SHRI NIMESH JABARMAL CHANDANI, MUMBAI V. INCOME TAX OFFICER 19(2)(4), MUMBAI

ITA 4261/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1214 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 20-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKTHAR H ANSARI
• Assessee Lawyers: PRAFUL L VORA
• Keywords: Reopening of assessment; Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 4261 /MUM/ 2018 ( ASSESSMENT YEAR: 2011 - 12 ) SHRI NIMESH JABARMAL CHANDANI GROUND FLOOR, SHOP NO.91 - 95 KIKA STREET, GULALWADI MUMBAI 400 004 VS. INCOME TAX OFFICER 19 (2)(4) ROOM NO.210, MATRU MANDIR, TARDEO MUMBAI 400 007 PAN/GIR NO. ADCPJ2850Q (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI PRAFUL L VORA REVENUE BY SHRI AKTHAR H ANSARI DATE OF HEARING 07 / 11/ 2019 DATE OF PRONOUNCEMENT 28 / 11 /2019 / O R D E R PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 53, MUMBAI DATED 16/04/2018 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961. 2. IN THIS APPEAL AS SESSEE IS AGGRIEVED FOR REOPENING OF ASSESSMENT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE AO RECEIVED INFORMATION FROM INVESTIGATION WING ABOUT VITAL INFORMATION RECEIVED FROM SALES TAX DEPARTMENT REGARDING PARTI ES INDULGING IN ISSUING BOGUS BILLS WITHOUT SUPPLY OF ANY MATERIAL. THE ASSESSEE WAS BENEFICIARY OF SEVEN SUCH PARTIES FROM WHOM PURCHASES OF 2 ITA NO. 4261/MUM/2018 SHRI NIMESH JABARMAL CHANDANI RS.65,54,206/ - WAS CLAIMED. AFTER REOPENING THE ASSESSMENT, AO MADE ENQUIRIES BY ISSUING NOTICES U/S.133(6). HOWEV ER, NOTICES COULD NOT BE SERVED AND WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES WITH REMARKS NOT KNOWN OR NO SUCH ADDRESSES, LEFT ETC . A S THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS , AO ESTIMATED PROFIT AT 12.5% ON SUCH BOGUS PURCHASES A ND ADDED THE SAME IN ASSESSEES INCOME AFTER RELYING ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHETH 356 ITR 451. 4. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO AFTER RELYING ON THE DECISION OF GUJARAT HIGH COURT IN THE C ASE OF SIMIT P SHETH. ASSESSEE IS IN FURTHER APPEAL BEFORE HIM. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO DELIBERATED ON THE VARIOUS JUDICIAL PRONOUNCEMENTS CITED BY LD. AR DURING THE COURSE OF HEARING BEFORE US. I FOUND THAT CIT(A) APPLIED THE JUDICIAL PRONOUNCEMENTS OF GUJARAT HIGH COURT IN CASE OF SIMIT P SHETH WITHOUT CONSIDERING THE PERCENTAGE OF GROSS PROFIT ADOPTED BY THE ASSESSEE, IF IT IS CORRECT IN THE LINE OF BUSINESS I.E. DEALER IN FERR OUS AND NON - FERROUS ITEMS. IN THE CASE OF SIMITH P SHETH, GUJARAT HIGH COURT HAS OBSERVED THAT VAT WAS LEVIED AT 10% , EXTRA PROFIT MARGIN OF 2.5% WAS ESTIMATED. THUS, TOTAL ADDITION 3 ITA NO. 4261/MUM/2018 SHRI NIMESH JABARMAL CHANDANI OF 12.5% WAS MADE. HOWEVER, IN THE INSTANT CASE, IT APPEARS THAT VAT IS LEVIED @4%. THUS, IT APPEARS THAT CIT(A) HAS NOT PROPERLY APPRECIATED FACTS OF THE INSTANT CASE WHILE APPLYING JUDICIAL PRONOUNCEMENTS IN CASE OF SIMIT P. SHETH. IN THE SUBSTANTIAL INTEREST OF JUSTICE, I RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) FOR DECI DING AFRESH AFTER CONSIDERING THE ACTUAL RATE OF VAT TO BE LEVIED ON THE ASSESSEE AND THEREAFTER, ESTIMATE PROFIT MARGIN FOR SUCH BOGUS PURCHASES. I DIRECT ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 / 11 / 2019. SD/ - (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 28 / 11 /2019 KARUNA, SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//