HARDIK JITENDRA SHAH, MUMBAI V. INCOME TAX OFFICER-32(1)(5), MUMBAI

ITA 4684/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8629 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Reopening of assessment; Bogus purchase
• Section: 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 4684 /MUM/ 2017 (ASSESSMENT YEAR 20 09 - 10 ) MR. HARDIK JITENDRA SHAH ROOM NO. 2, LAXMI NIWAS RANCHHODDAS THAKKAR ROAD DAHISAR WEST MUMBAI - 400 068. PAN : ARVPS 6076L V S . ITO 32(1)(5) C - 11, 2 ND FLOOR PRATYAKSHKAR BHAVAN, BKC BANDRA MUMBAI - 400 051. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAJESH SHAH DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 2 .1 1 . 201 7 DATE OF PRONOUNCEMENT 2 . 11 . 201 7 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10 - 04 - 2017 PASSED BY LD CIT(A) - 44, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING THE A DDITION RELATING TO BOGUS PURCHASES. THE ASSESSEE IS ALSO CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT. 2. THE FACTS RELATING TO THE CASE ARE DISCUSSED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN IRON & STEEL, INDUSTRIAL PR ODUCTS ETC. HE CARRIES ON THE BUSINESS IN ITS PROPRIETARY CONCERN NAMED M/S REENA ENTERPRISES. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT CERTAIN PARTIES ARE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION BILLS WITHOUT A CTUALLY SUPPLYING THE MATERIALS AND UPON NOTICING THAT THE ASSESSEE HAS PURCHASED GOODS FROM SOME OF SUCH PARTIES IN THE YEAR UNDER CONSIDERATION TO THE TUNE OF RS.77.88 LAKHS, THE AO REOPENED THE ASSESSMENT OF THIS YEAR BY ISSUING NOTICE U/S 148 OF THE AC T. THE ASSESSING OFFICER ESTIMATED THE PROFIT ELEMENT EMBEDDED IN THE ABOVE SAID SUSPICIOUS PURCHASES AT 30% OF ITS VALUE MR. HARDIK JITENDRA SHAH 2 AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE LD CIT(A) REDUCED THE SAME TO 12.50% AND STILL AGGRIEVED, THE ASSESSEE HA S FILED THIS APPEAL. 3. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. I NOTICE THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT. ACCORDINGLY I AM OF THE VIEW THAT IT CANNOT BE SAID THAT THE REOPENING WAS ON PRESUMPTION BASIS. ACCORDINGLY I UPHOLD THE VALIDITY OF REOPENING OF ASSESSMENT. 4. WITH REGARD TO THE ESTIMATION OF PROFIT @ 12.50%, THE LD A.R SUBMITTED THAT THE ASSESSEE AGREES TO THE SAME IN ORDER TO PUT AN END T O THE LITIGATION. HOWEVER HE SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN THE PURCHASES MADE FROM M/S R.K. TRADERS AT RS.23,94,503/ - , WHERE AS THE ACTUAL PURCHASES MADE FROM THE ABOVE SAID PARTY AS PER THE BOOKS OF ACCOUNT WAS ONLY RS.10,60,992/ - . ACCO RDINGLY HE SUBMITTED THAT THE PURCHASE VALUE MAY BE SUITABLY REDUCED. I NOTICE THAT THE ASSESSEE HAS TAKEN THIS PLEA BEFORE THE AO AND THE ASSESSING OFFICER HAS ALREADY CONSIDERED THE SAME. HOWEVER, SINCE THE ASSESSEE CONTENDS THAT THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNT WAS ONLY RS.10,60,992/ - , I AM OF THE VIEW THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE HIS CONTENTIONS BEFORE THE AO. 5. ACCORDINGLY, I SUSTAIN THE PROFIT RATE OF 12.50% ESTIMATED BY LD CIT(A). HOWEVER , THERE IS DISPUTE WITH REGARD TO THE QUANTUM OF PURCHASES MADE FROM M/S R.K. TRADERS. ACCORDINGLY, THE ISSUE RELATING THERETO IS SET ASIDE TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCO RDANCE WITH THE LAW. MR. HARDIK JITENDRA SHAH 3 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 .11 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 11 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSTT. REGI STRAR /SENIOR PS ) PS ITAT, MUMBAI