MR. VRAJLAL MANILAL SHAH, Mumbai V. ITO WARD 27(3)(5), Mumbai

ITA 4829/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9347 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Opportunity of being heard; Reassessment proceedings
• Section: 69C; 142(1); 133(6); 143(1); 250; 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 4829/MUM/2019 ( ASSESSMENT YEARS: 2010-11 ) MR. VRAJLAL MANILAL SHAH, 37, VADHANI INDUSTRIAL ESTATE, LBS ROAD OPP SHREYAS CINEMA, GHATKOPAR (W), MUMBAI 400086. / VS. ITO, WARD 27(3)(5) CABIN NO. 402A, 4 TH FLR, TOWER NO.6, VASHI RLY STATION. NAVI MUMBAI ./ ./ PAN/GIR NO. : AAGPS2788D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : DINKLE HARIYA, AR / RESPONDENT BY : SMITA VERMA, DR / DATE OF HEARING 28/01/2021 !'# / DATE OF PRONOUNCEMENT 29/01/2021 / O R D E R PER PAVAN KUMAR GADALE - JM: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A)-25,NAVI MUMBAI PASSED U/S 143(3 ) R.W.S 147 AND 250 OF THE ACT. THE ASSESSEE HAS RAIS ED THE FOLLOWING THE GROUNDS OF APPEAL: ITA NO . 4829/MUM/2019 VRAJLAL MANILAL SHAH, MUMBAI - 2 - 1. THE LD. CIT(A) ERRED IN NOT GRANTING PROPER, SUFFICIENT AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLANT WHILE FRAMING THE APPELLATE ORDER. 2. IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE APPELLATE ORDER SO FRAMED BE HELD AS BAD AND ILLEGAL, AS THE SAME I S FRAMED IN BREACH OF THE PRINCIPLES OF NATURAL JUSTI CE AND IS PASSED WITHOUT APPLICATION OF MIND TO THE FACTS AND THE SUBMISSIONS BROUGHT ON RECORD BY THE APPELLANT.. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION O F THE AO IN INITIATING REASSESSMENT PROCEEDINGS AND FRAMI NG THE ASSESSMENT OF THE APPELLANT BY INVOKING THE PROVISIONS OF SEC. 147 R.W.S 148. 4. WHILE DOING SO, THE LD. CIT(A) FAILED TO APPRE CIATE THAT THE CASE OF APPELLANT DID NOT FALL WITHIN THE PARAMETERS LAID DOWN BY SEC. 147 R.W.S 148 AND THE NECESSARY PRECONDITIONS FOR INITIATING AND COMPLETI ON THEREOF WERE NOT SATISFIED. 5. IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE REASSESSME NT FRAMED IS BAD ILLEGAL AND VOID. 6. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E A.O IN MAKING ADDITION OF RS. 12,90,170/- U/S 69C OF TH E ACT TO THE INCOME OF THE APPELLANT ON ACCOUNT OF ALLEGE D UNAPPROVED BOGUS PURCHASES. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR MODIFY ALL OR ANY THE ABOVE GROUND AT THE TIME OF H EARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF VACUUM FORMING/THERMO FORMING OF PLASTIC ITEMS. THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE A.Y 2010-11 ON 30.09.2010 WITH A TOTAL INCOME OF RS . ITA NO . 4829/MUM/2019 VRAJLAL MANILAL SHAH, MUMBAI - 3 - 6,49,150/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE A.O HAS RECEIVED INFORMATION FROM DGIT, MUMBAI AND THE SALES TAX DEPARTMENT, MAHARASHTRA THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION OF BOGUS PURCHASES BILLS FROM THE CERTAIN ENTITIES AND DEALERS. THEREFORE A. O. ISSUED NOTICE U/S 148 OF THE ACT, IN RESPONSE TO TH E NOTICE THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME FILED ON 30.09.2010 IS TREATED AS COMPLIANCE TO THE NOTICE. FURTHER, THE NOTICE U/S 143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED. IN COMPLIANCE, THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAIL S. THE ASSESSEE CALLED UPON TO FILE THE DETAILS OF PURCHASES MADE FROM THE PARTIES. THE A.O FOUND THAT THE ASSESSEE HAS OBTAINED PURCHASE BILLS OF RS. 12,90,170/- FROM TWO DEALERS AND ISSUED NOTICE U/S 133(6) OF THE ACT TO THE PARTIES TO PROVE THE GENUINENESS OF THE PURCHASES BUT THE NOTICES WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES AS UNCLAIMED. THEREFORE, THE A.O CONSIDERING THE INFORMATION FILED ON RECORD AND THE FACTS THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE ITA NO . 4829/MUM/2019 VRAJLAL MANILAL SHAH, MUMBAI - 4 - PURCHASES HAS MADE AN ADDITION OF BOGUS PURCHASES AND ASSESSED THE TOTAL INCOME OF RS. 19,39,320/- AN D PASSED THE ORDER U/SEC143(3) R.W.S.147 OF THE ACT. AGGRIEVED BY THE ORDER OF THE A.O, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). WHEREAS, THE CIT(A ) HAS CONFIRMED THE ACTION OF THE A.O. AND DISMISSED THE ASSESSEE APPEAL. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE FILED AN APPEAL WITH THE TRIBUNAL. 3. AT THE TIME OF HEARING, THE LD.AR OF THE ASSESSE E SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMIN G THE ADDITION MADE BY THE A.O, THOUGH THE ASSESSEE HAS SUBMITTED BILLS AND OTHER DETAILS IN THE ASSESSMENT PROCEEDINGS . 4. CONTRA, LD.DR EMPHASIZED THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE PURCHASES THEREFO RE THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION AND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE DISPUTED ISSUE AS ENVISAGED BY THE LD. AR IS IN RESPECT OF ADDITION O F ITA NO . 4829/MUM/2019 VRAJLAL MANILAL SHAH, MUMBAI - 5 - BOGUS PURCHASES MADE BY THE A.O AND CONFIRMED BY THE CIT(A). WE FIND ON THE PERUSAL OF THE ASSESSMEN T ORDER, THE A.O HAS NOT DOUBTED THE SALES. WHEREAS, THE ASSESSEE HAS MADE BOGUS PURCHASES FROM THE DEALERS, IN TURN PROVIDES SAVINGS TO THE ASSESSEE F OR NONPAYMENT OF TAXES. WE CONSIDERING THE FACTS, CIRCUMSTANCES AND SERIES OF DECISIONS OF THE HONBL E TRIBUNAL IN THE SIMILAR CASES AND PRECEDENTS, WHER E THE INCOME IS ESTIMATED @12.50% OF VALUE OF BOGUS TRANSACTIONS WAS ACCEPTED. ACCORDINGLY, WE RESTRICT THE ADDITION TO THE EXTENT OF 12.50% OF BOGUS PURCHASES AND MODIFY THE LD.CIT(A) ORDER SUSTAINI NG THE ADDITION TO THE EXTENT OF 12.50% AND PARTLY ALL OW THE GROUNDS OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2021 SD/- SD/- (RAJESH KUMAR) (PAVA N KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI, DATED 29/01/2021 KRK, PS ITA NO . 4829/MUM/2019 VRAJLAL MANILAL SHAH, MUMBAI - 6 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) !' #, / ITAT, MUMBAI