NITIN AVANTILAL DOSHI, MUMBAI V. ITO , 17(1)(4), MUMBAI

ITA 4739/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9792 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: NIRAJ SHETH LD
• Keywords: Bogus purchase; Peak credit
• Section: 143(3); 133(6)

Judgement Text

ITA NOS. 4739/MUM/2014 & 5119/M/2014 NITIN AVANTILAL DOSHI ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 4739/MUM/2014 NITIN AVANTILAL DOSHI PLOT NO.13A, GALA NO.3/4/5 MAGAZINE STREET, DARUKHANA, REAY ROAD MUMBAI 400 010 / VS. INCOME TAX OFFICER, 17(1)(4) MUMBAI ( ! /APPELLANT ) : ( '# ! / RESPONDENT ) & ./I.T.A. NO. 5119/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER, 17(1)(4) MUMBAI / VS. NITIN AVANTILAL DOSHI PLOT NO.13A, GALA NO.3/4/5 MAGAZINE STREET, DARUKHANA, REAY ROAD MUMBAI 400 010 $ ./ ./PAN/GIR NO. AABPD-1214-A ( ! /APPELLANT ) : ( '# ! / RESPONDENT ) ASSESSEE BY : NIRAJ SHETH, LD. AR REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 17/08/2017 / DATE OF PRONOUNCEMENT : 23 /08/2017 ITA NO 4739/MUM/2014 NITIN AVANTILAL DOSHI ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE ITA NO. 4739/M /2014 FOR ASSESSMENT YEAR [AY] 2010-11 ASSAILS THE ORDER OF L D. COMMISSIONER OF INCOME TAX (APPEALS)-29 [CIT(A)], MUMBAI DATED 22/0 5/2014 QUA CONFIRMATION OF CERTAIN AHDOC DISALLOWANCES / ADDITIONS. THE RESPECTIVE REPRESENTATIVES HAS POINTED THAT THE CROSS APPEAL O F THE REVENUE ITA NO. 5119/M/14 IS ALSO PENDING WITH THIS BENCH FOR HEARI NG ON 26/09/2017 AND THE SAME, BEING CROSS APPEAL, MAY ALSO BE HEARD TOGETHER WITH THE INSTANT APPEAL. A COPY OF FORM 36 AND GROUNDS OF AP PEAL RAISED BY THE REVENUE ARE ALSO PLACED BEFORE US. SINCE, THE CROSS APPEALS ARE TO BE HEARD TOGETHER, WE DISPOSE-OFF BOTH THE APPEALS BY WAY OF THIS COMMON ORDER. 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN TRADING OF METALS UNDER A PROPRIETORSHIP CONCERN NAMELY KUSHAL METAL & STEEL INDUSTRIES WAS ASSESSED U/S 143(3) FOR IMPUGNED AY ON 26/03/2013 AT RS.85,75,230/- AFTER CERTAIN ADDITION S / DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.17,95,230/- FILED BY THE ASSESSEE ON 27/07/2010. THE ASSESSEE, INTER-ALIA, SUFFERED ADDITION OF RS.67,28,834/- ON ACCOUNT OF CERTAIN BOGUS PURCHASES AND ADHOC DISALLOWANCE AGAINST TELEPHONE & TRAVELLING EXPENSES . ALL THESE ADDITIONS ARE THE SUBJECT MATTER OF THIS APPEAL. THE ASSESSEE REFLECTED TURNOVER OF RS.14.39 CRORES WITH GP/NP RATES OF 11.26% & 1.25% RESPECTIVELY. ITA NO 4739/MUM/2014 NITIN AVANTILAL DOSHI ASSESSMENT YEAR 2010-11 3 2.2 THE ASSESSEE CLAIMED TRAVELLING & CONVEYANCE EXPENSES OF RS.1,18,508/- AND SUFFERED ADHOC DISALLOWANCE OF 10% SINCE THE SAME WAS NOT FULLY SUPPORTED WITH VERIFIABLE DETAILS. SI MILARLY, THE ASSESSEE CLAIMED TELEPHONE EXPENSES OF RS.2,28,450/- AND SUFFERED ADHOC DISALLOWANCE OF 10% AGAINST THE SAME TO ACCOUNT FOR PERSONAL USE. 2.3 THE ASSESSEE MADE PURCHASES OF RS.2,27,88,416/- FROM FOUR PARTIES. TO CONFIRM THE PURCHASE TRANSACTIONS, NOTI CES U/S 133(6) WERE SENT TO THESE PARTIES BUT NONE OF THE PARTY WAS FOU ND AT THE GIVEN ADDRESS. UPON BEING CONFRONTED, THE ASSESSEE POINTE D OUT THAT THE PURCHASED MATERIAL HAS BEEN SOLD BY THE ASSESSEE SU BSEQUENTLY AND THERE COULD BE NO SALE WITHOUT PURCHASES AND THEREF ORE, THE PURCHASES WERE GENUINE. HOWEVER, NOT CONVINCED, LD. AO, PLACI NG RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS, ESTIMATED ADDITION AGAINST THE SAME AT RS.67,28,434/- ON THE BASIS OF PEAK BALANCES IN THE ACCOUNTS OF THE BOGUS SUPPLIERS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 22/05/2 014 WHERE DISALLOWANCE AGAINST TELEPHONE EXPENSES & TRAVELING EXPENSES WAS RESTRICTED TO 5% WHEREAS DISALLOWANCE AGAINST BOGUS PURCHASE WAS RESTRICTED TO 12.5% OF THE BOGUS PURCHASES BY PLACING RELIANCE ON ADDITION MADE BY LD. AO IN ASSESSEES OWN CASE IN I MMEDIATELY SUCCEEDING AY. AGGRIEVED, THE ASSESSEE AND REVENUE ARE IN FURTHER APPEAL BEFORE US. THE ASSESSEE IS AGGRIEVED BY THE ADDITIONS CONFIRMED BY LD. CIT(A) WHEREAS THE REVENUE IS AGGRIEVED BY T HE RELIEF PROVIDED TO THE ASSESSEE BY FIRST APPELLATE AUTHORITY. ITA NO 4739/MUM/2014 NITIN AVANTILAL DOSHI ASSESSMENT YEAR 2010-11 4 4. THE LD. REPRESENTATIVE FOR THE ASSESSEE [AR] CON TENDED THAT THE ADDITION OF 12.5% WAS ON THE HIGHER SIDE WHEREAS LD . DR CONTENDED THAT THE ONUS TO SUBSTANTIATE THE PURCHASES SQUAREL Y LIED ON THE ASSESSEE AND SINCE HE FAILED TO DISCHARGE THE SAME, HIGHER ADDITION WAS JUSTIFIED. 5. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE R ELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT TH ERE COULD BE NO SALE WITHOUT PURCHASES. THE SALES TURNOVER ACHIEVED BY T HE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS W ERE THROUGH BANKING CHANNELS. THE ASSESSEE IS A TRADER AND A PE RUSAL OF TAX AUDIT REPORT REVEAL THAT QUANTITATIVE DETAILS ARE BEING M AINTAINED BY THE ASSESSEE. ON THE OTHER HAND, NONE OF THE SUPPLIER W AS FOUND AT THE GIVEN ADDRESS AND NO CONFIRMATION ETC. WAS FILED TO SUBSTANTIATE THE PURCHASES. THEREFORE, IN SUCH A SITUATION, THE ADDI TION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSE SSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTL Y DONE. MOREOVER THE REVENUE IN THE IMMEDIATELY SUCCEEDING YEAR ACCE PTED ADDITION OF 12.5% AND THEREFORE, WE FIND THE ORDER OF LD.CIT(A) QUITE FAIR AND REASONABLE. THEREFORE, WE FIND NO REASON TO INTERFE RE WITH THE SAME. 6. THE ADHOC DISALLOWANCE OF 5% SUSTAINED BY LD. CIT(A) AGAINST TELEPHONE AND TRAVELLING EXPENSES WAS ALSO QUITE REASONABLE TO ACCOUNT FOR PERSONAL ELEMENT AND THEREFORE, THE SAM E STANDS CONFIRMED. ITA NO 4739/MUM/2014 NITIN AVANTILAL DOSHI ASSESSMENT YEAR 2010-11 5 7. RESULTANTLY, BOTH THE APPEALS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23. 08.2017 SR.PS:- THIRUMALESH ! / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI