MITESH CHIMANLAL SAVLA, MUMBAI V. ITO WD 21(2)(3), MUMBAI

ITA 4567/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9371 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: MATHURIA
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 133(6); 147; 148

Judgement Text

1 ITA NO.4567/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.4567/MUM/2016 (ASSESSMENT YEAR 2009-10) SHRI MITESH CHIMANLAL SAVLA 15/16, DIVYA MAHAL GYAN MANDIR ROAD, DADAR (W) MUMBAI PAN : AMWPS2822A VS THE ITO, WD.21(2)(3), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI M.S. MATHURIA RESPONDENT BY SHRI RAJAT MITTAL DATE OF HEARING 20-09-2017 DATE OF PRONOUNCEMENT 27-09-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-33, MUMBAI DATED 72-04-2016 AND IT PERTAINS TO AY 2009-10. THE ASSESSEE RAISED THE FOLLOWING GROUNDS:- (1) ON THE FACTS AND IN LAW, LEARNED CIT(A)-33 HAS ERRE D IN CONFIRMING OF JURISDICTION OF THE ASSESSING OFFICER TO INITIAT E PROCEEDINGS U/S 147 / 148 FOR ASSESSMENT YEAR 2009-10. (2) ON THE FACTS AND IN LAW, LEARNED CIT(A)-33 HAS ERRE D IN SUSTENANCE / CONFIRMATION OF ADDITION MADE BY AO TO THE EXTENT TO RS.18,58,158/-. 2 ITA NO.4567/MUM/2016 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y. 2009-10 ON 26-05- 2009 DECLARING TOTAL INCOME OF RS. 3,28,290/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE ASSESSING OFFICER NOTED THAT THE LI ST OF ASSESSES, WHO WERE INVOLVED IN BOGUS PURCHASE ACTIVITY BY TAKING ACCOM MODATION ENTRIES FROM HAWALA OPERATORS INCLUDED THE NAME OF ASSESSEE. AS PER THE INFORMATION THE ASSESSEE HAS TAKEN BOGUS PURCHASE BILLS FROM 13 PARTIES MENTIONED ON PAGE 2 OF THE ASSESSMENT ORDER TOTALING RS.74,32 ,632. THOSE 13 PARTIES, ON OATH HAVE STATED THAT THEY HAVE GIVEN O NLY BILLS AND NO ACTUAL TRANSACTION HAD TAKEN PLACE BETWEEN THEM AND THE A SSESSEE COMPANY. IN THE LIGHT OF THE INFORMATION RECEIVED FROM THE D GIT (INV), THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U /S 148 OF THE ACT. IN RESPONSE TO NOTICE U/S 148, THE ASSESSEE HAS FILED RETURN AND RETURNED THE SAME INCOME AS HAD BEEN RETURNED IN THE RETURN ORIG INALLY FILED. THE ASSESSING OFFICER, DURING THE COURSE OF RE-ASSESSME NT PROCEEDINGS, ISSUED NOTICES U/S 133(6) TO THOSE 13 PARTIES; HOWEVER, MA NY OF THE NOTICES WERE RETURNED BACK AND IN SOME CASES THOUGH NOTICES SERVED, BUT NO REPLY WAS RECEIVED. THESE FACTS WERE CONFRONTED TO THE AR OF THE ASSESSEE. THE ASSESSEE EXPLAINED THAT THE PURCHASE S SHOWN BY THEM WERE GENUINE AS THE PAYMENTS FOR THE PURCHASES HAVE BEEN DONE THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSING OFFICER, WAS N OT SATISFIED WITH THE EXPLANATION. HE OBSERVED THAT PAYMENT BY ACCOUNT P AYEE CHEQUE WAS NOT SACROSANCT AND WAS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE PURCHASES. FOR THIS PROPOSITION HE RELIED UPON THE JUDGEMENT OF HONBLE 3 ITA NO.4567/MUM/2016 APEX COURT IN THE CASE OF KACHWAL GEMS V/S JCIT (20 07) 288 ITR 10 (SC). IN THIS VIEW OF THE MATTER, THE AO HELD THE ENTIRE ALLEGED BOGUS PURCHASES OF RS.74,32,632 DEBITED TO THE P&L ACCOUN T AS UNEXPLAINED EXPENDITURE AND ACCORDINGLY ADDED THE SAME TO THE T OTAL INCOME DECLARED BY THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE M ATTER BEFORE CIT(A). THE LD.CIT(A), HAS DISMISSED THE LEGAL GROUND CHALL ENGING THE REOPENING RAISED BY THE ASSESSEE BY FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS JHAVERI STOCK BROKERS P. LTD 291 ITR 500 (SC) AND BY OBSERVING THAT THE AO HAS REOPENED THE ASSESSMENT BY FOLLOWING THE DUE PROCEDURE. ON MERITS, THE LD.CIT (A), FOR THE DETAILED REASONS MENTIONED IN HIS ORDER, HAS HELD THAT PROFI T ELEMENT INVOLVED IN SUCH BOGUS PURCHASES CAN ONLY BE ADDED AND, THEREFO RE, RELYING UPON THE JUDGEMENT OF VIJAY PROTEINS LTD VS CIT 58 ITD 428, CONFIRMED DISALLOWANCE OF 25% ON SUCH ALLEGED BOGUS PURCHASES THEREBY AN ADDITION OF RS.18,58,158 WAS RETAINED AND THE REMAINING ADDI TION OF RS.55,74,474 WAS DELETED. STILL AGGRIEVED, THE ASSESSEE IS IN A PPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES AND PERUSED MATERIAL AVAI LABLE ON RECORD. WITH REGARD TO GROUND NO.1 PERTAINING THE VALIDITY OF THE RE-ASSESSMENT U/S 147 WAS NOT PRESSED BEFORE US. ACCORDINGLY, GR OUND 1 IS REJECTED, AS NOT PRESSED. 4. WITH REGARD TO GROUND 2 PERTAINING TO CONFIRMATION OF ADDITION OF RS.18,58,158 WE FIND THAT THE ISSUE OF ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES BY OBTAINING BOGUS PURCHASE BILLS H AS BEEN CONSIDERED AND DECIDED IN A PLETHORA OF CASES AND THE TRIBUNAL HAS BEEN CONSISTENTLY 4 ITA NO.4567/MUM/2016 HOLDING A VIEW THAT ONLY PROFIT ELEMENT INVOLVED IN SUCH PURCHASES CAN ONLY BE ADDED. THE TRIBUNAL, IN THE CASE OF SHRI V IJAY N MEHTA IN ITA NO.1569/MUM/2015, VIDE ORDER DATED 21 JUNE,2017 HAS UPHELD ESTIMATION OF PROFIT OF 15% ON ALLEGED BOGUS PURCHA SES(WHEREIN ONE OF US WAS A PARTY TO THE ORDER. THEREFORE, CONSISTENT WI TH OUR EARLIER VIEW AND ALSO CONSIDERING THE FACTS OF PRESENT CASE, WE DIRE CT THE ASSESSING OFFICER TO ESTIMATE PROFIT OF 12.5% ON ALLEGED BOGUS PURCHA SES OF RS.74,32,632 AND MAKE THE ADDITION OF THE SAME TO THE RETURNED I NCOME. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2017. SD/- SD/- (SAKTIJIT DEY) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 27 TH SEPTEMBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI