SHRI. GANPATRAM DHUDARAMJI PUROHIT, Mumbai V. ITO 19(1)(3), Mumbai

ITA 4609/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1994 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Reopening of assessment; Bogus purchase; Set aside
• Section: 143(3); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4609/M/2019 ASSESSMENT YEAR: 2011-12 SHRI GANPATRAM DHUDARAMJI PUROHIT, ROOM NO.58, CARPENTER STREET, MANTRI BUILDING, NANUBHAI DESAI ROAD, MUMBAI 400 004 PAN: AADPP5868L VS. ITO-19(1)(3), ROOM NO.220, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, GRANT ROAD (W), MUMBAI 400 007 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJIV KHANDELWAL, A.R. REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 04.03.2021 DATE OF PRONOUNCEMENT : 25.05.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 15.05.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THERE ARE ONLY THREE AFFECTIVE GROUNDS RAISED BY THE ASSESSEE. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE E X-PARTE DECISION PASSED BY THE LD. CIT(A). THE ISSUE RAISE D IN GROUND NO.2 IS AGAINST THE REOPENING OF ASSESSMENT UNDER S ECTION 147 OF THE ACT WHEREAS THE ISSUE IN GROUND NO.3 IS AGAI NST THE ITA NO.4609/M/2019 SHRI GANPATRAM DHUDARAMJI PUROHIT 2 ENHANCEMENT OF INCOME BY LD. CIT(A) TO RS.1,09,57,6 79/- BEING 100% OF THE BOGUS PURCHASES AS AGAINST RS.13,69,710 /- BEING 12.5% OF THE BOGUS PURCHASES DISALLOWED AND ADDED B Y THE AO. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 25.09.2011 DECLARING AN INCOME OF RS.4,46 ,844/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED A FTER THE AO RECEIVED INFORMATION FROM DGIT(INV.), MUMBAI THAT A SSESSEE IS BENEFICIARY OF HAWALA PURCHASE ENTRIES WHICH IS PAR T OF THE SCAM AS BROUGHT OUT BY SALE TAX DEPARTMENT, MAHARASHTRA. ACCORDINGLY, THE NOTICE UNDER SECTION 148 OF THE AC T WAS ISSUED ON 22.09.2014 ON THE GROUND THAT ASSESSEE HAS RECEI VED ACCOMMODATION BILLS TO THE TUNE OF RS.1,09,57,679/- FROM SIX PARTIES AS MENTIONED BY THE AO ON PAGE NO.2 OF THE ASSESSMENT ORDER. THEREAFTER, THE AO CALLED FOR VARIOUS DETAI LS AND INFORMATION FROM THE ASSESSEE TO PROVE THE GENUINEN ESS OF THE PURCHASE AND ALSO ISSUED NOTICE UNDER SECTION 133(6 ) OF THE ACT. THE ASSESSEE FURNISHED BEFORE THE AO THE COPY OF BI LLS, VOUCHERS, DETAILS OF PAYMENT, STOCK TALLY ETC. HOWEVER, THE AO WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND CONSEQ UENTLY CAME TO CONCLUSION THAT THESE ARE NON GENUINE TRANSACTIO NS. FINALLY, THE AO DISALLOWED AND ADDED THE PROFIT ELEMENT IN T HE SAID BOGUS PURCHASE @ 12.5% THEREBY MAKING OF RS.13,69,7 10/- TO INCOME OF THE ASSESSEE UNDER SECTION 143(3) READ WI TH SECTION 147 OF THE ACT DATED 13.01.2016. 5. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHICH WAS DISMISSED BY THE LD. CIT(A) EX-PARTE BY E NHANCING THE ADDITION TO 100% OF THE BOGUS PURCHASES THEREBY DIRECTING ITA NO.4609/M/2019 SHRI GANPATRAM DHUDARAMJI PUROHIT 3 THE AO TO MAKE AN ADDITION OF RS.1,09,57,679/- AS A GAINST THE ADDITION OF RS. 13,69,710/- MADE BY THE AO @ 12.5% OF THE BOGUS PURCHASES. 6. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY THIS IS A CASE OF BOGUS PURCHASES. AS HAS BEEN OBSERVED BY THE AO IN THE A SSESSMENT ORDER THAT THE ASSESSEE HAS MADE PURCHASES FROM SI X PARTIES AGGREGATING TO RS.1,09,57,679/-. THE AO TREATED TH ESE PURCHASES AS NON GENUINE AND IN ORDER TO ASSESS THE PROFIT ELEMENTS THEREIN APPLIED A RATE OF 12.5% ON THE SA ID BOGUS PURCHASES AND THUS ADDED RS.13,69,710/-. WHEREAS LD . CIT(A) HAS ENHANCED ADDITION TO 100% OF THE BOGUS PURCHASE S. WE NOTE THAT THE ISSUE OF TAXABILITY ON BOGUS PURCHASE S IS MORE OR LESS SETTLED AND THE VARIOUS JUDICIAL FORUMS HAVE B EEN APPLYING THE PERCENTAGE ON THE BOGUS PURCHASES TO BRING THE PROFIT ELEMENT TO TAX. WE ALSO NOTE THAT ASSESSEE HAS FIL ED BILLS, VOUCHERS, SALE & PURCHASE RECORDS, ENTRIES IN THE S TOCK REGISTER AND DETAILS OF PAYMENT WITH THE AO. THEREFORE, THE ONLY PRESUMPTION IS THAT THE ASSESSEE MIGHT HAVE MADE PU RCHASES FROM THE GREY MARKET THEREBY LEADING TO ANOTHER PRE SUMPTION THAT ASSESSEE MIGHT HAVE MADE SOME SURPLUS BY PURCH ASING THE GOODS FROM GREY MARKET. THEREFORE, IN NO CASE THE ORDER OF LD. CIT(A) WHICH IS EX-PARTE CAN NOT BE SUSTAINED. 7. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO ASSESS THE INCOME @ 12.5% OF THE BOGUS PURCHASES. ITA NO.4609/M/2019 SHRI GANPATRAM DHUDARAMJI PUROHIT 4 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.05 .2021. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25.05.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.