ITO 3(3) , MUMBAI V. SANDEEP NAMDEO CHAVAN, MUMBAI

ITA 4566/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6790 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 201; 147

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY , JM & SHRI S . RIFAUR RAHMAN, AM ./ I.T.A. NO . 4566 /MUM/2019 ( / ASSESSMENT YEAR: 201 0 - 11 ) ITO WARD 3(3) , R. NO. 8 , 6 TH FLOOR, B - WING, ASHAR IT PARK, ROAD NO. 16Z, WAGLE INDUSTRIAL ESTATE, THANE (W), PIN - 400 604 / VS. SHRI SANDEEP NAMDEO CHAVAN, 1, NEAR THAKUR ENGG. WORKS, POKHARAN ROAD NO. 1, UPVAN, THANE - 400 601 ./ ./ PAN NO. A FTPC1326H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SANJAY J. SETHI , DR / RESPONDENTBY : NONE / DATE OF HEARING : 11.01 .202 1 / DATE OF PRONOUNCEMENT : 25.01.2021 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) - 2 IN SHORT REFERRED AS LD. CIT(A) , THANE, DATED 10 .04.19 FOR A SSESSMENT YEAR (IN SHORT A Y ) 2010 - 11 . 2 I.T.A. NO. 4566 /MUM/201 9 SHRI SANDEEP NAMDEO CHAVAN 2. AT THE OUTSET, IT IS NOTICED THAT NO NE APPEARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. ON THE OTHER HAND, L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE , WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. T HE BRIEF FACTS OF THE C ASE ARE, BASED ON THE INFORMATION RECEIVED FROM THE DGIT(INV) AND MAHARASHTRA SALES TAX DEPART MENT ABOUT THE ACCOMMODATION ENTRIES OBTAINED BY THE ASSESSEE. ACCORDINGLY, ASSESSMENT WAS REOPENED U/S 147 OF THE ACT AND SUBSEQUENTLY ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE ACT BY THE AO THEREBY MAKING 100% ADDITION ON ACCOUNT OF BOGUS PURC HASES. 4. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND BASED ON THE SUBMISSION OF ASSESSEE, LD. CIT(A)AGREED WITH THE AO THAT THIS PURCHASES WERE NOT GENUINE AND DOES NOT MEAN THAT PURCHASES MADE FROM THESE PARTIES ARE G ENUINE. THE COURTS HAVE HELD THAT PAYMENT MADE BY CHEQUE ITSELF IS NOT SACROSANCT SO AS TO PROVE THE GENUINENESS OF THE 3 I.T.A. NO. 4566 /MUM/201 9 SHRI SANDEEP NAMDEO CHAVAN PURCHASES WHEN THE SURROUNDING CIRCUMSTANCES ARE SUSPECT. HOWEVER, THE ASSESSEE HAS SHOWN ONWARDS SALES WHICH HAS NOT BEEN DOUBTED BY TH E AO. BY RELYING ON THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VRS. SMITH P. SHETH 356 ITR 451 (GUJ), HE REDUCED THE DIS ALLOWANCE @ 5%. ACCORDINGLY, LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE ABOVE ORDER, REVENUE HAS PREFERRED THE APPEAL BEFORE US ON THE GROUND MENTIONED HEREIN BELOW: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENE SS OF THE PURCHASES FROM THE NON EXISTENT VENDORS AS PER INFORMATION RECEIVED FROM LAW ENFORCEMENT AGENCY OF STATE GOVT. OF MAHARASHTRA I.E. SALES TAX DEPARTMENT, AND ESTABLISHED BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD.CIT(A) - HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ONUS TO JUSTIFY THE CLAIM OF EXPENSES IS ON THE ASSESSEE AND THE SAME HAS FAILED 4 I.T.A. NO. 4566 /MUM/201 9 SHRI SANDEEP NAMDEO CHAVAN TO DISCHARGE IT IN RELATION TO THE PURCHASES MADE FROM THE NON - EXISTENT VENDORS. 3. ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING, THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF PURCHASES FROM NON - EXISTENT VENDORS BY MEANS OF RELEVANT SUPPORTING DOCUMENTS RELATED TO MOVEMENT OF GO ODS, STOCK REGISTER, ETC. TO RESTRICT THE ADDITION TO 5% OF BOGUS PURCHASES FROM THE NON - EXISTENT VENDORS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE LAW CORRECTLY THAT ONCE THE PUR CHASES ARE UNVERIFIABLE/NOT GENUINE/BOGUS, THE SAME SHOULD HAVE BEEN DISALLOWED IN ENTIRETY, PARTICULARLY IN VIEW OF THE RATIO OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO. 242 OF 2003 DATED 20/06/2016 IN THE CASE OF N. K. PROTEINS LT D. AGAINST WHICH THE SLP WAS DISMISSED BY THE HON'BLE APEX COURT. 5. IT IS HUMBLY REQUESTED THAT PRESENT APPEAL IS BEING FILED IN ACCORDANCE WITH THE CBDT'S INSTRUCTION NO. 3/2018 DATED 11.07.2018 AMENDED VIDE LETTER DTD. 20.08.2018 AS PER PARA 10(E) OF THE SAID CIRCULAR. THEREFORE, THE ORDER OF THE CIT(A) MAY KINDLY BE VACATED AND THAT OF THE AO MAY BE RESTORED. 5 I.T.A. NO. 4566 /MUM/201 9 SHRI SANDEEP NAMDEO CHAVAN 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 6. CONSIDERED THE SUBMISSION OF LD. DR AND MATERIAL PLACED ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT NO DOUBT THE PURCHASES MADE FROM THE SUSPECTED PARTIES ARE NOT GENUINE. HOWEVER, THE PURCHASES ITSELF CANNOT BE DOUBTED AS RIGHTLY ADJUDICATED BY LD. CIT( A) THAT AO HAS NOT DOUBTED SALES DECLARED BY THE ASSESSEE, ONLY HE SUSPECTS THE PURCHASES. BY RESPECTFULLY FOLLOWING THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VRS. SMITH P. SHETH (SUPRA), WE ARE INCLINED TO AGREE WITH THE FINDINGS OF LD. CIT(A). THEREFORE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER S PRONOUNCED IN THE OPEN COURT ON 25.01. 20 21. SD/ - SD/ - ( VIKAS AWASTHY ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 25.01 .2021 SR.PS . DHANANJAY 6 I.T.A. NO. 4566 /MUM/201 9 SHRI SANDEEP NAMDEO CHAVAN / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI