NIRANJANKUMAR RAJMAL MEHTA, MUMBAI V. INCOME TAX OFFICER 19(2)(4), MUMBAI

ITA 4176/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7840 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPAIR
• Keywords: Accommodation entries
• Section: 234B; 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL SMC BENCH MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4176/MUM/2018 (ASSESSMENT YEAR 2009-10 ) SHRI NIRANJANKUMAR RAJMAL MEHTA, (PROP. M/S. INDO SAN STEELS 70, C.P. TANK ROAD, 1 ST FLOOR, MUMBAI-400004. PAN: AANPM6016B VS. ITO-19(2)(4) ROOM NO. 217, 2 ND FLOOR, MATRU MANDIR, TARDEO, MUMBAI-400007. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI S.K. BEPAIR (SR. DR) DATE OF HEARING : 01.8.2018 DATE OF PRONOUNCEMENT : 10.08.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-30, MUMBAI [LD. CIT(A)] DATED 23.03.2018 FOR ASSESSMENT YEARS 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. AO ERRED IN RE-OPENING THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT, 1961 AS THE PRESCRIBED CONDITIONS THEREIN ARE NOT SATISFIED. 2.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ID. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 7,74,060/- MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF POSSIBLE PROFIT ELEM ENT @ 12.5% EMBEDDED IN PURCHASES MADE THROUGH ALLEGED NON-GENUINE PARTIES ON THE BASIS OF INFORMATION OF THE SALES TAX DEPARTMENT ABOUT SUSPICIOUS DEALER S. B) THE ID. CIT(A) FAILED TO APPRECIATE THAT :- ITA NO. 4176 MUM 2018-SHRI NIRANJANKUMAR RAJMAL MEHTA 2 I) ALL THE PURCHASES ARE GENUINE BEYOND DOUBT AND S UPPORTED BY SUFFICIENT MATERIALS; II) ALL THE GOODS PURCHASED FROM THESE PARTIES HAVE BEEN BACKED BY CORRESPONDING SALES WHICH ARE ACCEPTED TO BE GENUIN E; III). THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELL ANT ARE CORRECT AND COMPLETE IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULAR LY AND CONSISTENTLY FOLLOWED BY THE APPELLANT. IV) THE GROSS PROFIT RATIO SHOWN BY THE APPELLANT I S QUITE REASONABLE; V) NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO THA T MONEY HAS EXCHANGED THE HANDS IN LIEU OF PAYMENT MADE FOR THESE PURCHAS ES BY ACCOUNT PAYEE CHEQUE; AND . VI) THE AO HAD NEITHER PROVIDED COPY OF MATERIALS A ND STATEMENTS RELIED UPON BY HIM NOR ALLOWED ANY OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE THOSE PARTIES WHO HAVE BEEN ALLEGED TO HAVE PROVIDED THE ACCOMMODATION ENTRIES OF SUCH PURCHASES. C) IN REACHING TO THE CONCLUSION AND CONFIRMING SUC H ADDITION MADE BY THE AO, THE LD. AO OMITTED TO CONSIDER RELEVANT FACTORS, CO NSIDERATIONS, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. D) WITHOUT PREJUDICE, THE RATE OR PERCENTAGE OF PRO FIT ELEMENT EMBEDDED IN SUCH PURCHASES AS FIXED BY THE AO AND CONFIRMED BY THE C IT(A) IS EXCESSIVE AND UNREASONABLE ON THE FACTS OF THE CASE. 3. THE AO ERRED IN CHARGING INTEREST U/S. 234A AND 234B OF THE INCOME TAX ACT, 1961. 4. THE AO ERRED IN INITIATING THE PENALTY PROCEEDIN GS 271(1)(C) OF THE INCOME TAX ACT, 1961. 5. THE GROUND NOS. 1, 3 AND 4 ARE NOT RAISED BEFORE THE CIT(A) AND YOUR APPELLANT PRAYS THAT THE GROUND BE ADMITTED IN THE FAIRNESS O F LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRADER IN FERROUS AND NON- FERROUS METALS, FILED ITS RETURN OF INCOME FOR ASSE SSMENT YEAR 2009-10 ON 28.09.2009 DECLARING TOTAL INCOME OF RS. 2,72,190/- . THE RETURN WAS ITA NO. 4176 MUM 2018-SHRI NIRANJANKUMAR RAJMAL MEHTA 3 PROCESSED UNDER SECTION 143(1). SUBSEQUENTLY, THE R ETURN OF INCOME WAS RE- OPENED UNDER SECTION 147 BY ISSUING NOTICE UNDER SE CTION 148 DATED 28.02.2014. THE ASSESSMENT WAS RE-OPENED ON THE BAS IS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION), MUMBAI ABOUT RE CEIPT OF VITAL INFORMATION FROM SALES TAX THAT CERTAIN DEALERS ARE INDULGING IN PRACTICE OF PROVIDING ACCOMMODATION ENTRIES WITHOUT DELIVERY OF GOODS. A LIST OF SUCH PARTIES WAS FORWARDED BY DGIT (INVESTIGATION), MUMB AI; THE NAME OF ASSESSEE WAS ALSO ONE OF THE BENEFICIARIES WHO HAVE ALLEGEDLY RECEIVED BOGUS BILLS. DURING THE RE-ASSESSMENT PROCEEDING, T HE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES SHOWN FROM EIGHT PARTIES AGGREGATING TO RS. 61,92,483/-. IN RESPONSE TO THE NOTICE, THE ASSESSE E FURNISHED THE COPY OF LEDGER ACCOUNT ALONG WITH PURCHASE INVOICES, COPY O F BANK STATEMENT, CHART SHOWING THE DETAILS OF PURCHASES ALONG WITH NAME OF PARTIES AND CORRESPONDING SALES. THE ASSESSEE ALSO SUBMITTED TH AT THERE IS CORRESPONDING SALES, ALL THE SALES OF THE ASSESSEE ARE FULLY VOUCHED AND PROVED THAT SUCH SALE CANNOT BE WITHOUT PURCHASES. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER MADE THE ADDITION @ 12.5% OF TOTAL PURCHASES SHOWN FROM SUCH EIGHT PARTIES. THE ASSESSING OFFICER WORKED OUT THE DISAL LOWANCE OF RS. 7,74,060/-. ON APPEAL BEFORE THE LD. CIT(A), THE RE -OPENING AS WELL AS THE ADDITION @ 12.5% WAS SUSTAINED. FURTHER AGGRIEVED B Y THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL B EFORE US. ITA NO. 4176 MUM 2018-SHRI NIRANJANKUMAR RAJMAL MEHTA 4 3. NONE APPEARED ON BEHALF OF ASSESSEE. THE NOTICE SEN T THROUGH RPAD IS RETURNED BACK WITH THE REMARK OF POSTAL AUTHORITIES NOT KNOWN. CONSIDERING THE FACT, WE LEFT NO OPTION EXCEPT TO D ECIDE AFTER HEARING THE LD. DR ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 4. THE DR FOR THE REVENUE SUPPORTED THE ORDER OF CIT(A ). THE DR FURTHER SUBMITS THAT THE SALES TAX DEPARTMENT, GOVT. OF MAH ARASHTRA AND THE INVESTIGATION WING OF INCOME TAX DEPARTMENT MADE FU LL-FLEDGED ENQUIRY WITH REGARD TO HAWALA DEALERS WHO WERE INDULGING IN PROVIDING ACCOMMODATION ENTERITIS WITHOUT DELIVERY OF GOODS. THE ASSESSEE HAS SHOWN PURCHASES FROM SUCH PARTIES WHOSE NAMES APPEA RED IN THE LIST OF HAWALA DEALERS. THE ASSESSEE MERELY OBTAINED ACCOMM ODATION BILLS ONLY TO INFLATE EXPENSES AND BRING OUT THE PROFITABILITY IN ORDER TO AVOID TAX. THE LD. DR FURTHER SUBMITS THAT AO HAS ALREADY GIVEN SUFFIC IENT RELIEF TO THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO.1 RELAT ES TO THE RE-OPENING OF THE ASSESSMENT. WE HAVE NOTED THAT THE ASSESSING OF FICER HAS MADE THE RE- OPENING ON THE BASIS OF INFORMATION RECEIVED FROM D GIT (INVESTIGATION), MUMBAI ABOUT THE PRACTICE OF HAWALA DEALERS IN PROV IDING ACCOMMODATION ENTRIES WITHOUT DELIVERY OF GOODS. THE NAME OF ASSE SSEE WAS APPEARED IN THE LIST OF THE BENEFICIARIES OF SUCH HAWALA/BOGUS BILLS. THEREFORE, THE ASSESSING OFFICER MADE THE RE-OPENING OF THE ASSESS MENT. IN OUR VIEW, THE ITA NO. 4176 MUM 2018-SHRI NIRANJANKUMAR RAJMAL MEHTA 5 INFORMATION IS SUFFICIENT FOR MAKING BELIEF FOR RE- OPENING OF THE ASSESSMENT THAT HE INCOME CHARGEABLE TAX HAS ESCAPE FROM THE A SSESSMENT. THE ASSESSEE HAS NEITHER COME FORWARD NOR EXPLAINED AS TO HOW TH E RE-OPENING IS INVALID. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF LOWER AUTHORITY, WHICH WE CONFIRMED. HENCE, GROUND NO.1 O F THIS APPEAL IS DISMISSED. 6. GROUND NO.2 RELATES TO SUSTAINING THE ADDITION @ 12 .5% OF THE PURCHASES. WE HAVE NOTED THAT DURING THE RE-ASSESSMENT PROCEED ING, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTANTIATE THE PURC HASES. THE ASSESSEE FURNISHED ITS DETAILED REPLY. THE ASSESSEE IN ALTER NATIVE AGREED FOR ESTIMATING THE GROSS PROFIT AT REASONABLE RATE. THE ASSESSING OFFICER AFTER CONSIDERING THE ALTERNATIVE SUBMISSION FOR GROSS PR OFIT ESTIMATION MADE THE DISALLOWANCE @ 12.5% OF NON-GENUINE/DISPUTED PURCHA SES OF RS. 61,92,483/-. THE LD. CIT(A) ON THE BASIS OF DECISIO N OF HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS. SIMIT P. SHETH 356 I TR 451 (GUJ.) CONFIRMED THE ADDITION CONSIDERING THE PROFIT ELEME NT EMBEDDED IN SUCH TYPE OF PURCHASES. IN OUR VIEW, THE LOWER AUTHORITY HAS TAKEN A REASONABLE VIEW ON THE BASIS OF PECULIARITY OF THE FACT OF THE CASE; THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF LO WER AUTHORITY. HENCE, GROUND NO.2 IS DISMISSED. 7. GROUND NO.3 RELATES TO CHARTING OF INTEREST UNDER S ECTION 234A AND 234B ARE CONSEQUENTIAL AND NEEDS NO SPECIFIC ADJUDICATIO N. GROUND NO.4 RELATES ITA NO. 4176 MUM 2018-SHRI NIRANJANKUMAR RAJMAL MEHTA 6 TO INITIATION OF PENALTY UNDER SECTION 271(1)(C). T HIS GROUND OF APPEAL IS PREMATURE AND NEED NO ADJUDICATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 10.08.2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE:10.08.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI