ASSISTANT COMMISSIONER OF INCOME TAX-19(1), MUMBAI V. BHAVYA GEMS, MUMBAI

ITA 4868/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2778 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K A VAIDYALINGAN

Judgement Text

P A G E | 1 ITA NO. 4868/MUM/2017 A.Y. 2012 - 13 ASST. COMMISSIONER OF INCOME TAX - 19(1) VS. M/S BHAVYA GEMS IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI G.S.PANNU, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4868 /MUM/2017 (ASSESSMENT YEAR: 2012 - 13 ) ASST. COMMISSIONER OF INCOME TAX - 19 ( 1 ), 2 ND F LOOR, MATRU MANDIR , TARDEO ROAD, MUMBAI - 400 007 VS. M/S BHAVYA GEMS, 108, 1 ST FLOOR, SHREEJI CHAMBERS TATA ROAD NO. 1 &2, OPERA HOUSE, MUMBAI 400 004 PAN AABFB8758K (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MANOJ KUMAR SINGH , D.R RESPONDENT BY: SHRI K.A. VAIDYALINGAN, A.R DATE OF HEARING: 12 .02.2019 DATE OF PRONOUNCEMENT: 2 7 .02.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 30, MUMBAI DATED 10.03.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), INCOME TAX ACT, 1961 (FOR SHORT IT ACT), DATED 25.03.2015. 2. BRIEFLY STATED, THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING, MANUFACTURING A ND EXPORT OF DIA MONDS HAD FILED ITS RETURN OF INCOME FOR A.Y. 2012 - 13 ON 24.08.2012, DECLARING TOTAL P A G E | 2 ITA NO. 4868/MUM/2017 A.Y. 2012 - 13 ASST. COMMISSIONER OF INCOME TAX - 19(1) VS. M/S BHAVYA GEMS INCOME AT RS.2,23,347,491/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. DURING THE COURSE OF THE ASS ESSMENT PROCEEDINGS INFORMATION WAS RECEIVED BY THE A.O FROM THE OFFICE OF THE DGIT, INVESTIGATION WING, MUMBAI THAT THE ASSESSEE AS A BENEFICIARY HAD OBTAINED ACCOMMODATION PURCHASE BILLS FROM TWO PARTIES VIZ. (I) M/S IMPEX GEMS (RS.1,82,52,659/ - ); AND (I I) M/S DAKSH DIAMONDS (RS.4,93,23,563/ - ) THEREIN AGGREGATING TO RS.6,75,76,222/ - . AS PER THE INFORMATION RECEIVED , THE AFOREMENTIONED PARTIES WERE LITERALLY CONTROLLED, OPERATED AND MANAGED BY SHRI BHANWAR LAL JAIN AN INFAMOUS ACCOMMODATION ENTRY PROVIDER. ON THE BASIS OF THE AFORESAID INFORMATION THE A.O CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. HOWEVER, THE ASSESSEE FAILED TO PLACE ON RECORD THE REQUISI TE DOCUMENTS SUBSTANTIATING THE AUTHENTICITY OF THE PURCHASE TRANSACTIONS TO THE SATISFACTION OF THE A.O. IT WAS NOTICED BY THE A.O THAT THE GOODS CLAIMED BY THE ASSESSEE TO HAVE BEEN PURCHASED FROM THE AFOREMENTIONED PARTIES, VIZ. (I) IMPEX GEMS; AND (II) M/S DAKSH DIAMONDS WERE ENTERED IN THE STOCK REGISTER AND THE CORRESPONDING SALES OF THE SAME WAS ALSO ACCOUNTED FOR IN ITS BOOK ACCOUNTS. IN THE BACKDROP OF THE AFORESAID FACTS THE A.O OBSERVED THAT IT COULD SAFELY BE CONCLUDED THAT THE PURCHASES OF THE GOODS UNDER CONSIDERATION WERE MADE BY THE ASSESSEE FROM THE OPEN/ GREY MARKET , AND ONLY ACCOMMODATION BILLS WERE OBTAINED FROM THE AFOREMENTIONED DUMMY CONCERN S . ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O HOLDING A CONVICTION THAT THE ASSESSEE WO ULD HAVE PURCHASE D THE GOODS UNDER CONSIDERATION AT A DISCOUNTED RATE FROM THE OPEN/GREY MARKET, THUS ESTIMAT ED THE PROFIT ELEMENT INVOLVED IN MAKING OF SUCH P A G E | 3 ITA NO. 4868/MUM/2017 A.Y. 2012 - 13 ASST. COMMISSIONER OF INCOME TAX - 19(1) VS. M/S BHAVYA GEMS PURCHASES @ 8% OF THE AGGREGATE VALUE OF SUCH PURCHASES AND MADE AN ADDITION OF RS. 54,06,097/ - IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE CONTENTION S ADVANCED BY THE ASSESSEE RESTRICTED THE ADDITION IN RESPECT OF THE PROFIT WHICH THE ASSESSEE WOULD HAD MADE BY PURCHASING THE GOODS FROM THE OPEN/GREY MARKET TO 3% OF THE AGGREGATE VALUE OF SUCH PURCHASES. 5. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS C ARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDER PASSED BY THE A.O. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE AUTHENTICITY OF THE PURCHASE TRANSACTION S WITH THE AFOREMENTIONED BOGUS CONCERN S , THEREFORE, THE A.O HAD RIGHTLY MADE AN ADDITION OF 8% OF THE AGGREGATE VALUE OF SUCH PURCHASE TRANSACTIONS. PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE RELIED ON THE ORDER PASSE D BY THE CIT(A). IT WAS SUBMITTED BY THE LD. A.R THAT THE REVENUE IN THE ASSESSES OWN CASE FOR THE SUCCEEDING YEAR S I.E A.Y. 2013 - 14 AND A.Y. 2014 - 15 HAD RESTRICTED THE ADDITION IN RESPECT OF PURCHASES MADE BY THE ASSESSEE FROM THE CONCERN S BELONGING TO SH RI BHANWAR LAL JAIN GROUP AT 3% OF THE AGGREGATE VALUE OF SUCH PURCHASES . APART THEREFROM, THE LD. A.R IN ORDER TO DRIVE HOME HIS CONTENTION THAT THE CIT(A) HAD RIGHTLY RESTRICTED THE ADDITION TO THE EXTENT OF 3% OF THE AGGREGATE VALUE OF PURCHASES MADE BY THE ASSESSEE FROM THE AFOREMENTIONED CONCERN S , THEREIN RELIED ON CERTAIN ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL VIZ. (I) ACIT - 19(2)(3), MUMBAI VS. M/S M. SHAILESH & CO. (ITA NO. 3451 & 3484/MUM/2017; DATED 22.09.2019); (II) M/S VEGA JEWELLERY VS . ITO - 19(3)(5) ; (III ) ITO - 5(1)(3) VS. DHAVAL EXIM P. LTD.; AND P A G E | 4 ITA NO. 4868/MUM/2017 A.Y. 2012 - 13 ASST. COMMISSIONER OF INCOME TAX - 19(1) VS. M/S BHAVYA GEMS (IV) ITO - 25(3)(4) VS. M/S SHAH DIAM . IT WAS SUBMITTED BY THE LD. A.R THAT IN THE AFOREMENTIONED CASES ALSO THE ADDITIONS IN RESPECT OF THE PURCHASES MADE BY THE SAID RESPECTIVE ASSESSES FROM THE ENTITIES BELONGING TO BHANWAR LAL GROUP WAS RESTRICTED BY THE TRIBUNAL TO 3% OF THE AGGREGATE VALUE OF THE PURCHASES THEREIN INVOLVED 6. WE HAVE HEARD THE AUTHORIZED REPRES ENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENT IONED PARTIES VIZ. (I) M/S IMPEX GEMS; AND (II) DAKSH DIAMONDS, BOTH OF WHICH CONCERN S WERE LITERALLY CONTROLLED, OPERATED AND MANAGED BY S HRI BHANWAR LAL JAIN, AN INFAMOUS ACCOMMODATION ENTRY PROVIDER. WE FIND THAT THE ONLY ISSUE BEFORE US IS IN RESPECT OF THE QUANTIFICATION OF THE PROFIT ELEMENT INVOLVED IN MAKING OF THE PURCHASES BY THE ASSESSEE FROM THE OPEN/GREY MARKET. WE FIND THAT THE REVENUE IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY SUCCEEDING YEAR S I.E. AY 2012 - 13 AND AY. 2013 - 14 HAD ITSELF MADE THE ADDITION IN RESPECT OF THE PURCHASES CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM BHANWAR LAL GROUP ENTITIES AT 3% OF THE AGGREGATE VALUE OF SUCH PURCHASES. APART THEREFROM, WE ALSO FIND SUBSTANTIAL FORCE IN THE CONTENTION ADVANCED BY THE LD. A. R THAT THE VARIOUS COORDINATE BENCHES OF THE TRIBUNAL, AS OBSERVED BY US HEREINABOVE , HAD CONSISTENTLY RESTRICT ED THE ADDITIONS IN RESPECT OF THE PURCHASES MADE BY THEM FROM BHANWAR LAL JAIN GROUP ENTIT IES TO 3% OF THE AGGREGATE VALUE OF SUCH PURCHASES. I N THE BACKDROP OF THE AFORESAID FACTS , WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) WHO HAD RIGHTLY RESTRICTE D THE ADDITION IN RESPECT OF THE PURCHASE S UNDER CONSIDERATION TO 3% OF THE AGGREGATE VALUE OF THE P A G E | 5 ITA NO. 4868/MUM/2017 A.Y. 2012 - 13 ASST. COMMISSIONER OF INCOME TAX - 19(1) VS. M/S BHAVYA GEMS SAME. WE THUS NOT FINDING ANY REASON TO DISLO DGE THE WELL REASONED ORDER OF THE CIT(A), UPHOLD THE SAME. 7. THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONO UNCED IN THE OPEN CO URT ON 2 7 . 02.2019 S D / - S D / - ( G.S.PANNU) ( RAVISH SOOD ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; 2 7 . 0 2 . 2 0 1 9 PS. ROHIT / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT . REGISTRAR) , / ITAT, MUMBAI