ITO 32(2)(1), MUMBAI V. JIGAR V. SHAH, MUMBAI

ITA 4655/MUM/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3770 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Bogus purchase
• Section: 69C

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE HONBLE SHRI SANDEEP GOSAIN, JM & HONBLE SHRI RAJESH KUMAR , A M ./ I.T.A. NO . 4655/MUM/2015 ( / ASSESSMENT YEAR: 20 11 - 12 ) ITO 32(2)(1) R. NO. 308, 3 RD FLOOR, C - 10, PRATAYAKSHKAR BHAVAN, BKC, BANDRA, MUMBAI - 400 051 / VS. JIGAR V. SHAH, B - 301, PREM APARTMENTS, SAI BABA NAGAR, OPP - GRAVITY SHOW ROOM, BORIVALI(W), MUMBAI - 400 092 ./ ./ PAN/GIR NO. A OYPS4771C ( / APPELLANT ) : ( / RESPONDENT ) C.O. N O . 118 /MUM / 2017 ( / ASSESSMENT YEAR: 20 11 - 12 ) JIGAR V. SHAH, B - 301, PREM APARTMENTS, SAI BABA NAGAR, OPP - GRAVITY SHOW ROOM, BORIVALI(W), MUMBAI - 400 092 / VS. ITO 32(2)(1) R. NO. 308, 3 RD FLOOR, C - 10, PRATAYAKSHKAR BHAVAN, BKC, BANDRA, MUMBAI - 400 051 ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJEEV GUBGOTRA , DR / RESPONDENTBY : SHRI NISHIT GANDHI , AR / DATE OF HEARING : 18/12 /201 8 / DATE OF PRONOUNCEMENT : 12.02.2019 2 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT A PPEAL AS WELL AS CROSS OBJECTION HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE ARE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 44, MUMBAI DATED 15.06.15 FOR AY 2011 - 12. 2. SINCE, THE FACTS RAISED IN THE APPEAL FILED BY THE REVENUE AS WELL AS C.O. FILED BY THE ASSESSEE ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. FIRST OF ALL WE TAKE UP CROSS OBJECTION NO. 118 /MUM /201 7 FILED BY ASSESSEE FOR AY 2011 - 12 O N THE GROUNDS MENTIONED HEREIN BELOW: - 1.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 44, MUMBAI, ['THE ID. CIT(A)'] ERRED IN PARTLY CONFIRMING THE DISALLOWANCE OF RS. 26,44,155 / - BEING 12% OF THE TOTAL PURCHASES AMOUNTING TO 3 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH RS.2,20,34,6257 - DISALLOWED BY THE INCOME TAX OFFICER - 32 (2) (1), MUMBAI ('THE A.O.') IN THE HANDS OF THE ASSESSEE. 1.2 WHILE DOING SO THE LD. CIT (A) ERRED IN: (I) BASING HIS ACTION ON SURMISES, ASSUMPTIONS AND IRRELEVANT AND EXTRANEOUS CONSIDERATIONS IGNORING THE RELEVANT MATERIAL AND CONSIDERATIONS; AND, (II) NOT AP PRECIATING THE OVERWHELMING EVIDENCES FURNISHED BY THE APPELLANT IN SUPPORT OF HIS CLAIM OF PURCHASES. 1.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE DISALLOWANCE SO CONFIRMED BY THE LD. CIT (A) DESERVES TO BE DELETED. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUNDS AT THE TIME OF HEARING. 4 . THE SOLITARY GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS. 26,44,155/ - BEING 12% OF THE TOTAL PURCHASES 4 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH AMOUNTING TO RS.2,20,34,627 - DISALLOWED BY THE AO IN THE HANDS OF THE ASSESSEE. 5 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED BEFORE US THAT THIS GROUND IS COVERED BY THE ORDER OF HONBLE ITAT IN ITA NO. 6099/MUM/16 FOR AY 2012 - 13 IN ASSESSEES OWN CASE , WHEREIN THE IDENTICAL GROUND RAISED IN THE PRESENT APPEA L HAS ALREADY BEEN DECIDED ON MERITS. 6 . ON THE OTHER HAND, LD. DR CONTESTED THE APPEAL AND RELIED UPON THE ASSESSMENT ORDER PASSED BY AO. 7 . WE HAVE HEARD BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED B Y THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 1223 & 1719/MUM/14 FOR AY 2010 - 11 IN ASSESSEES OWN CASE . THE OPERATIVE PORTION OF THE ORDER OF HONBLE ITAT PASSED IN ITA NO. 1223 & 1719/MUM/14 FOR AY 2010 - 11 CONTAINED IN PARA NO. 7 , WHICH IS REPRODUCED BELOW: - 5 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ADDITIONS IN THIS CASE HAVE BEEN MADE ON THE GROUND THAT NAME OF CERTAIN SUPPLIERS FIGURED IN THE LIST OF SUSPICIOUS DEALERS IN THE WEBSITE OF SALES TAX DEPARTMENT. EXCEPT TH AT, NO EVIDENCE HAS BEEN POINTED OUT BY THE AO WHICH MAY PROVE THAT THE ASSESSEE HAS INDULGED IN THE BOGUS PURCHASES. THE AO HAS NOT DOUBTED THE SALES MADE BY THE ASSESSEE. THE EXPENDITURE IS DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE. IT IS N OT THE CASE OF THE AO THAT THE GOODS WERE PURCHASED BY THE ASSESSEE AT A LESSER RATE OR THAT SOMEONE HAS SUPPLIED THE GOODS TO THE ASSESSEE FOR FREE. WHEN IT IS NOT SO, SOLELY ON THE BASIS OF UNCONFRONTED AND GENERAL STATEMENTS OF ALLEGED SUPPLIERS MADE BE FORE SALES TAX AUTHORITIES, ADDITION U/S 69C UNDER THE CIRCUMSTANCES ON ACCOUNT OF PURCHASES IS NOT WARRANTED AT ALL. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. M.K. BROTHERS (1987) 163 ITR 249 HAS HELD THAT WHERE THERE WAS NOTHING TO INDICATE THAT THE AMOUNT GIVEN BY THE ASSESSEE FOR THE PURCHASES MADE HAD COME BACK TO THE ASSESSEE IN ANY OTHER FORM AND WHERE THERE WAS NO EVIDENCE THAT THE SAID CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE AND EVEN THE STATEMENTS MADE BY THE ALLEGED SUPPLIERS I N NO WAY IMPLICATE THE TRANSACTION WITH THE ASSESSEE THEN UNDER SUCH CIRCUMSTANCES IT 6 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH CANNOT BE SAID THAT ENTRIES FOR THE PURCHASE OF GOODS MADE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE BOGUS AND NO ADDITION IN THIS RESPECT CAN BE MADE. THE LD. A.R. OF THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NIKUNJ ENTERPRISES (P.) LTD. (2013) 35 TAXMAN.COM 384 (BOMBAY) WHEREIN THE HONBLE BOMBAY HIGH COURT HAS UPHELD THE FINDINGS OF THE TRIBUNAL THAT WHERE THE ASSESSEE FILED LETTERS OF CONFIRMATION OF SUPPLIERS, COPIES OF BANK STATEMENT SHOWING ENTRIES OF PAYMENT THROUGH ACCOUNT PAYEE CHEQUES TO SUPPLIERS AND STOCK RECONCILIATION STATEMENTS, SALE OF PURCHASED GOODS WAS NOT DOUBTED, THE TRANSACTIONS WERE SUPPORT ED WITH EVIDENCES AND CONFIRMATIONS, IN SUCH AN EVENT MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE AO OR THE LD. CIT(A), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT GENUINE. EVEN WHEN IT IS NOT THE CASE OF THE REVENUE THAT SALES TURNOVER OF THE ASSESSEE HAS DECREASED OR THE NET PROFIT RATIO IS LESS THAN THE EARLIER ASSESSMENT YEARS OR THE SUBSEQUENT ASSESSMENT YEARS, THEN, IN OUR VIEW, MAKING ADDITION ON ASSUMPTION THAT THE ASSESSEE WOULD HAVE BOOKED A LESSER PROFIT HAS NO JUSTIFICATION. I N VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES IN MAKING/SUSTAINING THE 7 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH IMPUGNED ADDITIONS AND THE SAME ARE ACCORDINGLY ORDERED TO BE DELETED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDE RING THE ORDERS PASSED BY REVENUE AUTHORITIES AND COORDINATE BENCH OF ITAT AS MENTIONED ABOVE IN ASSESSEES OWN CASE , WE FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ITA NO. 1223 & 1719/MUM/14 FOR AY 2010 - 11 IN ASSESSEES OWN CASE , WHEREIN THE TRIBUNAL HAD DELETED THE ENTIRE ADDITIONS. T HEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE A PPLY THE SAME FINDINGS WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS ALLOWED . ITA NO. 4655/MUM/2015 (AY 2011 - 12) 8. NOW WE TAKE UP REVENUES APPEALS IN ITA NO. 4655 /MUM/2015 (AY 2011 - 12 ) . SINCE WE HAVE ALREADY DECIDED THE SIMILAR G ROUND O F APPEAL IN CO. NO. 118/MUM/2017 FOR AY 8 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH 2011 - 12 ON MERITS. THEREFORE , FOLLOWING OUR OWN DECISION IN CO NO. 118 /MUM/17 , WE APPLY THE SAME FINDINGS IN THE PRESENT APPEAL IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY WHICH IS APPLICABLE MUTATIS MUTANDIS . 9 . IN THE NET RESULT , THE CROSS OBJECTION FILED BY THE A SSESSEE STANDS ALLOWED AND APPEAL FILED BY THE REVENEUE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEB , 20 1 9 SD/ - SD/ - ( RAJESH KUMAR ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 .02 .201 9 SR.PS . DHANANJAY 9 I.T.A. NO.4655/MUM/2015 AND C.O. NO. 118/MUM/2017 JIGAR V. SHAH / 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