SMT LALITA BABULAL KANUNGO, MUMBAI V. ITO 19(2)(1), MUMBAI

ITA 479/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5904 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY T SETHI
• Keywords: 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 MAHAVIR SINGH, VICE PRESIDENT AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.479/M/2020 ASSESSMENT YEAR: 2010-11 SMT. LALITA BABULAL KANUNGO, SHOP NO.5, F WING, GROUND FLOOR, SHRIPATI JEWELS, SUKANAND WADI, NEAR C.P. TANK, MUMBAI 400 004 PAN: AFQPK7454R VS. INCOME TAX OFFICER- 19(2)(1), ROOM NO.217, 2 ND FLOOR, MATRU MANDIR, TARDEO, MUMBAI 400 007 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI SANJAY T. SETHI, D.R. DATE OF HEARING : 23.08.2021 DATE OF PRONOUNCEMENT : 14.09.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 21.11.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. AT THE TIME OF HEARING WHEN THE CASE WAS CALLED FOR HEARING, NEITHER ASSESSEE NOR HIS AUTHORISED REPRESENTATIVE WAS PRESENT TO ATTEND THE HEARING NOR ANY APPLICATION FOR ADJOU RNMENT WAS FILED. THEREFORE, WE ARE DECIDING THE APPEAL OF TH E REVENUE AFTER HEARING THE LD. D.R. AND AFTER CONSIDERING THE MERI TS OF THE CASE. ITA NO.479/M/2020 SMT. LALITA BABULAL KANUNGO 2 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) ENHANCING THE ADDITION @ 100% OF THE BOG US PURCHASES AS AGAINST 12.50% ADDITION MADE BY THE AO . 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 22.09.2010 DECLARING TOTAL INCOME OF RS.4 ,32,140/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THE CASE OF THE ASSESSEE WAS THEREAFTER REOPENED BY THE AO A FTER RECEIPT OF INFORMATION FROM DGIT (INV.), MUMBAI THAT ASSESS EE IS BENEFICIARY OF HAWALA PURCHASE ENTRIES TO THE EXTEN T OF RS.77,55,118/- AND ACCORDINGLY THE NOTICE UNDER SEC TION 148 OF THE ACT WAS ISSUED ON 20.03.2015. THE AO CALLED FO R VARIOUS DETAILS AND INFORMATION FROM THE ASSESSEE FROM TIME TO TIME DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH W ERE DULY FILED BEFORE THE AO. THE AO FINALLY REJECTED THE C ONTENTIONS OF THE ASSESSEE AND TREATED THE PURCHASES AS NON GENUI NE THEREBY MAKING AN ADDITION OF RS.9,69,390/-, BEING 12.5% OF THE PURCHASES, TO THE INCOME OF THE ASSESSEE BY FRAMING ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE A CT DATED 30.03.2016. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) NOT ONLY DISMISSED THE APPEAL OF THE ASSESSEE BUT ALSO ENHAN CED THE ADDITION TO 100% OF THE BOGUS PURCHASES THEREBY DIR ECTING THE AO TO MAKE ADDITION OF RS. 77,55,118/- INSTEAD OF R S. 9,69,390/- ON THE GROUND THAT THE ASSESSEE HAS FAIL ED TO ESTABLISH AS FROM WHOM THE PURCHASES WERE MADE. 6. AFTER HEARING THE LD. D.R. AND PERUSING THE MATE RIAL ON RECORD, WE OBSERVE THAT LD. CIT(A) HAS PASSED THE A PPELLATE ITA NO.479/M/2020 SMT. LALITA BABULAL KANUNGO 3 ORDER ENHANCING THE ADDITION EQUAL TO 100% OF THE B OGUS PURCHASES AS AGAINST THE 12.50% APPLIED BY THE AO. THE ONLY REASONING GIVEN BY THE LD CIT(A) IS THAT THOUGH THE ASSESSEE HAS SHOWN SALES BUT THE ONUS OF THE ASSESSEE IS TO PROV E THE SOURCES OF PURCHASE. WE NOTE THAT THE DESPITE THE ASSESSEE S UNDISPUTED FACTS AS TO PURCHASES BEING MADE FROM GREY MARKET, THE LD CIT(A) HAS TRIED TO DISTINGUISH THE DECISION OF GUJRAT HIG H COURT IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 356 ITR 451(GUJ) WHE REIN IT HAS BEEN HELD THAT IN CASE OF BOGUS PURCHASES ON LY PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASES IS TO BE AS SESSED. SIMILARY THE LD CIT(A) TRIED TO DISTINGUISH THE DEC ISION OF HONBLE BOMBAY HIGH COURT IN THE CASE MOHOMMAD HAZI ADAM & CO DATED 11.02.2019. AFTER TAKING INTO ACCOUNT THE FAC TS OF THE ASSESSEE WE ARE OF THE CONSIDERED OPINION THAT THE ABOVE DECISIONS HAVE WRONGLY BEEN DISTINGUISHED BY THE LD CIT(A). IN FACT THE LD AO HAS RIGHTLY TAXED THE PROFIT ELEMENT AFTER GIVING FINDINGS THAT THE ASSESSEE HAS MADE HAWALA PURCHASE S. MOREOVER, THE CO-ORDINATE BENCHES OF THE TRIBUNAL H AVE BEEN TAKING A CONSISTENT VIEW THAT IN CASE OF BOGUS PURC HASES ONLY A GP RATE RANGING BETWEEN 2% TO 12.5% HAS TO BE TAXE D DEPENDING ON THE FACTS OF EACH CASE. WE ARE THUS NO T IN AGREEMENT WITH THE CONCLUSION OF THE LD. CIT(A) AND ACCORDINGLY SET ASIDE THE SAME BY RESTORING THE ORDER OF AO. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2021. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 14.09.2021. * KISHORE, SR. P.S. ITA NO.479/M/2020 SMT. LALITA BABULAL KANUNGO 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.