ACIT 19(2), MUMBAI V. LEKHRAJ H DOSHI, MUMBAI

ITA 4502/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0929 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Assessee Lawyers: NIMISHA BOTHRA
• Keywords: Bogus purchase; Unexplained investment
• Section: 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4502 & 4503/MUM /2015 ASSESSMENT YEAR-2010-11 & 2011-12 ACIT-19(2), ROOM NO.207, MATRU MANDIR, MUMBAI-400007 / VS. M/S LEKHRAJ H. DOSHI, 24/1, 02 ND CARPENTER STREET, PATHE BAPURAO MARG, MUMBAI-400004 PAN NO . ABPD1010C ( / REVENUE) ( / ASSESSEE) / REVENUE BY SHRI R.P. MEENA CIT-DR / ASSESSEE BY MS. NIMISHA BOTHRA / DATE OF HEARING : 19/04/2017 / DATE OF ORDER: 24/04/2017 ITA NO.4502 & 4503/MUM/2015 M/S LEKHRAJ H. DOSHI 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE APPEALS ARE BY THE REVENUE AGAINST THE IMPUGNED ORDERS BOTH DATED 15/05/2015 OF THE LD. FI RST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE U P THE APPEAL FOR ASSESSMENT YEAR 2010-11 (ITA NO.4502/MUM/2015), WHEREIN, THE GROUND RAISED BY TH E REVENUE PERTAINS TO RESTRICTING THE NET ADDITION TO 7.50 OF THE PURCHASES FROM THE PARTIES, WHICH WERE NOT PROV ED TO BE GENUINE, DISREGARDING UNACCOUNTED INVESTMENT FRO M UNKNOWN SOURCES. 2. DURING HEARING, SHRI RAJESH KR. YADAV, LD. DR, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER BY SUBMITTING THAT NOTICE ISSUED U/S 133(6) OF THE INC OME TAX ACT, 1961 (HEREINAFTER THE ACT), NOBODY APPEARE D. IT WAS ALSO CONTENDED THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE FOR SUCH PURCHASES, THUS, THE ONUS WAS NOT DISCHARGED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, MS. NIMISHA BOTHRA, DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT A WELL REASONED ORDER HAS BEEN PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA L) AND THE ONUS CASTE UPON THE ASSESSEE WAS DULY DISCHARGED. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S ITA NO.4502 & 4503/MUM/2015 M/S LEKHRAJ H. DOSHI 3 ANUPAM METALS (INDIA), CARRYING ON BUSINESS IN SUPP LY OF FERROUS AND NON-FERROUS METAL, IRON AND STEEL, ALLO YS AND FITTING ETC, DECLARED INCOME OF RS.14,59,700/- IN H IS RETURN FILED ON 29/09/2011. THE RETURN WAS PROCESSE D U/S 143(1) OF THE ACT. STATUTORY NOTICE U/S 143(2) OF THE ACT WERE ISSUED TO WHICH THE ASSESSEE ATTENDED FROM TIME TO TIME. TO ASCERTAIN THE GENUINENESS OF THE PURCH ASES, THE LD. ASSESSING OFFICER ISSUED NOTICES U/S 133(6) TO VARIOUS PARTIES. AS PER THE REVENUE, THESE PARTIES WERE NOT APPEARED AND ON SOME OF THE ADDRESS, THE NOTICE S COULD NOT BE SERVED AS THE POSTAL AUTHORITIES RETUR NED SUCH NOTICES WITH THE REMARK NOT KNOWN AND LEFT . THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THE ONUS CASTE UPON THE ASSESSEE WAS NOT DISCHARGED. IT WAS ALSO NOTICED BY THE ASSESSING OFFICER THAT THE SALES TAX DEPARTMENT OF MAHARASHTRA STATE GOVERNMENT MADE DETAILED INVESTIGATION IN THE CASES OF CERTAIN DEAL ERS AND FOUND THAT THEY WERE ISSUING BOGUS PURCHASE BILLS. THE ASSESSEE WAS ASKED TO PRODUCE THESE PARTIES OR TO ESTABLISH THE GENUINENESS OF THE PURCHASES. THE LD. DR, DURING HEARING, CONTENDED THAT SOME OF THE PARTIES HAVE ADMITTED, BEFORE THE SALES TAX AUTHORITIES, THAT TH EY WERE ISSUING BOGUS BILLS. THE LD. ASSESSING OFFICER MADE THE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. 2.2. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE ASSESSEE VIDE SUBMISSIONS DATED 07/02/2013, CONTENDED THAT HE MAINTAINS DAY T O ITA NO.4502 & 4503/MUM/2015 M/S LEKHRAJ H. DOSHI 4 DAY STOCK REGISTER, HAVING ALL INVOICES OF PURCHASE S AND SALES, WHICH ARE PASSED THROUGH STOCK REGISTERS. TH E LD. COMMISSIONER OF INCOME TAX (APPEAL) CONSIDERED THE FACTUAL MATRIX, RELIED UPON THE DECISION LIKE DURGA PRASAD MORE 82 ITR 540(SC), SUMATI DAYAL VS CIT 214 ITR 801, JAMUNA PRASAD KANHAIYA LAL VS CIT 130 ITR 244 (SC), MINAKSHI MILLS LTD. 63 ITR 609 (SC), MCDO WELLS & CO. 154 ITR 148 (SC), DAULAT RAM RAWATMAL. 87 ITR 349, CHUHAR MAL VS CIT 172 ITR 205 (SC), NIKUNJ EXIMPS, ITA NO.5604 OF 2010 (BOM.), KILLICK NIXON L TD. VS DCIT (2012) 20 TAXMAN.COM 703 (BOM.), SHRI GANESH RICE MILLS VS CIT (2007) 294 ITR 316 (ALL.), KHANDE LWAL TRADING COMPANY VS ACIT 55 TTJ 261(JP) AND VARIOUS OTHER JUDICIAL PRONOUNCEMENTS, AS MENTIONED IN THE IMPUGNED ORDER ALONG WITH SIMILAR ISSUE ADJUDICATED IN THE CASE OF THE ASSESSEE, ESTIMATED THE EMBEDDED IN COME AT THE RATE OF 12.5% OF THE TOTAL PURCHASES. SINCE, THE ASSESSEE HAD ALREADY OFFERED AND AVERAGE GROSS OF P ROFIT OF 5% DURING THE LAST FEW YEARS, THE NET ADDITION W AS CONFIRMED TO 7.50% (12.5% - 5%). THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME , CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, THI S FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE THAT ITA NO.4502 & 4503/MUM/2015 M/S LEKHRAJ H. DOSHI 5 IN EARLIER ASSESSMENT YEARS, THE INCOME WAS ESTIMAT ED AT 12.5% OF THE TOTAL PURCHASES AND THE ASSESSEE HAD ALREADY OFFERED AVERAGE GROSS OF 5% DURING THE LAST FIVE YEARS. HOWEVER, THE FACT REMAINS THAT THE OBSERVATI ON MADE IN THE ASSESSMENT ORDER WERE NOT CONTRVERTED B Y THE FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER . AT THE SAME TIME, THE BASIS FOR REDUCING THE ADDITION FROM 12.5% TO 7.5% IS ALSO HYPOTHETICAL AND THE SAME IS NOT JUSTIFIED GROUND FOR MAKING THE REDUCTION. IT IS AL SO A FACT THAT NOTICES ISSUED TO THE PARTIES WERE EITHER NOT SERVED OR WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES . THUS, THE ONUS CASTE UPON THE ASSESSEE REMAINED TO BE DISCHARGED. AT THE SAME TIME, TO PUT AN END TO TH E LITIGATION, UNDER THE FACTS, AND THE CIRCUMSTANCES NARRATED IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER, THE ADDITION IS REDUCED TO 10% AGAI NST THE ESTIMATION OF 12.5% OF THE PURCHASES AND CONSEQUENTLY, INCREASED TO THE SAME FIGURE AGAINST 7.50% REDUCED BY THE LD. COMMISSIONER OF INCOME TAX (APPE AL). THE LD. ASSESSING OFFICER IS DIRECTED TO ADOPT THE NET PROFIT AT THE RATE OF 10% OF THE TOTAL PURCHASES MA DE BY THE ASSESSEE, THUS, THIS APPEAL OF THE REVENUE IS P ARTLY ALLOWED. 3. NOW, WE SHALL TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2011-12 (ITA NO.4503/MUM/2015), WHERE ALSO IDENTICAL GROUND HAS BEEN RAISED. SINCE, THE FACTS AND THE ISSUE IS IDENTICAL, THEREFORE, OUR AF ORESAID ITA NO.4502 & 4503/MUM/2015 M/S LEKHRAJ H. DOSHI 6 DIRECTION/CONCLUSION, WILL ALSO APPLY TO THE PRESEN T APPEAL ALSO, THUS, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. FINALLY, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 19/04/2017. SD/- SD /- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 24/04/2017 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUM BAI