DEPUTY COMMISSIONER INCOME TAX 13(1)(2), MUMBAI V. POPLEY DIAMOND AND GOLD PLAZA PRIVATE LIMITED, MUMBAI

ITA 4812/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6830 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKEYAN
• Assessee Lawyers: NEERAJ SETH
• Keywords: Bogus purchase
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.4812/M/2017 ASSESSMENT YEAR: 2008-09 DCIT, CIRCLE-13(1)(2), 2 ND FLOOR, ROOM NO.218, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. POPLEY DIAMOND AND GOLD PLAZA P. LTD., 188/A, TURNER ROAD, BANDRA (W), MUMBAI 400 050 PAN: AAACS5154L (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NEERAJ SETH, A.R. REVENUE BY : SHRI ABI RAMA KARTIKEYAN, D.R. DATE OF HEARING : 26.02.2019 DATE OF PRONOUNCEMENT : 28.02.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 17.04.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A) DELETING THE ADDITION TO THE EXTENT OF 8 7.2% OF THE BOGUS PURCHASES AS AGAINST 100% DISALLOWANCE MADE B Y THE AO. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE, BEING TRADER DIAMOND AND GOLD JEWELLERY ITEMS, FILED RETURN OF INCOME ON 20.09.2008 DECLARING AN INCOME OF RS.4,17,11,430/-. ASSESSMENT UNDER SECTION 143(3) WAS FRAMED VIDE ORD ER DATED ITA NO.4812/M/2017 M/S. POPLEY DIAMOND AND GOLD PLAZA P. LTD. 2 27.09.2010 ASSESSING THE INCOME OF RS.4,28,61,430/- . THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED B Y ISSUING NOTICE UNDER SECTION 148 DATED 19.03.2015 WHICH WAS RESPONDED BY THE ASSESSEE VIDE LETTER DATED 09.04.2 015 SUBMITTING THAT THE RETURN FILED UNDER SECTION 139( 1) MAY BE TREATED AS RETURN IN COMPLIANCE TO SECTION 148 OF T HE ACT. THE CASE OF THE ASSESSEE WAS REOPENED WHEN THE AO RECEI VED INFORMATION FROM INVESTIGATION WING THAT ASSESSEE I S A BENEFICIARY OF BOGUS PURCHASE BILLS FROM VARIOUS EN TITIES CONNECTED TO SHRI BHANWARLAL JAIN AND SHRI PRAVIN K UMAR JAIN. THE AO DURING THE COURSE OF REASSESSMENT PROCEEDING S FOUND THAT ASSESSEE HAD AVAILED ENTRIES FROM SUCH ENTITIE S TO THE TUNE OF RS.1,24,57,031/- FROM VARIOUS ENTITIES SUCH AS D AKSH DIAMOND, IMPEX GEMS & MOHIT INTERNATIONAL. THE AO BY REJECTING THE CONTENTIONS OF THE ASSESSEE ADDED THE ENTIRE PURCHASES TO THE INCOME OF THE ASSESSEE BY TREATING THE PURCHASES AS BOGUS PURCHASES DESPITE THE ASSESSEE F ILING ALL THE INFORMATION/EVIDENCES QUA THE PURCHASES. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON TO THE TUNE OF RS.12.5% OF THE TOTAL PURCHASES I.E. RS.15,57,13 0/- AS AGAINST THE TOTAL ADDITION OF RS.1,24,57,031/- ON THE PLEA THAT ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM THE GREY MARKET AND ALSO THE FACT THAT THE AO HAS NOT DISPUTED THE SALES OF THE ASSESSEE. THE LD. CIT(A) SUSTAINED 12.5% OF THE TOTAL PURCHAS ES PRIMARILY ON THE GROUND THAT WHEN THE SALES OF THE ASSESSEE A RE ACCEPTED THERE HAS TO BE CORRESPONDING PURCHASES AND THEREFO RE A REASONABLE PERCENTAGE HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE BY FOLLOWING THE DECISION IN THE CASE OF C IT VS. ITA NO.4812/M/2017 M/S. POPLEY DIAMOND AND GOLD PLAZA P. LTD. 3 BHOLANATH POLY FAB PVT. LTD. (2013) 355 ITR 290 AND CIT VS. SMITH P. SETH (2013) 219 TAXMANN 85 (GUJ.). 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENU E HAS PREFERRED AN APPEAL BEFORE US. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSEE FILED VARIOUS INFORMATION/DETAILS/EVIDENCES SUCH AS INVOICE, PRO OF OF PAYMENTS, BILLS AND VOUCHERS ETC. WE NOTE THAT THE SALES OF THE ASSESSEE WERE ALSO NOT DISPUTED BY THE AO. UNDER T HESE CIRCUMSTANCES, THE ONLY POSSIBLE PRESUMPTION IS THA T ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM THE GREY MARKET THEREBY MAKING SAVING IN THE FORM OF NON PAYMENT OF VAT AND OTHER EXPENSES. UNDER THESE CIRCUMSTANCES, THE ORDER OF LD. CIT(A), WHICH IS A VERY REASONED AND DETAILED ORDER, APPEAR S TO BE CORRECT WHEREIN THE LD. CIT(A) HAS ESTIMATED THE IN COME ON BOGUS PURCHASES AT THE RATE OF 12.5% OVER AND ABOVE THE NORMAL PROFITS OF THE ASSESSEE. ACCORDINGLY, WE ARE INCLI NED TO UPHOLD THE SAME BY DISMISSING THE APPEAL OF THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2019. SD/- SD/- (AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.02.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO.4812/M/2017 M/S. POPLEY DIAMOND AND GOLD PLAZA P. LTD. 4 THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.