KAVIS FASHIONS PVT. LTD., MUMBAI V. DCIT - 12(3)(1), MUMBAI

ITA 4176/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2406 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4176 / MUM/ 201 7 ( / ASSESSMENT YEAR: 20 09 - 10 ) KAVIS FASHIONS PVT. LTD. 20, 2 ND FLOOR, SUKHSHANTI, 19, DR. G. DESHMUKH MARG, PEDDER ROAD, MUMBAI - 400026 . / VS. DCIT 12(3)(1) AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAACK 9496 R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 29 . 10 .201 8 / DATE OF PRONOUNCEMENT : 12. 11. 2018 / O R D E R PER A MARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 02 .0 3 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 20 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 1 0 . 2 . THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS: - (I) ON THE FACTS & CIRCUMSTANCES OF THE CASE AND THE LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.19,99,185/ - MADE BY THE LD. AO ON ACCOUNT OF UNVERIFIABLE PURCHASE. (II) THE APPELLANT CRAVES LEAV E TO ADD, AMEND, ALTER OR DELETE ANY OF THE GROUNDS OF APPEAL. REVENUE BY : SHRI MANOJ KUMAR SINGH (DR) ASSESSEE BY: SHRI S. K. KEDIA (AR) ITA. NO. 4176/ M/201 7 A.Y. 2009 - 10 2 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 26 .09.20 09 DECLARING TOTAL INCOME TO THE TUNE OF RS.2,74,61,170 / - . THE ASSESSMENT OF THE ASSESSEE WAS REOPEN ED U/ 148 OF THE ACT ON THE FOLLOWING REASONS: - THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 26.09.2009, DECLARING TOTAL INCOME AT RS.2,74,61,170/ - AND THE SAME WAS ACCEPTED U/S 143(1) OF THE I.T. ACT, 28.12.2010. IN THIS CASE INFO RMATION HAS BEEN RECEIVED FROM THE INVESTIGATION, WING, MUMBAI, OF THE INCOME TAX DEPARTMENT, THROUGH THE CIT - 9, MUMBAI REGARDING THE HAWALA TRANSACTION ENTERED INTO BY VARIOUS PARTIES BY WAY OF ISSUING BOGUS PURCHASES BILLS, WITHOUT ACTUAL DELIVERY OF GOO DS OR MATERIALS. AS PER THE INFORMATION, THE ASSESSEE IS ONE OF THE BENEFICIARIES OF HAWALA TRANSACTIONS. DURING THE F.Y. 2008 - 09 RELEVANT TO A.Y. 2009 - 10 THE ASSESSEE COMPANY HAS SHOWN BOGUS PURCHASE FROM VARIOUS PARTIES. THE DETAILS OF THE SAME ARE AS UN DER: S.NO. NAME OF THE PARTY AMOUNT 1 TORAL ENTERPRISES 11,15,304 2 V3 ENTERPRISES 10,79,999 3 SHUBHAM ENTERPRISES 17,80,560 4 SHREE SAI TRADING CO. 26,89,4355 5 NIDDHISH IMPEX PVT. LTD. 26,07,642 6 VAKHARIYA ENTERPRISES 5,78,509 7 SKAND INDUSTRIES 25,13,357 8 DEEP ENTERPRISES 36,27,679 TOTAL 1,59,93,485/ - ITA. NO. 4176/ M/201 7 A.Y. 2009 - 10 3 THEREAFTER, THE NOTICE U/S 147/ 148 OF THE ACT WAS GIVEN AND THE ASSESSEE FILED ITS RETURN OF INCOME WHICH HE HAD ALREADY BEEN FILED EARLIER ON 26.09.2009. THEREAFTER, THE NOTICE S U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF LEATHER FOOTWEAR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWED THE INCOME UNDER THE HEAD INCOME FROM PROFIT/GAINS OF BUSINESS/ PROFESSION AND INCOME FROM OTHER SOURCES. NOTICE U/S 133(6) OF THE ACT DATED 02.02.2015 WAS ISSUED TO THE EIGHT PARTIES FROM WHOM THE ASSESSEE HAD ALLEGED TO MADE BOGUS PURCHASE. F INDING NO JUSTIFIABLE REPLY ON BEHALF OF THE ASSE SSEE , TH E AO RAISED THE ADDITION TO THE TUNE OF RS.19,99,185/ - WHICH WAS THE 12.5% OF THE TOTAL BOGUS PURCHASE TO THE TUNE OF RS.1,59,93,485/ - . FEELING AGGRIEVED , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ADDITION, THEREFORE, THE ASS ESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT NO SUFFICIENT TIME WAS GIVEN FOR EXPLANATION BEING THE NOTICE WAS GIVEN ON 02.02.2015 AND THE ASSESSMENT WAS COMPLETED ON 09.02.2015, THEREFORE, IN THE SAID CIRCUMSTANCES, ASSESSING THE ESTIMATED INCOME @ 12.5% OF THE BOGUS PURCHASE IS WRONG AGAINST LAW AND FACT. IT IS ALSO ARGUED THAT THE GROSS PROFIT RAT IO FOR THE A.Y. 2008 - 09 @ 32.36% AND GROSS PROFIT RATIO FOR THE A.Y. 2009 - 10 @ 38.72% WERE NOT CONSIDERED WHILE ASSESSING THE ESTIMATE D PROFIT OF BOGUS PURCHASE, THEREFORE, THE FINDING OF THE CIT(A) IS LIABLE TO BE SET ASIDE. THE ASSESSEE ALSO PLACED RELIA NCE UPON THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 3202/M/2014 DATED 29.10.2015. THE LD. REPRESENTATIVE OF THE ITA. NO. 4176/ M/201 7 A.Y. 2009 - 10 4 DEPARTMENT HAS STRONGLY RELIED UPON THE DECISION OF THE HONBLE CIT(A) IN QUESTION. THE CAS E OF THE ASSESSEE WAS REO PENED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, MUMBAI REGARDING BOGUS PURCHASE OF EIGHT PARTIES TO THE TUNE OF RS.1,59,93,485/ - . UNDOUBTEDLY, THE NOTICE U/S 133(6) OF THE ACT DATED 02.02.2015 WAS ISSUED AND AFTER THE ISSUANCE O F NOTICE , THE ASSESSMENT WAS COMPLETED ON 09.02.2015 WHICH SEEMS THAT THE ASSESSEE NOWHERE GOT SUFFICIENT TIME TO REPRESENT HIS CASE. THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF DECISION OF FOLLOWING CASES: - (I) CIT VS. BHOLANATH POLY FAB LTD. (2013) 355 ITR 290 (GUJ). (HC) (II) CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) (III) CIT VS. SANJAY OIL CAKE INDUSTRIES (2009) 316 ITR 274 (GUJ) (IV) ITO VS. PERMANAND (2007) 107 TTJ 395 (JD) (V) SHRI MADHUKANT B. GANDHI VS. ITO ITA NO. 1950 /M/2009 BENCH B DT. 23.02.2010 (AY 2005 - 06) (MUM)(TRIB) (VI) SANJEEV WOOLEN MILLS VS. CIT (2005) 279 ITR 434) (SC) 5 . THE SALE IS NOT DISPUTED BY THE REVENUE. THE CIT(A) HAS DECIDED THE MATTER OF CONTNROVERSY BY RELYING UPON THE DECISION IN THE CASE CITE D AS CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) AND UPHELD THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASE. THE GROSS PROFIT OF THE ASSESSEE IN THE A.Y. 2008 - 09 WAS @ 32.36% AND GROSS PROFIT OF THE ASSESSEE IN THE A. Y . 2009 - 10 WAS @ 38.72% . T HE SAME WAS NOT CONSIDERED AT THE TIME OF THE DECISION DELIVERED BY CIT(A). NO DOUBT THE PROFIT RATIO IN CONNECTION WITH THE BOGUS PURCHASE IS LIABLE TO BE CONSIDERED BY TAKING THE EARLIER RATIO OF PROFIT TO CURTAIL THE LEAKAGE OF REVENUE. IN THIS REGARD, THE FINDING HAS BEEN GIVEN BY THE GUJRAT HIGH COURT IN CASE OF CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ). TAKING INTO ACCOUNT, ALL THE FACTS AND ITA. NO. 4176/ M/201 7 A.Y. 2009 - 10 5 CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE END OF INTEREST OF JUSTICE WILL MEET IF THE PROFIT RATIO BE E STIMATED @ 5% OF THE BOGUS PURCHASE. ACCORDINGLY, WE ALLOWED THE CLAIM OF THE ASSESSEE. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12. 11. 2018 . SD/ - SD/ - ( B. R.BASKARAN ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 12. 11. 2018 VIJAY / 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// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI