KETAN LALITCHAND SHAH, MUMBAI V. INCOME TAX OFFICER, WARD - 30(2)(1), MUMBAI

ITA 4479/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0728 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Rejection of books of accounts; Corroborative evidences
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 4479 / MUM/20 17 & ITA NO.4481/MUM/2017 ( ASSESSMENT YEAR : 2009 - 10 & 2011 - 12 ) SHRI KETAN LALITCHAND SHAH 1104, ANAND APARTMENT, GORAS WADI NEAR MILAP CINEMA MALA D - WEST MUMBAI 400 064 VS. ITO WARD - 30(2)(1) MUMBAI PAN/GIR NO. AMXPS9410R APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI HARESH SHAH REVENUE BY MS. N. HEMALATHA DATE OF HEARING 24 / 10 /201 7 DATE OF PRONOUNCEME NT 18 / 01 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 41 DATED 05/04/2017 FOR A.Y.2009 - 10 & 2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) /147 OF THE IT ACT. 2. IN BOTH THE YEARS ASSESSEE HAS CHALLENGED REOPENING AS WELL AS MERIT OF THE ADDITION MADE BY ESTIMATING PROFIT AT 12.5%. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN HARDWARE TOOLS, BEARINGS AND GENERAL SUPPLIERS IN THE NAME AND STYLE OF M/S. TRADE LINKS. THE RETURN WAS INITIALLY PROCESSED U/S 143(1). SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM DGIT(INV.), MUMBAI AND ITA NO. 4479/MUM/2017 & 4481/MUM/2017 SHRI KETAN LALITCHAND SHAH 2 SALES TAX DEPARTMENT THAT THE ASSESSEE HAD CLAIM ED PURCHASES OF RS. 1,09,76,404/ - FROM 7 PARTIES WHO HAVE BEEN DECLARED AS HAWALA DEALERS BY SALES TAX DEPARTMENT. THESE PARTIES HAD ISSUED ACCOMMODATION BILLS WITHOUT ACTUAL SALE AND DELIVERY OF GOODS. THEREFORE, THE CASE WAS RE - OPENED. THE AO ISSUED NOTICE U/S 133(6) TO THESE PARTIES WHICH WERE EITHER RETURNED BACK BY THE POSTAL DEPARTMENT OR NO REPLY WAS RECEIVED. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE PURCHASES AND TO PRODUCE THE PARTIES. THE ASSESSEE FAILED TO PRODUCE THE PARTIES BUT FURNISHED THE LE DGER ACCOUNTS OF THE PURCHASE PARTIES, CORRESPONDING SALES, COPIES OF PURCHASE AND SALE BILLS AND BANK STATEMENTS CLAIMING PAYMENT TO THE PURCHASE PARTIES. THE AO MENTIONED THAT THE ASSESSEE FAILED TO FURNISH SUPPORTING EVIDENCES IN THE FORM OF TRANSPOR TATION BILLS, DELIVERY CHALLAN, STOCK REGISTER AND LORRY RECEIPT. THE AO HELD THAT THERE WAS EVERY POSSIBILITY OF LEAKAGE OF REVENUE AS THE PURCHASES SHOWN BY THE ASSESSEE DURING THE YEAR REMAINED UNVERIFLABLE AND REJECTED THE BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF SECTION 145(3) OF THE I T ACT. ACCORDINGLY, HE ESTIMATED ADDITIONAL PROFIT OF 12.5% ON THE ALLEGED BOGUS PURCHASES. 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IT WA S ARGUED BY LEARNED AR THAT ASSESSEE HAS ALREADY DISCLOSED PROFIT OF 5.76% IN THE A.Y.2009 - 10 AND 8.39% IN THE A.Y.2011 - 12. ACCORDINGLY, IT WAS PRAYED THAT ESTIMATED PROFIT SHOULD BE REDUCED BY THE PROFIT ALREADY DECLARED BY THE ASSESSEE. ITA NO. 4479/MUM/2017 & 4481/MUM/2017 SHRI KETAN LALITCHAND SHAH 3 7. ON TH E O THER H AND, LEARNED DR CONTENDED THAT AO HAS VERY REASONABLY ESTIMATED PROFIT ON BOGUS PURCHASES AT 12.5%, THEREFORE NO INTERFERENCE IS REQUIRED. 8. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT CORRESPONDING SALES HAVE NOT BEEN DECLINED BY THE AO AND HE HAS JUST ESTIMATED PROFIT ON THE ALLEGED BOGUS PURCHASES. STATEMENT SHOWING COMPARATIVE G.P AND N.P AS UNDER : - A.Y. SALES GROSS PROFIT NET PROFIT RS RS. % RS % 2006 - 07 1 0174278 625936 6.15 291764 2.87 2007 - 08 10550950 646638 6.13 311642 2.95 2008 - 09 13101691 781312 5.96 375528 2.87 '5009 - 10 17389678 992583 5.71 480369 2.76 2010 - 11 17151045 1163342 6.78 506071 2.95 2011 - 12 12308270 103285 4 8.39 485771 3.95 9. I T IS CLEAR FROM THE ABOVE CHART THAT ASSESSEE HAS DECLARED GP RANGING FROM 5.71% TO 8.39% DURING THE A.Y.2006 - 07 TO 2011 - 12. NET PROFIT DECLARED BY THE ASSESSEE RANGES FROM 2.76% TO 3.95% DURING THE A.Y.2006 - 07 TO 2011 - 12. IT IS ALSO CLEAR THAT G.P. AND N.P. OR BOOK RESULTS FOR THE YEARS UNDER CONSIDERATION I.E. A.Y.2010 - 11 TO 2011 - 12 WAS BETTER THAT THE EARLIER YEAR . KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE ADDITION BY R EDUCING NET PROFIT ITA NO. 4479/MUM/2017 & 4481/MUM/2017 SHRI KETAN LALITCHAND SHAH 4 RATE OF 2.76% DECLARED IN THE A.Y.2009 - 10 AND 3.95% DECLARED IN THE A.Y.2011 - 12. WE DIRECT ACCORDINGLY. 10 . IN THE RESULT, APPEALS ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 18 / 01 /201 8 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 18 / 01 /201 8 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//