TUSHAR S. KAMDAR, MUMBAI V. INCOME TAX OFFICER, WARD- 25(1)(5), MUMBAI

ITA 4305/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0496 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Rejection of books of accounts
• Section: 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.4305/M/2017 ASSESSMENT YEAR: 2009-10 MR. TUSHAR S. KAMDAR, 5, MAKHARIA INDL. ESTATE, OFF MAHAKALI CAVES ROAD, ANDHERI (E), MUMBAI 400 093 PAN: AACPK7699B VS. INCOME TAX OFFICER, WARD 25(1)(5), ROOM NO.611, C-12, PRATYAKSH KAR BHAWAN, BKC, BANDRA (E), MUMBAI 400 051 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI TUSHAR KAMDAR (WRITTEN SUBMISS ION) REVENUE BY : MS. N. HEMALATHA, D.R. DATE OF HEARING : 14.12.2017 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 24.03.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF P LASTIC RAW MATERIALS UNDER THE NAME AND STYLE OF M/S. RAJ INTE RNATIONAL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICE D THAT THE ASSESSEE HAS SHOWN PURCHASES OF RS.54,07,740/- FROM TWO PART IES, AS LISTED AT PARA-1 OF THE ASSESSMENT ORDER, WHICH WERE FOUND TO BE APPEARING IN THE LIST OF HAWALA DEALERS WHO WERE ENGAGED IN PROV IDING BOGUS BILLS OF PURCHASES AS FOUND DURING THE COURSE OF INVESTIG ATION CONDUCTED ITA NO.4305/M/2017 MR. TUSHAR S. KAMDAR 2 BY DIT(LNV.), MUMBAI AND THOSE PARTIES WERE FOUND T O BE BLACK LISTED BY SALES-TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT. NOTICE UNDER SECTION 148 OF THE ACT WAS ACCORDINGLY ISSUED AND A SSESSMENT WAS COMPLETED TREATING THE PURCHASE FROM THE SAID PARTY AS BOGUS AND ADDING 12.5% OF SAID BOGUS PURCHASE WHICH AMOUNTS T O RS.6,75,967/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER (HEREI NAFTER REFERRED TO AS THE AO). 4. THE ASSESSEE HAS GIVEN THE WRITTEN SUBMISSION AN D IN THE WRITTEN SUBMISSION ASSESSEE PLEADED BEFORE ME THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF PLASTIC RAW M ATERIALS UNDER THE NAME AND STYLE OF M/S. RAJ INTERNATIONAL. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS PRODUCED THE E VIDENCE LIKE BANK STATEMENT, PURCHASE BILLS, STOCK REGISTER, QUA NTITY DETAILS, RECONCILIATION OF PURCHASE WITH CORRESPONDING SALES , DELIVERY CHALLAN AND MODE OF TRANSPORT/DELIVERY IN RESPECT OF PURCHA SE FROM ABOVE PARTIES. THE AO ISSUED NOTICE UNDER SECTION 113(B) OF THE ACT TO THE PARTIES FROM WHOM THE PURCHASES HAVE BEEN MADE. TH E ASSESSEE DID NOT GIVE THE LATEST ADDRESS AND WHEREABOUTS OF PURC HASE PARTIES, BANK STATEMENT OF HAWALA PARTIES AND ASSESSEE COULD NOT PRODUCE SO CALLED SUPPLIERS FOR VERIFICATION. THE ASSESSEE WAS NOT A BLE TO PRODUCE THE PARTIES. THE ASSESSEE HAS SUBMITTED THE BILLS IN S UPPORT OF PURCHASE AND PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. ASSESSE E SUBMITTED THAT ASSESSEE HAS PRODUCED ALL THE EVIDENCES WHICH ARE NECESSARY FOR ITA NO.4305/M/2017 MR. TUSHAR S. KAMDAR 3 DECIDING THE APPEAL. THE AO HAS REJECTED THE BOOKS OF ACCOUNTS ONLY ON THE GROUND THAT ASSESSEE COULD NOT PRODUCE THE P ARTIES BUT TO MEET THE JUSTICE AO HAS ESTIMATED 12.5% OF BOGUS PURCHAS ES. THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE HAD COME UP B EFORE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF NIK UNJ EXIMP PVT. LTD. VS. CIT IN ITA NO.5604 OF 2010 DATED 17.12.201 2 WHEREIN THE JURISDICTIONAL HIGH COURT HAS