DINESH TARAKCHAND MEHTA, MUMBAI V. CIT(A)-30, MUMBAI

ITA 4590/MUM/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5638 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 29-05-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGNATH PASALE
• Assessee Lawyers: NIKHIL JOSHI
• Keywords: Bogus purchase; Bogus
• Section: 147; 148; 143(1); 250

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER IT A N o . 4 590 /M um/ 2 02 3 (A . Y . 2 01 0-11) IT A N o. 4 591 /M um/ 2 02 3 (A . Y . 2 01 1-12) D i n es h T a r ac h a n d M eh t a 25 , A s h uk un j B ui l d i n g , 3 rd F l o o r, 2 nd P ars i w a d a, Mu mb ai-4 0 0 0 04 V s . IT O-19( 1) ( 4 ) , M at r u M an d i r B ui l d i n g , T a r d e o R oa d , G r a n t R o ad , Mu mb ai-4 0 0 0 0 7 स्थायी लेखा सं./जीआइआर सं./PAN / GI R N o : AM JP S 3 4 37N Appellant .. Respondent Appellant by : Mr. Nikhil Joshi Respondent by : Shri Nagnath Pasale D a t e o f H e a ri n g 30.05.2024 D a t e o f P r on o un c em e n t 24.07.2024 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These appeals are filed by the assessee against the consolidated order of the Learned Commissioner of Income-tax (Appeals), Mumbai-30 /National faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 25.06.2018 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Years [A.Y.] 2010-11 & 2011-12. ITA Nos. 4590, 4591/Mum/2023 A.Ys.2010-11 & 2011-12 DINESH TARACHAND MEHTA Page 2 of 5 2. Appeals have been filed with delay of 1939 days. The assessee has filed application for condonation of delay and has submitted that the order of the Ld. CIT(A) dated 07.09.2018 which was sent online was not in his knowledge. The earlier CA, Shri Navaratnamal Ji Surana who was looking after the matter was diagnosed with Covid and hospitalized. Thereafter, he continuously suffered from ill health and unfortunately expired on 17.03.2023. Even though the fees for filing appeal of Rs. 10,000/- was deposited on 07.03.2020 but the CA could not file appeal due to his ill health. The new CA appointed by the assessee while verifying the outstanding tax demand noticed that the appellate order has been passed and no further appeal had been filed. It is the only then the assessee came to know that the appeal had not been filed despite the fact that appeal fee of 10,000/- was paid on 07.03.2020 i.e. a fortnight before the onset of Covid. The assessee has furnished proof of deposit of Rs. 10,000/- as fee for appeal and also message received regarding condolence meeting of Shri Navratnamal Ji Surana CA in support of his contentions. 3. In view of the facts submitted by the Ld. AR, we hereby condone the delay in filing of appeals and proceed to decide issues involved on merits. 4. The only issue which is common in both years is regarding the disallowance of purchases to the extent of 12.05% on account of purchase from non-genuine parties. ITA No. 4590/Mum/2023 for AY 2010-11 5. The assessee has raised following ground of appeal for AY 2010-11: ITA Nos. 4590, 4591/Mum/2023 A.Ys.2010-11 & 2011-12 DINESH TARACHAND MEHTA Page 3 of 5 “1. The Ld. Commissioner of Income-tax (Appeals) (hereinafter referred to as "Ld.CIT(A)"] has erred in upholding the order of the Ld. Assessing Officer and disallowing the purchase to the extent of 12.5% of Rs. 1,04,34,421/- amounting to Rs. 13,04,303/- on account of purchase from non-genuine purchase parties.” 6. Brief facts for AY 2010-11 are as under: a. Return declaring income of Rs. 3,67,899/- was filed on 29.09.2010 and was processed u/s 143(1) of the Act. Subsequently, information was received from the DGIT Investigation Wing, Mumbai about a scam unearthed by Sales Tax Department regarding issue of hawala bills/accommodation entries by several parties in Mumbai. The assessee allegedly made purchases of Rs. 1,04,34,421/- from the some of the non-existent parties detected by the sales tax department. Accordingly, based on this information, the case was reopened u/s 147 of the Act and notice u/s 148 was issued on 16.09.2014. After making independent enquiry, the AO came to the conclusion that the assessee had indulged in non-genuine transactions with the intention of suppressing the true profits. He, therefore, made an addition of Rs. 13,04,303/- being 12.5% of the total non-genuine purchases amounting to Rs. 1,04,34,421/-. ITA Nos. 4590, 4591/Mum/2023 A.Ys.2010-11 & 2011-12 DINESH TARACHAND MEHTA Page 4 of 5 b. The Ld. CIT(A) has upheld the order of the AO based on various decisions, specifically that of the Hon’ble Gujarat High Court in the case of CIT v/s Simit P. Shet (2013) 356 ITR 451. 7. We have considered the rival submissions and perused various judicial pronouncements cited by the Ld. AR as well as Ld. DR. The only issue for consideration is whether the element of profit estimated by the AO @12.5% in such bogus purchases is reasonable or not. 8. The assessee is engaged in trading in Ferrous and Non-ferrous Metals. Since, the assessee failed to discharge onus of proving the genuineness of the transactions in question, the AO has rightly proceeded to make the addition of profit element embedded in the total bogus purchases. Considering the nature of business of the assessee and other relevant facts as well as the judicial pronouncements, we deem it reasonable to estimate the profit @5% of the total non-genuine purchases of Rs. 1,04,34,421/-. Thus, the addition to the extent of 5% which works out 5,21,721/- is sustained. Thus, appeal of the assessee is partly allowed. ITA No. 4591/Mum/2023 for AY 2011-12 9. The assessee has raised following ground of appeal for AY 2011-12: a. “The Ld. Commissioner of Income-tax (Appeals) [hereinafter referred to as "Ld.CIT(A)"] has erred in upholding the order of the Ld. Assessing Officer and disallowing the purchase to the extent of 12.5% of Rs.1,23,04,442 /- amounting to Rs. 15,38,055/- on account of purchase from non-genuine purchase parties.” ITA Nos. 4590, 4591/Mum/2023 A.Ys.2010-11 & 2011-12 DINESH TARACHAND MEHTA Page 5 of 5 10. There is no change in the facts in AY 2011-12. In this year, the AO has made addition of Rs. 15,48,055/- @ 12.5% of the total non-genuine purchases of Rs. 1,23,04,442/. As discussed above, the addition to the extent of 5% of the non-genuine purchases is hereby sustained which works out to Rs. 6,15,222/-. 11. In the result, both the appeals of the assessee are partly allowed. Order pronounced in the open court on 24.07.2024. S d /- S d /- N A R E N D E R K U M AR CH O U D H R Y R E N U J AU H R I (J U D I CI A L ME M B E R ) ( A C C OU N T AN T M E MB E R ) Place: Mumbai Date : 24.07.2024 ANIKET SINGH RAJPUT/STENO आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतिकरण/ ITAT, Bench, Mumbai