, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.4566/MUM/2014 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER - 16(3)(1), ROOM NO.219, MATRU MANDIR, MUMBAI-400007 / VS. SHRI SHAILESH LAKHAMSHI CHHEDA, SHOP NO.04, NARAYAN BUILDG. S.V. ROAD, OPP. CENTRAL BANK, MUMBAI-400004 ( ' / REVENUE) ( #$ % /ASSESSEE) P.A. NO. AACPC0733G ' / REVENUE BY SHRI B.S. BIST-DR #$ % / ASSESSEE BY NONE & ' ' % ( / DATE OF HEARING : 20/02/2017 ' % ( / DATE OF ORDER: 20/02/2017 SHAILESH L. CHHEDA ITA NO.4566/MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 01/04/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED BY THE REVENUE PERTAINS TO RESTR ICTING THE ADDITION MADE U/S 69C OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AMOUNTING TO RS.2,66,19,862/- TO RS.33,27,483/- I.E. TO 12.5% ON ACCOUNT OF BOGUS PU RCHASES, MORE SPECIFICALLY WHEN ACCOMMODATION ENTRIES WERE P ROVIDED TO THE ASSESSEE AND FIELD ENQUIRIES RESULTED IN CON FIRMATION OF BOGUS PURCHASES. 2. DURING HEARING OF THIS APPEAL, NONE WAS PRESENT FOR THE ASSESSEE, WHEREAS, SHRI B.S. BIST, LD. DR, WAS PRESENT FOR THE REVENUE. WE FIND THAT THE REVENUE FILED THIS AP PEAL ON 30/07/2014 AS IS EVIDENT FROM ORDER-SHEET ENTRY DAT ED 30/12/2015. REGISTERED NOTICES WERE SENT TO THE ASS ESSEE FOR 11/01/2016 AND ON 18/07/2016, THE LD. DR WAS TO AFF ECT SERVICES UPON HE ASSESSEE FOR 20/02/2017. DURING H EARING NOTHING WAS PRODUCED BY THE REVENUE TO AFFECT THE S ERVICE. EVEN THE REGISTERED AD NOTICE WAS RETURNED BY THE P OSTAL AUTHORITIES, THEREFORE, WE HAVE NO OPTION BUT TO PR OCEED EX- PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FAC TS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN WHOLESALE TRADI NG IN SHAILESH L. CHHEDA ITA NO.4566/MUM/2014 3 HARDWARE IN PROPRIETARY CONCERN NAMELY SHUBHAM HARD WARE, DECLARED TOTAL INCOME OF RS.19,45,934/- IN HIS RETU RN FILED ON 14/10/2010. THE INCOME OF THE ASSESSEE WAS CONSIST ING OF BUSINESS INCOME AND INCOME FROM OTHER SOURCES. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICES U/S 143(2) AND 142(1) OF THE ACT WAS SERVED UPON THE ASSESSEE. THE ASSESSEE ATTENDED THE PROCEEDINGS AND FILED REQUISITE DETAILS, EXPLANATIO N CALLED FOR AND THUS THE ASSESSMENT WAS COMPLETED ON A TOTAL IN COME OF RS.2,85,65,800/- U/S 143(3) OF THE ACT ON 22/03/201 3 BY MAKING CERTAIN ADDITIONS/DISALLOWANCES. THE ASSESS EE CLAIMED TO HAVE MADE PURCHASES FROM M/S VICTOR INTE RTRADE PVT. LTD. THE LD. ASSESSING OFFICER IS HAVING INFOR MATION THAT BEFORE THE SALES TAX AUTHORITIES, M/S VICTOR INTERT RADE PVT. LTD., TENDERED THAT THEY ARE INDULGED IN PROVIDING BOGUS BILLS AND ACTUALLY DID NOT SUPPLY ANY GOODS. ON THE BASI S OF THIS INFORMATION, THE LD. ASSESSING OFFICER SUBMITTED TH E LEDGER EXTRACTS OF M/S VICTOR INTERTRADE PVT. LTD. FOR FIN ANCIAL YEAR 2009-10, RECORDING THE TRANSACTION OF PURCHASES MAD E FROM THEM INDICATING THE DESCRIPTION OF GOODS AND VALUAT ION OF PURCHASES MADE FROM M/S VICTOR INTERTRADE PVT. LTD. ALONG WITH COPIES OF BANK STATEMENTS OF THE RESPECTIVE MO NTH EVIDENCING THE PAYMENTS MADE TO M/S VICTOR INTERTRA DE PVT. LTD., THROUGH ACCOUNT PAYEE CHEQUE. THE LD. ASSESSI NG OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND TREATE D THE PURCHASES AS UNEXPLAINED EXPENDITURE BY OBSERVING T HE SAME AS BOGUS AND CONSEQUENT ADDITION WAS MADE U/S 69 OF THE ACT. SHAILESH L. CHHEDA ITA NO.4566/MUM/2014 4 2.2. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDERED AND FOLLOWING VARIOUS DECISIONS AND DIRECTED THE ASSESSING OFFICE R TO SUSTAIN THE ADDITION TO THE EXTENT OF 12.5% OF THE PURCHASE S MADE AS THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. DR, IF KEPT IN JUXTAPOSI TION AND ANALYZED, WE FIND THAT WHILE COMING TO A PARTICULAR CONCLUSION, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) PLACED RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS LIKE THE DECIS ION OF THE TRIBUNAL IN VIJAY M. MISTRY CONSTRUCTION LTD. 355 I TR 498 (GUJ.), VIJAY PROTEINS 58 ITD 428 (AHD.), JITENDRA T. ADNANI, ORDER OF THE FIRST APPELLATE AUTHORITY DATED 26/03/ 2012, HON'BLE GUJARAT HIGH COURT IN CIT VS SIMIT SHETH (2 013) 38 TAXMAN.COM 385 (GUJ.), STATE BANK OF INDIA VS S.K. SHARMA AIR 1996 SC 364 (SC), G.T.C. INDUSTRIES LTD. VS ACI T (65 ITD 380)(BOM.), ACIT VS TRIBHOVANDAS BHIMJI JHAVERI (20 00) 74 ITD 92 (BOM.), SANJAY OIL CAKES INDUSTRIES VS CIT ( 2009) 316 ITR 274 (GUJ.) AND VARIOUS OTHER DECISIONS (AS CONT AINED IN THE IMPUGNED ORDER) AND DECIDED ACCORDINGLY. CONSIDERIN G THE TOTALITY OF FACTS, BROADLY, WE AFFIRM THE SAME. HOW EVER, NO PLAUSIBLE EXPLANATION WAS OFFERED BY THE ASSESSEE W ITH RESPECT TO SOURCE OF EXPENDITURE WHICH WAS MADE FOR BOGUS PURCHASES. THE ASSESSEE ALSO DID NOT PRODUCE THE P ARTIES SHAILESH L. CHHEDA ITA NO.4566/MUM/2014 5 FROM WHOM THE BOGUS PURCHASES WERE MADE, THUS, THE DEPARTMENT COULD NOT GO INTO THE DEEP OF THE TRANSA CTION TO UNEARTH THE RACKET OF BOGUS BILLING. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE/DISCLOSE THE IDENTITY OF THESE UNDISCLOSED ENTITY AND ALSO THE SOURCE OF PAYMENT. UNDISPUTEDLY, M/S VICTOR INTERTRADE PVT. LTD., THRO UGH AN AFFIDAVIT, TENDERED THAT THEY ARE PROVIDING BOGUS B ILLS AND THIS FACTUM WAS NEVER CONTRADICTED. THUS, TO FILL THE GA P OF UNHEALTHY TRADING BY THE PARTIES, WE INCREASE THE A DDITION TO THE EXTENT OF 14.5% OF THE BOGUS PURCHASES AGAINST 12.5% SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEAL), CONSEQUENTLY, THE APPEAL OF THE REVENUE IS PARTLY A LLOWED. WE ARE MAKING IT CLEAR THAT THIS INCREASE OF 2% IS BEC AUSE OF THE PECULIAR FACTS OF THE PRESENT APPEAL, NARRATED IN T HE ASSESSMENT ORDER, WHICH WERE NOT CONTRADICTED HUNDR ED PERCENT BY THE LD. COMMISSIONER OF INCOME TAX (APPE AL). FINALLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWE D. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 20/02/2017. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) #$ / ACCOUNTANT MEMBER %$ / JUDICIAL MEMBER & MUMBAI; * DATED : 20/02/2017 F{X~{T? P.S / +' &%'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 0./ / THE RESPONDENT. SHAILESH L. CHHEDA ITA NO.4566/MUM/2014 6 3. 1 1 & 2% ( ,- ) / THE CIT, MUMBAI. 4. 1 1 & 2% / CIT(A)- , MUMBAI 5. 4'5 % , 1 ,-( , 6 , & / DR, ITAT, MUMBAI 6. 7# 8 / GUARD FILE. / BY ORDER, 04-% % //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI,