DINESH H. TRIVEDI, MUMBAI V. INCOME TAX OFFICER WARD 18(1)(4), MUMBAI

ITA 4523/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6972 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 18-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSHMI NAYAKLD
• Assessee Lawyers: RADHA HALBELD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 201; 143(2); 147; 148

Judgement Text

ITA NO.4523/MUM/2018 DINESH H. TRIVEDI ASSESSMENT YEAR :2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4523/MUM/2018 ( / ASSESSMENT YEAR : 2009-10 ) DINESH H. TRIVEDI E-2, FLAT NO.60, 4 TH FLOOR TULSI MAHAVIR NAGAR MANPADA ROAD, DOMBIVALI(EAST) DISTT. THANE- 421 201 / VS. I TO - 18(1)(4) EARNEST HOUSE, 2 ND FLOOR NCPA ROAD, NARIMAN POINT MUMBAI- 400 021. %& ./ ./PAN/GIR NO. ABTPT-9180-E ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) ASSESSEE BY : MS. RADHA HALBE-LD.AR REVENUE BY : MS. JYOTILAKSHMI NAYAK-LD. DR / DATE OF HEARING : 04/02/2020 / DATE OF PRONOUNCEMENT : 05/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEA R [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-29, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-29/IT-241/ITO-18(1)(4)/2015-16 DA TED 15/05/2018 ON FOLLOWING GROUNDS OF APPEAL: - ITA NO.4523/MUM/2018 DINESH H. TRIVEDI ASSESSMENT YEAR :2009-10 2 1.ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD . CIT(A) IS NOT RENDERING ANY LEGAL GROUNDS RAISED RELATING TO VALIDITY OF RE-OPE NING U/S 147 / 148 AND VALIDITY OF ISSUE OF NOTICES U/S 143 (2) / 142 (1) BEFORE OBTAI NING THE OBJECTIONS OF ASSESSEE ON REASONS RECORDED. HE OUGHT TO HAVE DECIDED BOTH THE LEGAL ISSUES RAISED. 2. ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE L D. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF PROFIT OF RS.17,30,530 O N ALLEGED SUSPICIOUS PURCHASES @ 12.5% AND FURTHER NOT JUSTIFIED IN RENDERING ANY DE CISION N ALTERNATE CLAIM RAISED, RELYING UPON THE JUDGEMENT OF HON. BOMBAY HIGH COUR T IN PRUTHVI BROKERS' CASE - 349 ITR 336 PG. THE LD. AR EXPRESSED WILLINGNESS NOT TO CONTEST LEG AL GROUND NO.1.IN GROUND NO.2, THE ASSESSEE IS AGGRIEVED BY ESTIMATED ADDITIONS OF 12.5% ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. WE HAVE CAREFULLY HEARD THE SUBMISSIONS MADE BY BOTH REPRESENTATIVES. WE HAVE ALSO PERUSED RELEVANT MATE RIAL ON RECORD. OUR ADJUDICATION TO ISSUE RAISED IN THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF METAL S UNDER PROPRIETORSHIP CONCERN NAMELY M/S L.D. ENTERPRISES, WAS ASSESSED FOR YEAR UNDER CONSIDERATION 143(3) R.W.S. 147 ON 20/03/2015 WHERE IN THE ASSESSEE WAS SADDLED WITH IMPUGNED ESTIMATED ADDITIONS OF RS .17.30 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 15/09/2009 AT RS.2.99 LACS WHICH WAS PROCESSED U/S 143(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INV.) / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESSEE OBTAINED BOGUS PURCHASES BILLS AGGREGATING TO RS.13 8.44 LACS FROM AS MANY AS 10 ENTITIES, THE DETAILS OF WHICH HAVE ALRE ADY BEEN EXTRACTED IN PARA-1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY , THE CASE WAS ITA NO.4523/MUM/2018 DINESH H. TRIVEDI ASSESSMENT YEAR :2009-10 3 REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 07/03/2014 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTAN TIATE THE PURCHASE TRANSACTIONS. 3.3 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES BY SUBMITTING PURCHASE INVOICES, DELIVERY CHALLANS, BANK STATEMEN TS EVIDENCING PAYMENT THROUGH BANKING CHANNELS, LEDGER EXTRACTS E TC. BUT FAILED TO SUBSTANTIATE THE DELIVERY OF MATERIAL. THE ASSESSEE ALSO FAILED TO FILE CONFIRMATION LETTERS FROM THE SUPPLIERS. CONSEQUENT LY, LD. AO ESTIMATED AN ADDITION OF 12.5% AGAINST SUCH PURCHASES WHICH C AME TO RS.17.30 LACS AND ADDED THE SAME TO THE INCOME OF THE ASSESS EE. 4. BEFORE LD. CIT(A), THE ASSESSEE DREW ATTENTION T O THE FACT THAT CORRESPONDING SALES WERE ACCEPTED AND THE ESTIMATIO N AS ON HIGHER SIDE. HOWEVER, THE SAME COULD NOT CONVINCE LD. CIT( A) WHO UPHELD THE ACTION OF LD. AO IN MAKING ESTIMATED ADDITIONS OF 1 2.5%. AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 5. UPON DUE CONSIDERATION, WE ARE OF THE OPINION TH AT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL PARTICU LARLY WHEN THE ASSESSEE WAS INTO TRADING ACTIVITIES. THE SALES TUR NOVER HAS NOT BEEN DISPUTED / DISTURBED BY THE REVENUE. THE ASSESSEE W AS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. HOWEVER, AT THE SAME TIME , THE ASSESSEE FAILED TO PRODUCE EVEN A SINGLE SUPPLIER OUT OF 10 SUPPLIERS TO CONFIRM THE TRANSACTIONS. NO CONFIRMATION LETTERS WERE FILED FR OM THE SUPPLIERS. THE STATED FACTUAL MATRIX, IN OUR CONSIDERED OPINION, W OULD MAKE IT A FIT CASE TO MAKE ESTIMATED ADDITIONS TO ACCOUNT FOR PROFIT E LEMENT EMBEDDED IN ITA NO.4523/MUM/2018 DINESH H. TRIVEDI ASSESSMENT YEAR :2009-10 4 THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY / UNORGANIZED MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHAS ES, WHICH LOWER AUTHORITIES HAVE RIGHTLY DONE SO. HOWEVER, KEEPING IN VIEW THE FACT THAT THE ASSESSEE WAS DEALING IN LOW-MARGIN COMMODITY LI KE IRON & STEEL, THE ESTIMATION OF 12.5% WAS ON HIGHER SIDE. THEREFORE, WE RESTRICT THE SAME TO 5% OF ALLEGED BOGUS PURCHASES OF RS.1,38,44,238/ - WHICH COMES TO RS.6,92,212/-. THE BALANCE ADDITIONS STAND DELETED. THE ORDERS OF LOWER AUTHORITIES STAND MODIFIED TO THAT EXTENT. 6. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 05/02/2020 SR.PS. JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 23),4 , 4 , / DR, ITAT, MUMBAI 6. 356 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.