NAAFE CONSTRUCTION, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-17(2), MUMBAI

ITA 4487/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8862 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Reason to believe
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' SMC ' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 4487 /MUM/ 2017 (ASSESSMENT YEAR: 2011 - 12 ) M/S. NAAFE CONSTRUCTION VS. ASSISTANT COMMISSIONER OF 9, 3RD FLOOR, 148/150, MYHN HOUSE, GHOGHARI STREET PYDHONIE, MUMBAI 400003 INCOME TAX 17(2) MUMBAI PAN ABHFN0991Q APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SMT. N. HEMALATHA DATE OF HEARING: 25 .10.2017 DATE OF PRONOUNCEMENT: 28 . 10.2017 O R D E R PER R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) FOR A.Y. 2011 - 12 IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT. 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED FOR UPHOLDING THE ADDITION OF 25% OF THE BOGUS PURC HASES. 3. NOBODY APPE ARED ON BEHALF OF THE ASSESSEE , NOR ANY ADJOURNMENT PETITION WAS FILED. THE BENCH THEREFORE DECIDED TO DISPOSED OF THE APPEAL AFTER CONSIDERING THE MATERIAL PLACED ON RECORD AND HEARING THE CONTENTIONS OF THE LEARNED D.R. 4. I HAVE GONE THRO UGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT DURING THE YEAR UNDER CONSIDERATION THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE WAS INDULGING IN UTILISATION OF BOGUS/ACCOMMODATION BILLS AND THEREBY INFLATING THE PURCH ASES AND SUPPRESSING THE PROFITS. THIS INFORMATION WAS REFERRED BY THE AO IN THE REASON TO BELIEVE AND THEREAFTER THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. ITA NO. 4487 /MUM/2017 M/S. NAAFE CONSTRUCTION 2 5. I FOUND THAT THE AO WAS IN RECEIPT O F CREDIBLE FRESH INFORMATION WHICH BY ITSELF HAD BECOME THE BASIS OF REASON TO BELIEVE. IN NUMEROUS JUDGEMENTS AS DISCUSSED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS IT HAS BEEN HELD THAT CREDIBLE THIRD PARTY INFORMATION CAN BECOME SUCH BASIS THE INFORMATION IS A SPECIFIC ONE WI TH NAMES OF PARTIES, AND EVEN THE FIGURES ARE QUANTIFIED. ACCORDINGLY I CONFIRM REOPENING OF THE ASSESSMENT. 6. WITH REGARD TO THE MERIT ON ADDITION I FOUND THAT THE AO HAS NOT MADE ADDITION OF ENTIRE AMOUNT OF PURCHASES BUT ESTIMATED THE PROFIT AT 12.5% OF T HE BOGUS PURCHASES AND ADDED THE SAME. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF THE AO AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7. FROM THE RECORD I FOUND THAT THE AO HAS ACCEPTED THE CORRESPONDING SALES MADE BY THE ASSESSEE. THE QUANT ITATIVE DETAILS OF PURCHASE AND SALE WAS ALSO FURNISHED BEFORE THE LOWER AUTHORITIES. KEEPING IN VIE W THE G.P. RATE DECLARED BY THE ASSESSEE DURIN G THE YEAR UNDER CONSIDERATION AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I MODIFY THE ORDER OF THE CIT(A ) AND DIRECT THE AO TO RESTRICT THE ADDITION TO 1 0 % OF THE BOGUS PURCHASE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2017 . S D/ - ( R.C. SHARMA ) ACCOUNTANT MEMBER MUMBAI, DATED: 28 TH OCTOBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - 28 , MUMBAI 4. THE PR. CIT - 17 , MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITA NO. 4487 /MUM/2017 M/S. NAAFE CONSTRUCTION 3 ITAT, MUMBAI BENCHES, MUMBAI N.P. S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 25 . 10 .1 7 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 26 . 10 .1 7 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER DICTATION PAD ATTACHED