DECIDED THAT MERELY N OT PRODUCING THE PURCHASERS NO ADDITION CAN BE MADE. SIMILARLY, IN THE CASE OF CIT VS. MANGALYA FABRICS (GUJARAT HC) WHEREIN THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.1.27 CRORES AND THE ASS ESSEE COULD NOT PRODUCE THE PARTY BUT ASSESSEE HAS MADE PURCHASE WH ICH WAS SUPPORTED BY BILLS, ENTRIES OF BOOKS OF ACCOUNT, PA YMENT OF CHEQUE AND QUANTITY DETAILS. THE AO DID NOT FIND INFLATIO N IN PURCHASE PRICE OR INFLATION IN CONSUMPTION, THE ADDITION BASED ONL Y ON THE GROUND THAT PARTIES ARE NOT TRACEABLE AND THE ADDITION ON ACCOUNT OF BOGUS PURCHASE CANNOT BE SUSTAINED. THE ASSESSEE ALSO RE LIED UPON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF HIRALAL CHUNNILAL JAIN VS. ITO IN ITA NO.4547/M/2014 AND VARIOUS JUDGMENTS OF TRIBUNAL. 5. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDER OF REVENUE AUTHORITIES. 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIN D THAT ASSESSEES CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEI VED FROM THE SALES TAX DEPARTMENT. THE AO RECEIVED THE INFORMAT ION THAT ASSESSEE HAD MADE PURCHASES FROM SHRINATH TRADING C O. AMOUNTING ITA NO.4305/M/2017 MR. TUSHAR S. KAMDAR 4 TO RS.35,75,520/- AND FRAOM SAILEELA TRADING AMOUNT ING TO RS.18,32,220/-. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE HAS FURNISHED THE DETAILS WITH ABOVE TWO PARTIES AND AO HAS ACCEPTED. ASSESSEE HAS SUBMITTED PURCHASE BILLS, STOCK REGIST ER, DELIVERY CHALLAN, BANK STATEMENT CONFIRMING THE PAYMENT OF S AID SUPPLIERS, LEDGER ACCOUNT, CONFIRMATIONS OF SALES AGAINST PURC HASE QUANTITY AND LEDGER ACCOUNT OF SUPPLIER. THE CASE WAS REOPENED ON THE BASIS OF THE INFORMATION THAT THESE TWO SUPPLIERS WERE DECLA RED AS HAWALA DEALERS. THE ASSESSEE WAS ASKED TO PRODUCE THESE P ARTIES. ASSESSEE WAS UNABLE TO PRODUCE THE PARTIES, THEREFORE, AO HA S APPLIED 12.5% ON THE PURCHASE FROM ABOVE PARTIES. I FIND THAT SI MILAR CASE HAD COME UP BEFORE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF NIKUNJ EXIMP PVT. LTD. VS. CIT (SUPRA) WHEREIN IT I S HELD THAT THE ASSESSEE WAS ASKED TO PRODUCE THE PARTY FROM WHOM T HE PURCHASES HAVE BEEN MADE. ASSESSEE WAS UNABLE TO PRODUCE THE PARTY. THEREFORE, THE ADDITION WAS MADE. THE HONBLE BOMB AY HIGH COURT HAS HELD THAT MERELY NOT PRODUCING THE PARTY NO ADD ITION CAN BE SUSTAINED, BECAUSE ASSESSEES PURCHASES ARE SUPPORT ED BY PURCHASE BILL, STOCK REGISTER, DELIVERY CHALLAN, COPIES OF B ANK STATEMENT CONFIRMING THE PAYMENT OF DETAILS OF SAID SUPPLIERS , LEDGER ACCOUNT AND CONFIRMATION OF SALES AGAINST PURCHASE QUANTITY . I ALSO FIND THAT SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE GUJARA T HIGH COURT IN THE CASE OF MANGALYA FABRICS WHEREIN THE ASSESSEE H AS MADE PURCHASES TO THE TUNE OF RS.1.27 CRORES AND ASSESSE E WAS NOT ABLE TO PRODUCE THE PARTY. THE HONBLE GUJARAT HIGH COURT HAS HELD THAT NO ADDITION CAN BE MADE MERELY BECAUSE NOT PRODUCING T HE PARTY. WHEN ITA NO.4305/M/2017 MR. TUSHAR S. KAMDAR 5 THE PURCHASES ARE SUPPORTED BY BILLS, ENTRY OF BOOK S OF ACCOUNTS, PAYMENT BY CHEQUE AND QUANTITY DETAILS, NO ADDITION CAN BE MADE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF HONBLE BOMBAY HIGH COURT AND HONBLE GUJARAT HIGH COURT, I DELETE THE ADDITION. 7. IN THE RESULT, APPEAL IS ALLOWED. 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.