REAFIQULLA NIAMAT KHAN, MUMBAI V. ITO 20(3)(1), MUMBAI

ITA 448/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9775 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 448 /MUM/ 2017 (ASSESSMENT YEAR 20 09 - 1 0 ) RAFIQULLAH NIAMAT KHAN RASHMI ZAVERI & CO, CAS ARHAM, GROUND FLOOR PLOT NO. 266, SION EAST MUMBAI - 400 022. PAN : AA CPK9445K VS. ITO 20(3)(1) ROOM NO. 622 LALBAGU, PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 450/MUM/2017 (ASSESSMENT YEAR 2009 - 10) ZAHEER AHMED ANEES AHMED KHAN RASHMI ZAVERI & CO, CAS ARHAM, GROUND FLOOR PLOT NO. 266, SION EAST MUMBAI - 400 022. PAN : AMRPK5850D VS. ITO 20(3)(5) ROOM NO. 205 LALBAGU, PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 451/MUM/2017 (ASSESSMENT YEAR 2009 - 10) DILIPKUMAR JAISWAR RASHMI ZAVERI & CO, CAS ARHAM, GROUND FLOOR PLOT NO. 266, SION EAS T MUMBAI - 400 022. PAN : AFNPJ8720J VS. ITO 20(1)(4) ROOM NO. 112 LALBAGU, PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SANJAY R. PARIKH DEPARTMENT BY SHRI RAM TIWARI DATE OF HEARING 1 9 .9. 201 7 DATE OF PRONOUNCEMENT 19 . 9 . 201 7 O R D E R THESE THREE APPEALS FILED BY THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A) - 32, MUMBAI AND THEY RELATE TO THE ASSESSMENT RAFIQULLAH NIAMAT KHAN & 2 OTHERS 2 YEAR 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY CO NFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES. SINCE IDENTICAL ISSUES ARE URGED IN THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. I FIRST TAKE UP THE APPEAL FILED BY SHRI RAFIQUALLAH NIAMAT KHAN. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A DEALER IN M.S PIPES. CONSEQUENT TO THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THAT CERTAIN PARTIES (CALLED HAWALA PARTIES) ARE INDULGING IN PROVIDING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIALS, THE REVENUE EXAMINED THOSE DETAILS. IT WAS NOTICED THAT THE ASSESSEE HEREIN HAVE PURCHASED GOODS DURING THE YEAR UNDER CONSIDERATION FROM THE PARTIES LISTED AS HAWALA PARTIES AGGREGATING TO RS .2,00,04,965/ - . HENCE THE AO REOPENED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION. 3. BEFORE AO, THE ASSESSEE ONLY FURNISHED COPIES OF PURCHASE BILLS AND BANK STATEMENT TO PROVE THE GENUINENESS OF PURCHASES. WHEN THE AO ASKED THE ASSESSEE TO PRODU CE THE PARTIES, THE ASSESSEE EXPRESSED HIS INABILITY. HENCE THE AO WAS NOT SATISFIED WITH THE GENUINENESS OF PURCHASES. HOWEVER, BY FOLLOWING THE DECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHAH (356 ITR 451) AND ALSO SOME OTHE R DECISIONS, THE AO TOOK THE VIEW THAT PROFIT ELEMENT INVOLVED IN THE PURCHASES SHOULD BE BROUGHT TO TAX. ACCORDINGLY HE ASSESSED 12.50% OF THE VALUE OF SUSPICIOUS PURCHASES AS INCOME OF THE ASSESSEE. THE LD CIT(A) NOTICED THAT THE ASSESSEE HAS DECLARED G.P AT THE RATE OF 5.77%. ACCORDINGLY HE TOOK THE VIEW THAT THE ADDITION SHOULD BE RESTRICTED TO THE G.P RATE DECLARED BY THE ASSESSEE. ACCORDINGLY HE DIRECTED THE AO RESTRICT THE ADDITION TO 5.77% OF THE VALUE OF PURCHASES. STILL AGGRIEVED, THE ASSESS EE HAS FILED THIS APPEAL. RAFIQULLAH NIAMAT KHAN & 2 OTHERS 3 4. IN THE SIMILAR MANNER, THE AO HAD MADE THE ADDITION AT 12.50% OF THE VALUE OF ALLEGED BOGUS PURCHASES IN THE OTHER TWO CASES ALSO. THE LD CIT(A), IN THE SIMILAR MANNER, RESTRICTED THE ADDITION TO THE EXTENT OF THE AMOUNT CALCULATED BY APPLYING RESPECTIVE G.P RATE ON THE VALUE OF ALLEGED BOGUS PURCHASES. 5. THE LD A.R SUBMITTED THAT THE TURNOVER AND NET PROFIT OF THE ASSESSEE HAS INCREASED DURING THE YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT THE DIVISION BEN CH OF MUMBAI ITAT HAS ESTIMATED THE PROFIT @ 2% IN THE CASE OF CIT VS. ASHOK INDUSTRIAL CORPORATION (ITA NO.647/MUM/2017 DATED 12 - 05 - 2017). ACCORDINGLY HE CONTENDED THAT THE ADDITION SHOULD BE RESTRICTED TO 2% OF THE VALUE OF IMPUGNED PURCHASES. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE SUPPLIERS HAVE ADMITTED THAT THEY HAVE PROVIDED ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING MATERIALS. SINCE THE ASSESSEE HAS CORRELATED PURCHASES AND SALES, THE ASSESSEE SHOULD HAVE PURCHASED GOODS FROM SOME OTHER CHANNEL. IN THAT PROCESS, THE ASSESSEE SHOULD HAVE SAVED TAXES AND SHOULD HAVE ALSO EARNED DISCOUNT. IF ONE TAKES INTO ACCOUNT THESE FACTORS, THE ADDITION SUSTAINED BY LD CIT(A) WOULD BE REASONABLE, EVEN THOUGH THE REVENUE HAS NOT CONTEST ED THE DECISION OF LD CIT(A) ON ACCOUNT OF MONETARY EFFECT. 7. HAVING HEARD RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THERE IS NO MERIT IN THE CLAIM OF THE ASSESSEE. SINCE THE ASSESSEE COULD CORRELATE PURCHASES WITH SALES, THE TAX AUTHORITIES HAVE EST IMATED THE PROFIT THAT WOULD HAVE BEEN MADE BY THE ASSESSEE ON THE VALUE OF ALLEGED BOGUS PURCHASES. THE SAID PROFIT IS ESTIMATED AT GROSS PROFIT LEVEL. IN OUR VIEW, THE LD D.R RIGHTLY POINTED OUT THAT THAT THE ASSESSEE WOULD HAVE SAVED VAT PORTION OF TA X AND ALSO PURCHASED GOODS AT DISCOUNT. IN THE CASE OF SIMIT P SHAH (SUPRA), THE HONBLE GUJARAT HIGH RAFIQULLAH NIAMAT KHAN & 2 OTHERS 4 COURT HAS CONSIDERED THE VAT RATE AND THE POSSIBLE DISCOUNT IN ORDER TO DETERMINE THE ADDITION RATE OF 12.50%. IN THE INSTANT CASE, I NOTICE THAT THE VA T RATE APPLICABLE IS 4%, WHICH SHOULD HAVE BEEN SAVED BY THE ASSESSEE. IN ADDITION TO THE ABOVE, THE ASSESSEE SHOULD HAVE OBTAINED DISCOUNT ALSO. CONSIDERING THESE FACTORS, I AM OF THE VIEW THAT THE ADDITION @ 5.77% OF THE VALUE OF ALLEGED BOGUS PURCHASE S SUSTAINED BY THE LD CIT(A) IS REASONABLE. SINCE THE ISSUE URGED BEFORE ME IS FACTUAL IN NATURE AND SINCE I HAVE DECIDED THE SAME ON THE BASIS OF FACTS AVAILABLE IN THIS CASE, I AM OF THE VIEW THAT THE ASSESSEE COULD NOT TAKE SUPPORT OF DECISIONS TAKEN I N OTHER CASES. IN ANY CASE, I HAVE FOLLOWED THE METHODOLOGY ADOPTED BY HONBLE GUJARAT HIGH COURT IN THE CASE REFERRED SUPRA. ACCORDINGLY I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD CIT(A) AND HENCE UPHOLD THE SAME. 8. IN THE CASE OF ZAHEE R AHMED ANEED AHMED KHAN, THE LD CIT(A) HAS SUSTAINED ADDITION TO THE EXTENT OF 4.52% OF THE VALUE OF SUSPICIOUS PURCHASES AND IN THE CASE OF DILIPKUMAR JAISWAR, THE LD CIT(A) HAS SUSTAINED ADDITION TO THE EXTENT OF 4.17% OF THE VALUE OF SUSPICIOUS PURCHA SES. FOR THE REASONING GIVEN IN THE PRECEDING PARAGRAPH, I UPHOLD THE ORDERS PASSED BY LD CIT(A) IN THEIR HANDS. 9. IN THE RESULT, THE APPEALS FILED BY THESE ASSESSEES ARE DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 9 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 1 9 / 9 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT RAFIQULLAH NIAMAT KHAN & 2 OTHERS 5 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI