INCOME TAX OFFICER-23(3)(4), MUMBAI V. SORABH DEVRAJ CHAGTI, HUF, MUMBAI

ITA 4459/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0830 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bogus purchase
• Section: 69C; 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.4459/MUM/2017 ASSESSMENT YEAR : 2011-12 ITO 23(3)(4) MUMBAI VS. SORABH DEVRAJ CHAGTI, HUF, FLAT NO.3, HIGHLAND APARTMENT, 2 ND FLOOR, PALI HILL, BANDRA (W), MUMBAI 400 050. PAN AAQHS5720R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHAUDHARY ARUN KUMAR SINGH RESPONDENT BY : SHRI DHARMIL JHAVERI DATE OF HEARING : 15 . 11 .201 8 DATE OF PRONOUNCEMENT : 30 .11 .201 8 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER THIS APPEAL BY THE DEPARTMENT ARISES OUT OF THE OR DER, DATED 29.03.2017, OF LEARNED CIT(A)-34, MUMBAI FOR ASSESS MENT YEAR 2011-12. THE ISSUE IN DISPUTE IN THE PRESENT APPEAL IS CONFI NED TO ESTIMATION OF PROFIT @12.5% OF THE BOGUS PURCHASES. 2. BRIEFLY, FACTS ARE, THE ASSESSEE - A HUF, IS ENG AGED IN THE BUSINESS OF TRADING IN IRON AND STEEL. FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCOME ON 24.02.2012, DECLARING TOTAL INCOME AT ` 3,90,896/-. THE RETURN OF INCOME FILED BY THE ASS ESSEE WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF I NFORMATION RECEIVED FROM ITA NO.4459/MUM/2017 SORABH DEVRAJ CHAGTI, HUF 2 DGIT (INV), MUMBAI, AS WELL AS SALES TAX DEPARTMENT THAT PURCHASES WORTH ` 3,77,18,219/- CLAIMED TO HAVE BEEN MADE FROM CERTA IN PARTIES ARE NOT GENUINE, THE ASSESSING OFFICER RE-OPENED THE ASSESS MENT U/S. 147 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO, FOR ASCERTAINING THE GENUINENESS OF THE AFORESAID PURCHASES SHOWN BY THE ASSESSEE, CONDUCTED INDEPENDENT INQUIRY BY ISSUING NOTICES U/S. 133(6) OF THE ACT. AS OBSERVED BY THE ASSESSING OFFICER, ALL SUCH NOTICES WERE RETUNE D BACK UN-SERVED BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN. TH EREFORE, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUI NENESS OF THE PURCHASES MADE. AS ALLEGED BY THE ASSESSING OFFICER, THE ASS ESSEE COULD NOT PROVE THE DELIVERY OF GOODS BY FURNISHING TRANSPORT RECEIPTS OR LORRY RECEIPTS OR OCTROI RECEIPTS. THUS, THE ASSESSING OFFICER CONCLUDED TH AT THE PURCHASES SHOWN BY THE ASSESSEE ARE NOT GENUINE. HOWEVER, RELYING UPO N THE DECISION OF THE TRIBUNAL IN VIJAY PROTEIN LTD. (1996) 58 ITD 428 (A HD.), THE ASSESSING OFFICER DISALLOWED 25% OUT OF TOTAL PURCHASES OF ` 3,77,18,219/-, WHICH WORKED OUT TO ` 94,29,555/- AND ADDED BACK TO THE INCOME OF THE AS SESSEE U/S 69C OF THE ACT. BEING AGGRIEVED OF SUCH ADDITION, ASSESSE E PREFERRED APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) UPON CONSID ERING THE FACT THAT THE ASSESSEE HAS RECONCILED THE PURCHASES WITH CORRESPO NDING SALES AND ALSO THE FACT THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQU ES, REDUCED THE ADDITION TO 12.5% OF THE ALLEGED BOGUS PURCHASES. WHILE DOING SO, HE RELIED ITA NO.4459/MUM/2017 SORABH DEVRAJ CHAGTI, HUF 3 UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P SHETH (2013) 38 TAXMANN.COM 385. 3. THE LEARNED DR RELIED UPON THE OBSERVATIONS OF T HE ASSESSING OFFICER WHEREAS, THE LEARNED AR STRONGLY RELYING UPON THE O BSERVATIONS OF THE CIT(A) SUBMITTED THAT CONSIDERING THE PROFIT RATE GENERALL Y RELATABLE TO THIS LINE OF BUSINESS, ESTIMATION OF PROFIT @12.5% SHOULD NOT BE INTERFERED. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THOUGH, THE ASSESSEE WAS UNABLE TO CONCLUSIVELY PROVE THE GENUINENESS OF PUR CHASES MADE FROM THE DECLARED SOURCE, HOWEVER IT IS EVIDENT, THE ASSESSE E WAS ABLE TO CO-RELATE THE PURCHASES WITH CORRESPONDING SALES. FOR THAT REASO N ALONE, THE ASSESSING OFFICER INSTEAD OF MAKING 100% ADDITION OF ALLEGED BOGUS PURCHASES HAS RESTRICTED ADDITION TO 25% OF ALLEGED BOGUS PURCHAS ES. THE LEARNED CIT(A) RELYING UPON THE DECISION OF OF HONBLE GUJARAT HIG H COURT IN THE CASE OF CIT VS. SIMIT P SHETH (SUPRA), HAS REDUCED THE ADDITION TO 12.5% OF THE ALLEGED BOGUS PURCHASES. IN OUR VIEW, THE AFORESAID DECISI ON OF THE LEARNED CIT(A) BEING IN LINE WITH THE RATIO LAID DOWN IN SEVERAL J UDICIAL PRECEDENTS, INCLUDING THE VIEW EXPRESSED BY DIFFERENT BENCHES OF THE TRIB UNAL, NEEDS NO INTERFERENCE. ACCORDINGLY, WE UPHOLD THE DECISION OF THE LEARNED CIT(A) ON THE ISSUE AND DISMISS THE GROUNDS RAISED. ITA NO.4459/MUM/2017 SORABH DEVRAJ CHAGTI, HUF 4 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0 TH NOVEMBER, 2018. SD/- SD/- (RAMIT KOCHAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED : 30 TH NOVEMBER, 2018. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI