ITO 21 (3)(1), Mumbai V. RAMESH B MUSALE, Mumbai

ITA 4465/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8142 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4465/MUM/2019 ASSESSMENT YEAR: 2010 - 11 ITO - 21(3)(1), ROOM NO. 207, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400012. VS. RAMESH B MUSALE, ROOM NO. - 382, GROUND FLOOR, ADARSH NAGAR, BUILDING NO. 23, PRABHADEVI, MUMBAI - 400025. PAN NO. AJTPM 0744 R APPELLANT RESPONDENT REVENUE BY : MS. SMITA VERMA, DR ASSESSEE BY : NONE DATE OF HEARING : 11/01/2021 DATE OF PRONOUNCEMENT : 18/01/2021 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 11.01.2021 , NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPR ESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATE . THEREFORE, CONSIDERING THE NON - COMPLIANCE BY THE ASSESSEE, WE ITA NO. 4465/M/2019 RAMESH B MUSALE 2 ARE PROCEEDING TO DISPOSE OFF THIS APPEAL AFTER EXAMINING THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE (DR). 2. THE GROUNDS OF APPEAL FILED BY THE R EVENUE READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) HAS ERRED IN UPHOLDING ONLY 30% ADDITION OF RS.2, 6 6,147/ - ON THE BOGUS PURCHASES IN THE CASE OF PURCHASE FROM GOODL UCK IMPEX AND SURAJ STEEL AS AGAINST THE AO'S STAND OF DISALLOWING 100% OF THE BOGUS PURCHASES, IGNORING THE FACT THAT THE ACTION OF THE ASSESSING OFFICER WAS ONLY BASED ON CREDIBLE INFORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX DEPARTMENT, THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FAILED TO PROVE THE GENUINENESS OFTHE PURCHASE TRANSACTIONS . 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD . CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OFTHE A SSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 09.10.2010 DECLARING TOTAL INCOME OF RS.3,57,692/ - . THE ASSESSM ENT WAS COMPLETED U/S 143(3) ON 31.12.2012 DETERMINING THE TOTAL INCOME AT RS.10,02,120/ - . SUBSEQUENTLY, ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS FROM TWO PARTIES I.E. GOODLUCK IMPEX (RS.15 , 733 / - ) AND SURAJ STEEL (RS. 2,50,414 / - ), THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE FILED A LETTER DATED 19.08.2013 BEFORE THE AO, REQUESTING THE ORIGINAL RETURN TO B E TREATED AS RETURNED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE ABOVE TWO ITA NO. 4465/M/2019 RAMESH B MUSALE 3 PARTIES. HOWEVER, THOSE NOTICES WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES. THE AO A SKED THE ASSESSEE TO PRODUCE THE ABOVE TWO PARTIES BEFORE HIM FOR EXAMINATION OF THEIR BOOKS OF ACCOUNTS. SINCE THERE WAS NO COMPLIANCE BY THE ASSESSEE, THE AO HAVING CONSIDERED THE FINDINGS OF THE SALES TAX DEPARTMENT MADE AN ADDITION OF RS.2,66,147/ - . 4 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 05.04.2019, THE LD. CIT(A) HELD THAT : 10.2 ON THE ADDITION OF RS. 2,92,829 / - IN CASE OF SURAJ STEEL AND GOODLUCK IMPEX WHERE THERE WAS IN FORMATION FROM SALES TAX AND NOTICES U/S 133(6) WERE ALSO RETURNED BACK, IT HAS BEEN SUBMITTED BY THE APPELLANT THAT ALL RELEVANT DETAILS LIKE COPIES OF BILLS, BANK STATEMENT AND DELIVERY CHALLANS WERE FILED. REGARDING SHREE SAI WIRENETTING WHERE NOTICES U /S 133(6) RETURNED BACK, IT WAS SUBMITTED THAT THIS WAS A GENUINE PARTY NOT APPEARING IN TH E LIST OF SALES TAX DEPARTMENT. IN MY CONSIDERED VIEW, ONCE THE AO IS UNABLE TO VERIFY THE TRANSACTIONS DUE TO NON - AVAILABILITY OF THE PARTIES AND THE ASSESSEE DOES NOT PRODUCE THE PARTIES FOR VERIFICATION, THE TREATMENT REGARDING THE TRANSACTIONS WITH THOSE PARTIES SHOULD BE THE SAME IRRESPECTIVE OF THE FACT AS TO WHETHER THEY APPEAR IN THE LIST OF THE SALES TAX DEPARTMENT OR NOT. I AM ALSO OF THE VIEW THAT 100% ADDI TION CANNOT BE MADE UNLESS IT IS PROVED BEYOND DOUBT THAT THE ASSESSEE HAS RECEIVED BACK THE CASH IN LIEU O F CHEQUES AND NO PURCHASE WAS MADE EVEN FROM THE GREY MARKET. OTHERWISE, PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTIONS CAN ONLY BE ADDED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ADDITIONAL PROFIT OF 30% IS ESTIMATED IN OBTAINING ACCOMMODATION ENTRIES FROM THE PARTIES WHO ARE NOT TRACEABLE AND WHERE PURCHASE COULD NOT BE VERIFIED. THEREF ORE, THE ADDITION OF 30% OF RS.2,66, 147/ - = RS.79,844/ - IS SUSTA INED IN CASE OF PURCHASE FROM GOOD LUCK IMPEX AN D SURAJ STEEL AND BALANCE ADDITION OF RS.1,86,303/ - IS HEREBY DELE TED. ITA NO. 4465/M/2019 RAMESH B MUSALE 4 5. THE LD. DR SUBMITS THAT THE ORDER PASSED BY THE AO BE CONFIRMED BECAUSE (I) AS PER THE INFORMATION RECEIVED AFTER INQUIRY FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS FROM THE ABOVE TWO CONCER NS, (II) THE NOTICES ISSUED U/S 133(6) BY THE AO WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES AND (III) THE ASSESSEE FAILED TO PRODUCE THE ABOVE TWO PARTIES BEFORE THE AO FOR EXAMINATION. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS RECORDED BY THE LD. CIT(A), THE ASSESSEE HAD FILED ALL RELEVANT DETAILS LIKE COPIES OF BILLS, BANK STATEMENTS AND DELIVERY CHALLANS. HAVING CONSIDERED THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS RIGHTLY BROUGHT TO TAX TH E PROFIT ELEMENT EMBEDDED IN SUCH DISPUTED PURCHASES BY ESTIMATING @ 30% ON RS.2,66,147/ - WHICH COMES TO RS.79,844/ - . IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 38 TAXMANN.COM (GUJ), THE HONBLE GUJARAT HIGH COURT HAS HELD THAT WHERE PURCHASES WERE NOT BOGUS BUT WERE MADE FROM PARTIES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNT, NOT ENTIRE PURCHASE PRICE BUT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO INCOME OF THE ASSESSEE. THAT BEING THE POSITION, NOT THE ENTIRE PURCHASE PRICE BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE. THE HONBLE HIGH COURT REFERRED TO A SIMILAR VIEW TAKEN IN THE CASE OF CIT VS. VIJAY M. MISTRY CONSTRUCTION LTD. [2013] 355 ITR 498 (GUJ) AND CIT VS. BHOLAN ATH POLY FAB (P) LTD. [2013] 355 ITR 290 (GUJ). ITA NO. 4465/M/2019 RAMESH B MUSALE 5 IN VIEW OF THE ABOVE FACTUAL SCENARIO AND POSITION OF LAW, WE AFFIRM THE ORDER OF THE LD. CIT(A). 7 . IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01.2021. SD/ - SD/ - (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 18.01.2021 ALINDRA, P.S. 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./ASSISTANT REGISTRAR) ITAT, MUMBAI