MESSRS: DYNAMIC METAL HOUSE, Mumbai V. ITO 17(1)(4), Mumbai

ITA 4868/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3713 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Section: 133(6); 201; 48; 147

Judgement Text

1 I.T.A. NO.48 68 /MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) I.T.A. NO. 48 68 /MUM/201 9 (ASSESSMENT YEAR 20 1 0 - 1 1 ) M/S DYNAMIC METAL HOUSE SHOP NO.1, KOLSA MOHALLA STREET MUMBAI PAN : AA CFD4330N VS ITO - 17(1)(4), MUMBAI APPELLANT RESPONDENT APPELLANT BY NONE RESPONDENT BY MS. SMITA VERMA, DR DATE OF HEARING 0 1 - 02 - 2021 DATE OF PRONOUNCEMENT 25 - 02 - 2021 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 31 - 0 5 - 201 9 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 28 , MUMBAI FOR THE ASSESSMENT YEAR 20 1 0 - 1 1 . 2. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE, AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIALS ON RECORD. 3. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE MADE ON ACCOUNT OF NON GENUINE PURCHASES. 2 I.T.A. NO.48 68 /MUM/2019 4 . BRIEFLY, THE FACTS ARE, THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF TRADING IN NON FERROUS METAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 14 - 1 0 - 20 1 0 DECLARING NIL INCOME. THE RETURN OF INCOME SO F ILED WAS INITIALLY PROCESSED UNDER SECTION 14 3(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE S ALES - TAX DEPARTMENT THROUGH THE INVESTIGATION WING THAT PURCHASES WORTH RS. 97,33,680 / - CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM FIFTEEN PARTIES ARE N ON GENUINE AS THE CONCERNED PARTIES HAVE BEEN I DENTIFIED AS HAWALA OPERATORS. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UP ON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES. IN RESPONSE TO QUERY RAISED, THE ASSESSEE FURNISHED COPIES OF LEDGER ACCOUNT OF THE SELLING DEALER, PURCHASE BILLS, BANK STATEMENT EVIDENCING PAYMENTS MADE THROUGH CHEQUES, PURCHASE REGISTER, ETC. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE, AS ACCORDING TO HIM, THE ASSESSEE COULD NOT FURNISH DIRECT EVIDENCE SUCH AS STOCK REGISTER, DELIVERY CHALLAN, LORRY RECEIPT, OCTROI PAYMENT , CONFIRMATION FROM TRANSPORT OPERATORS, ETC. FURTHER, THE NOTICES ISSUED U/S 133(6) OF THE ACT SEEKING INFORMATION FROM THE SELLING DEALERS RETURNED BACK UNSERVED. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT THE PURCHASES ARE NON GENUINE. HOWEVER, INSTEAD OF DISALLOWING THE ENTIRE PURCHASES, THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.12,16,710/ - BEING 12.5% OF THE ALLEGED NON GENUINE PURCHASES. THE AFORESAID DISALLOWANCE WAS ALSO SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) WHILE DECIDING ASSESSEES APPEAL. 5. HE ARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THOUGH , THE ASSESSING OFFICER HAS HELD THE DISPUTED PURCHASES 3 I.T.A. NO.48 68 /MUM/2019 TO BE NON GENUINE; HOWEVER, HE WAS CONVINCED THAT NOT ONLY THE ASSESSEE HAD PURCHASED THE GOODS FROM SOME OTHER SOURCES, BUT HAS AL SO EFFECTED CORRESPONDING SALES. THEREFORE , HE HAS RESTRICTED THE DISALLOWANCE TO PROFIT ELEMENT EMBEDDED IN SUCH PURCHA SES BY ESTIMATING IT AT 12.5%. CONSIDERING THE FACT THAT THE ASSESSEE IS A TRADER IN NON FERROUS METAL ON WHICH THE NORMAL PROFIT RATE AS PER INDUSTRY NORMS VARIES BETWEEN 2% TO 5%, THE DISALLOWANCE MADE AT 12. 5% APPEAR S TO BE ON A MUCH HIGHER SIDE. THEREFORE, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 5% OF THE NON GENUINE PURCHASES. GROUND I S PARTLY ALLOWED. THE ASSESSING OFFICER IS ALSO DIRECTED TO GIVE DUE CREDIT FOR THE A DVANCE - TAX PAID BY THE ASSESSEE AFTER VERIFYING FACTS AND MATERIALS ON RECORD AND IN ACCORDANCE WITH LAW. 6. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED O N 25 / 02/2021. SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DT : 25 /02/2021 PAVANAN 4 I.T.A. NO.48 68 /MUM/2019 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI