NARESHKUMAR K BISHNOI, MUMBAI V. ITO 19(2)(4), MUMBAI

ITA 466/MUM/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9402 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Additional evidence
• Section: 147; 144

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “एस एम सी” , मुंबई Įी ǒवकास अवèथी, Ûयाियक सदèय के सम¢ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं. 466/मुं/2020 (िन.व.2011-12) ITA NO.466/MUM/2020 (A.Y.2011-12) Nareshkumar K. Bishnoi, 17/21, Maruti Mandir Marg, 5 th Kumbharwada lane, Mumbai-400004. PAN: AHZPB0943P ...... अपीलाथȸ /Appellant बनाम Vs. ITO 19(2)(4) Matru Mandir, Tardeo Road, Mumbai-400007. ..... Ĥितवादȣ/Respondent अपीलाथȸ Ʈारा/ Appellant by : None Ĥितवादȣ Ʈारा/Respondent by : Sh. Sanjay J. Sethi सुनवाई कȧ ितिथ/ Date of hearing : 29/06/2021 घोषणा कȧ ितिथ/ Date of pronouncement : 22/09/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-30, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 25/11/2019 for the assessment year 2011-12. 2 आअसं. 466/मुं/2020 (िन.व.2011-12) ITA NO.466/MUM/2020 (A.Y.2011-12) 2. The brief facts of the case as emanating from records are: The assessee is engaged in trading of Ferrous and Non-ferrous Metals. During assessment proceedings, the assessee failed to appear before the Assessing Officer (AO) despite service of notices. The AO invoked the provisions of section 144 and completed the assessment by making addition of Rs. 25,21,081/- i.e. the entire bogus purchases made from vendors declared as hawala operators by the Sales Tax Department, Government of Maharashtra. Against the assessment order dated 30.11.2016 passed under section 144 read with section 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], the assessee filed appeal before the CIT(A). The assessee furnished additional evidences to substantiate genuineness of the purchases before the CIT(A). The CIT(A) sought remand report from the AO on the additional evidences. Since, no rebuttal was filed by the assessee against the remand report, the CIT(A) upheld the findings of AO. Hence, the present appeal by the assessee. 3. Sh. Sanjay J. Sethi representing the Department submitted that the assessee has failed to discharge his onus in proving genuineness of the purchases and the dealers from whom such purchases were made. The assessee could neither produce the dealers nor any confirmations were filed from them. No delivery challen, transport receipt, octroi receipts, etc., was furnished by the assessee to prove transportation of goods. The assessee was non-cooperative before the AO, therefore, the AO was constrained to complete the assessment under section 144 of the Act. The ld. Departmental Representative (DR) 3 आअसं. 466/मुं/2020 (िन.व.2011-12) ITA NO.466/MUM/2020 (A.Y.2011-12) vehemently prayed for upholding the impugned order and dismissing the appeal of assessee. 4. Submissions made by ld. DR heard, orders of the authorities below examined. Undisputedly, the assessee failed to discharge his onus in proving genuineness of the dealers and purchases made from them during the period relevant to AY under appeal. At the same time, it is observed that the AO has not questioned the sales turnover and inventory declared by the assessee. Without purchases, there cannot be sales. The assessee might have procured the goods from grey market and thereafter obtained matching purchase bills from accommodation entry providers. Such dubious transactions are undertaken only to save VAT and suppress some profit. The entire unproved purchases cannot be added back. It is only the suppressed profit margin embedded in such transactions that can be brought to tax (Re: PCIT vs. Paramshakti Distributors Pvt. Ltd. in Income Tax Appeal No. 413 of 2017 decided on 15.07.2019). Generally, in trading of Ferrous and Non-ferrous metals, the Gross Profit ranges between 5% to 8%. Taking into consideration entirety of facts, I deem it appropriate to restrict disallowance on bogus purchases to 8%. I hold and direct accordingly. 5. Before parting, I would take to observe that non-appearance of assessee before the AO though explained by the assessee before the First Appellate Authority does not absolve the assessee from his negligence in not reporting the new/correct address to the Tax Administration Authority at the earliest point of time. The assessee/appellant is directed to be more vigilant in discharging his duties and obligations while managing affairs of his business. 4 आअसं. 466/मुं/2020 (िन.व.2011-12) ITA NO.466/MUM/2020 (A.Y.2011-12) 6. In the result, appeal by assessee is partly allowed in the terms aforesaid. Order pronounced in the open court on Wednesday, the 22 nd day of September, 2021. Sd/- (VIKAS AWASTHY) Ûयाियक सदèय / JUDICIAL MEMBER मुंबई/Mumbai, Ǒदनांक/Dated: 22/09/2021 SK, PS Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ/The Appellant , 2. Ĥितवादȣ/ The Respondent. 3. आयकर आयुƠ(अ)/ The CIT(A)- 4. आयकर आयुƠ CIT 5. ǒवभागीय Ĥितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड[ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai