M/S DHADDA GEMS LTD, MUMBAI V. ITO 5 (1)(3), MUMBAI

ITA 459/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3841 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries
• Section: 13

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 459 / / 2020 (%. 2007-08 ) ITA NO.459/MUM/2020(A.Y 2007-08) M/S. DHADDA GEMS LTD. 1805 A, PANCHRATNA OPERA HOUSE, MUMBAI 400 004 PAN-AABCD-2150-N ...... ' / APPELLANT % VS. THE ITO -5(1)(3), ROOM NO.569, 5 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... ()/ RESPONDENT '*/ APPELLANT BY : SHRI VIMAL PUNMIYA ()*/ RESPONDENT BY : SHRI SANJAY J. SETHI %+) / DATE OF HEARING : 28/06/2021 ,-. +) / DATE OF PRONOUNCEMENT : 24/09/2021 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-10, MUMBAI (IN SHORT THE CIT(A)) DATED 29/11/2019 FOR THE ASSESSMENT YEAR 2007-08 . 2. SHRI VIMAL PUNMIYA APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT THE ASSESSEE IS A TRADER IN DIAMONDS. THE ASSESSME NT FOR ASSESSMENT YEAR 2007-08 IN THE CASE OF ASSESSEE WAS REOPENED ON THE GROUND THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM M/S. MOULIM ANI IMPEX PVT.LTD., M/S. SUN DIAM AND M/S. VITRAG JEWELS AGGREGATING TO RS. 1,24,16,485/- DURING THE 2 ITA NO.459/MUM/2020(A.Y 2007-08) FINANCIAL YEAR 2006-07. THE ASSESSING OFFICER MADE ADDITION OF RS.15,52,061/- BY ESTIMATING SUPPRESSED PROFIT MARGIN ON ALLEGED B OGUS PURCHASES @ 12.5%. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE CIT (A), INTER-ALIA, CHALLENGING REOPENING OF ASSESSMENT, AS WELL AS, ADDITION ON ME RITS. THE CIT(A) GRANTED PART RELIEF TO THE ASSESSEE BY RESTRICTING ADDITI ON ON ACCOUNT OF ALLEGED BOGUS PURCHASES TO 8%. THE ASSESSEE HAS OFFERED G.P OF 4.15% DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED THAT ADDI TION FOR SIMILAR REASONS WERE MADE BY THE ASSESSING OFFICER IN ASSESSEES OW N CASE IN SUBSEQUENT ASSESSMENT YEARS, THE ASSESSEE CARRIED THE ISSUE I N APPEAL BEFORE THE TRIBUNAL FOR ASSESSMENT YEARS 2008-09,2010-11,2011-12, 2012- 13 AND 2013-14 IN ITA NO.7310 TO 7314/MUM/2016 FOR THE RESPECTIVE ASSESSM ENT YEARS. THE TRIBUNAL VIDE ORDER DATED 19/05/2017 COMMON FOR AF ORESAID ASSESSMENT YEARS HAD RESTORED THE ISSUE BACK TO THE FILE OF ASSESSIN G OFFICER WITH SPECIFIC DIRECTION. THE ASSESSING OFFICER HAS GRANTED RELIE F TO THE ASSESSEE WHILE PASSING ORDER GIVING EFFECT TO THE TRIBUNAL ORDER. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT T HE PRESENT APPEAL MAY ALSO BE RESTORED BACK TO THE FILE OF ASSESSING OFFICER W ITH SIMILAR DIRECTIONS. 3. SHRI SANJAY J. SETHI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR UPHOLDING THE SAM E. HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E TRIBUNAL IN ASSESSEES OWN CASE IN SUBSEQUENT ASSESSMENT YEARS, WHEREIN AD DITIONS WERE MADE ON ACCOUNT OF BOGUS PURCHASES IN SOMEWHAT SIMILAR MANN ER HAS ADJUDICATED APPEALS OF THE ASSESSEE. 4. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. THE ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE ON ACCOUNT O F ASSESSEES INVOLVEMENT 3 ITA NO.459/MUM/2020(A.Y 2007-08) IN OBTAINING ACCOMMODATION ENTRIES FROM CONCERNS B ELONGING TO RAJENDRA JAIN GROUP. THE CONTENTION OF ASSESSEE IS THAT THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT DOCUMENTS BEFORE THE AUTHORITIES BELO W TO PROVE GENUINENESS OF PURCHASES. HOWEVER, THE AUTHORITIES BELOW HAVE FAI LED TO CONSIDER THE DOCUMENTS FURNISHED BY THE ASSESSEE. IN WRITTEN SU BMISSIONS THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS LIST ED DOCUMENTS FURNISHED BY ASSESSEE TO SUBSTANTIATE GENUINENESS OF PURCHASES . THE SAME IS REPRODUCED HEREIN BELOW: 1. ASSESSEE HAS ALL BILLS OF PURCHASES WITH DELIVER Y CHALLANS 2. ALL PAYMENT MADE THOUGHT ACCOUNT PAYEE CHEQUE. 3. SUPPLIER PROVIDED ALL IDENTITY TO BANK FOLLOWING KYC NORMS. 4. ALL SALES OF ASSESSEE WERE ACCEPTED. 5. WITHOUT PURCHASES SALES CANNOT TAKE PLACE. 6. ASSESSEE ACCOUNTS DULY AUDITED BY TAX AUDITOR AN D VAT AUDITOR. 7. DELIVERY CHALLAN OF ALL PURCHASES ARE DULY MAINT AINED. 8. ASSESSEE PURCHASES ARE SOLD TO CUSTOMERS AND BAL ANCE ARE LYING AS CLOSING STOCK. 9. ASSESSEE PURCHASES ARE SOLD TO CUSTOMERS AND CORRELATION GIVEN BY ASSESSEE. 10- ALL PURCHASES BILLS ALSO HAD SHOWN VAT AMOUNT W HICH IS DULY PAID BY ASSESSEE TO SUPPLIER. 11. VAT IS PAID BY US TO THE MAHARASHTRA GOVERNMENT . 12. THERE IS NO EVIDENCE THAN CASH RECEIVED BACK BY ASSESSEE. 5. I FIND THAT SIMILAR CONTENTIONS WERE RAISED BY T HE ASSESSEE BEFORE THE TRIBUNAL IN ITA NO. 7310 TO 7314/MUM/2016 (SUPRA). THE TRIBUNAL RESTORED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER BY OBSERVING AS UNDER:- 8. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCE S OF THE CASE AND ORDERS OF THE LOWER AUTHORITIES AND ALSO SUBMISSIONS MADE BY BOTH THE S IDES BEFORE US. IT IS NOTED THAT IN THIS CASE, THE ASSESSEE HIMSELF HAS OFFERED THE ADDITI ON TO BE MADE KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. HOWEVER, THE A LTERNATIVE PRAYER BEFORE US IS THAT THE ADDITION SHOULD BE COMPUTED IN FAIR AND JUSTIFIED M ANNER. THEREFORE, AFTER TAKING INTO THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE FIRST PRAYER OF THE ASSESSEE CANNOT BE ACCEPTED AND THUS THE ADDITION MADE ON AC COUNT OF BOGUS PURCHASES CANNOT BE DELETED FULLY. NEXT QUESTION THAT ARISES BEFORE US IS THAT HOW MUCH ADDITION SHOULD BE MADE. LD. CIT(A) HAS SUSTAINED THE ADDITION @ 8% THE REVE NUE IS NOT IN APPEAL BEFORE US. THEREFORE, 4 ITA NO.459/MUM/2020(A.Y 2007-08) THE ADDITION IS SUSTAINED AT 8% AS HAS BEEN DONE BY LD. CIT(A). HOWEVER, THE ONLY GRIEVANCE OF THE ASSESSEE WHICH IS NOW LEFT IS THAT THE AMOUN T OF PROFIT WHICH IS ALREADY DISCLOSED BY THE ASSESSEE SHOULD BE DEDUCTED; OTHERWISE IT WILL LEAD TO EXCESSIVE ADDITION. WE HAVE CAREFULLY CONSIDERED IN THE FACTS OF THIS CASE AND FIND THAT THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE DEMAND THAT PROPORTIONATE AMOUNT OF GROSS PROF IT ALREADY DISCLOSED BY THE ASSESSEE CORRESPONDING TO THE AMOUNT OF BOGUS PURCHASES SHOU LD BE DEDUCTED FROM THE ADDITION MADE. THE ASSESSEE EMPHATICALLY STATED BEFORE US TH AT IF THIS ISSUE IS SENT BACK TO THE FILE OF THE AO THEN, THE ASSESSEE SHALL BE ABLE TO MATCH TH E AMOUNT OF THE SALES WITH THE CORRESPONDING AMOUNT OF ALLEGED BOGUS PURCHASES AND THEREFORE THE EXACT AMOUNT OF PROFIT DISCLOSED ON THESE PURCHASES CAN BE FACTUALLY WORKE D OUT. THIS ISSUE IS ACCORDINGLY SENT BACK TO THE FILE OF THE AO WHERE THE ASSESSEE SHALL SUBM IT REQUISITE DETAILS AND EVIDENCES TO SHOW THE CORRESPONDING AMOUNTS OF SALES AGAINST THE IMPUGNED BOGUS PURCHASES AND THEN THE AMOUNT OF ADDITION SUSTAINED @ 8% BY THE LD. CI T(A) SHALL BE FURTHER REDUCED BY THE AMOUNT OF GROSS PROFIT ACTUALLY SHOWN ON THESE PURC HASES. THE ADDITION SHALL BE SUSTAINED ON THE BALANCE AMOUNT. THE AO SHALL GIVE ADEQUATE O PPORTUNITY TO THE ASSESSEE BEFORE DECIDING THIS GROUND AFRESH. THUS, ASSESSEE WOULD GET PART RELIEF. THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. SINCE BOTH SIDES ARE UNANIMOUS IN STATING THAT THE FACTS IN THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO THE FACTS IN ASSE SSMENT YEAR 2008-09, RESPECTFULLY FOLLOWING THE DECISION OF DIVISION B ENCH IN ASSESSEES OWN CASE THE ISSUE IN APPEAL IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE SAME A FRESH IN LINE WITH THE DIRECTIONS OF THE TRIBUNAL FOR ASSESSMENT YEAR 2008-09(SUPRA). THE APPEAL OF ASSESSEE IS THUS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY THE 2 4TH DAY OF SEPTEMBER, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 0%/ DATED 24/09/2021 VM , SR. PS (O/S) 5 ITA NO.459/MUM/2020(A.Y 2007-08) COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. () / THE RESPONDENT. 3. 1) ( )/ THE CIT(A)- 4. 1) CIT 5. 23 ()% , . . . , / DR, ITAT, MUMBAI 6. 345 67 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI