST THE ABOVE ORDER , THE ASSESSEE IN APPEAL BEFORE THE ITAT. 5 . I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED . I T IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSI BLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ E XIMP E NTERPRISES (IN W RIT P ETITION N O . 2860, ORDER D ATED 18.6.2014). IN THIS CASE , THE HONBLE HIGH COURT HAS UPHELD 100 % ALL OWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER , THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE 3 ITA NO. 4162/MUM/2017 (A.Y. 2009 - 10) PRAVIN THANMAL SHAH HUF VS. ASST. CIT(A) PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NO N - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION , IN OUR CONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. ACCORDINGLY, I HOLD THAT THE DISA LLOWANCE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASES. 6. THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THE ABOVE PROPOSITION AND SUBMITTED THAT HE SHALL NOT BE PRESSING FOR THE GROUND RELATING TO CHALLENGE OF THE REOPENING. 7 . IN THE RESULT , THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 12.10.2017 . . ./ ROSHANI , S R. PS / 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 F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI