M/s j p stainless steel, Mumbai V. ITO WARD 19(2)(1), Mumbai

ITA 4872/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3723 (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: 2009-2010
• Appeal Filed On: 22-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Section: 133(6); 201; 147

Judgement Text

1 I.T.A. NO.4872/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) I.T.A. NO. 4872 /MUM/201 9 (ASSESSMENT YEAR 20 09 - 1 0 ) M/S J.P. STAINLESS STEEL 2/6, ISHWAR BHUWAN,FALKLAND ROAD 4 TH CROSS LANE, NEAR KHETWADI MUMBAI - 400 004 PAN : AA FFJ5461M VS ACIT 4(3), 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 27 - 0 5 - 201 9 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 6 , MUMBAI FOR THE ASSESSMENT YEAR 20 09 - 1 0 . 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE MADE ON ACCOUNT OF NON GENUINE PURCHASES. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON FERROUS METAL S . FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 27 - 09 - 2009 DECLARING TOTAL INCOME OF RS.31,523/ - . THE RETURN OF INCOME SO FILED WAS INITIALLY PROCESSED U NDER 2 I.T.A. NO.4872/MUM/2019 SECTION 1 4 3(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER HAVING RECEIVED INFORMATION FROM THE S ALES - T AX DEPARTMENT THROUGH THE INVESTIGATION WING THAT PURCHASES WORTH RS.34,45,477/ - CLAIMED TO HAVE BEEN MADE DU RING THE YEAR FROM THREE PARTIES ARE NON GENUINE, REOPENED THE ASSESSMENT U NDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES. FURTHER, TO INDEPENDENTL Y VERIFY SUCH PURCHASES, THE ASSESSING OFFICER ISSUED NOTICES U NDER SECTION 133(6) OF THE ACT TO THE CONCERNED SELLING DEALER S . HOWEVER, AS STATED BY THE ASSESSING OFFICER, ALL SUCH NOTICES RETURNED BACK UNSERVED. THOUGH , IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED COPIES OF LEDGER ACCOUNT, PURCHASE INVOICES, BANK STATEMENT EVIDENCING PAYMENT THROUGH CHEQUE, SALES INVOICE, ETC., HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED. ULTIMATELY, HE CONCLUDED THAT THE PURCHASES ARE NON GENUINE. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE HAS EFFECTED CORRESPONDING SALES AND THE PROFIT DERIVED THEREON HAVE BEEN OFFERED TO TAX, INSTEAD OF DISALLOWING THE ENTIRE PURCHASES, HE DISALLOWED AN AMOUNT OF RS.4,30,685/ - BEING 12.5% OF THE NON GENUINE PURCHASES. THE DISALLOWANCE SO MADE WAS SUSTAINED BY LEARNED COMMISSIONER (APPEALS) WHILE DECIDING ASSESSEES APPEAL. 4. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. THEREFORE , I PROCEEDED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE, AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 5. HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THOUGH , THE A SSESSING O FFICER HAS HELD THE D ISPUTED PURCHASES TO BE NON GENUINE; HOWEVER, HE WAS CONVINCED THAT NOT ONLY THE 3 I.T.A. NO.4872/MUM/2019 ASSESSEE HAD PURCHASED THE GOODS FROM SOME OTHER SOURCES, BUT HAS ALSO EFFECTED CORRESPONDING SALES . T HEREFORE, HE HAS RESTRICTED THE DISALLOWANCE TO PROFIT ELEMENT EMBEDDED I N SUCH PURCHASES BY ESTIMATING IT AT 12.5%. CONSIDERING THE FACT THAT THE ASSESSEE IS A TRADER IN FERROUS AND NON FERROUS METAL S , ON WHICH THE NORMAL PROFIT RATE AS PER INDUSTRY NORMS VARIES BETWEEN 2% TO 5%, THE DISALLOWANCE MADE AT 12.5% APPEARS 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 IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON 25 / 02/2021. SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DT : 25 /02/2021 PAVANAN 4 I.T.A. NO.4872/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