ITO 21(1)(2), Mumbai V. M/S BARMARE TIMBER TRADERS, Mumbai

ITA 4875/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3714 (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: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 201; 48; 147

Judgement Text

1 I.T.A. NO.48 75 /MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) I.T.A. NO. 48 75 /MUM/201 9 (ASSESSMENT YEAR 20 1 0 - 1 1 ) INCOME - TAX OFFICER - 21(1)(2) MUMBAI VS M/S BARMARE TIMBER TRADERS PLOT NO.18, RETI BUNDER, MAHIM (W) MUMBAI - 400 016 PAN : AAAFB1768L APPELLANT RESPONDENT APPELLANT BY MS. SMITA VERMA, DR RESPONDENT BY NONE DATE OF HEARING 01 - 02 - 2021 DATE OF PRONOUNCEMENT 25 - 02 - 2021 O R D E R THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DATED 3 0 - 0 4 - 201 9 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 4 8 , MUMBAI FOR THE ASSESSMENT YEAR 20 1 0 - 1 1 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO PARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 48 IN THE MATTER OF ADDITION 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 BAMBOOS, TIMBERS AND BUILDING MATERIALS . FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 1 3 - 1 0 - 20 1 0 DECLARING INCOME OF RS.8,90,258/ - . INITIALLY, ASSESSMENT IN CASE OF THE ASSESSEE 2 I.T.A. NO.48 75 /MUM/2019 WAS COMPLETED U NDER SECTION 143(3) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE S ALES - TAX DEPARTMENT THROUGH THE INVESTIGATION WING THAT TH E ASSES SEE IS A BENEFICIARY OF BOGUS PURCHASE BILLS ISSUED BY HAWALA OPERATORS, THE ASSESSING OFFICER 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 GENUINENES S OF PURCHASES OF RS. 12 ,3 7 ,6 74 / - CLAIMED TO HAVE BEEN MADE FROM TWO PARTIES. THOUGH , THE ASSESSEE FURNISHED SOME EVIDENCE IN SUPPORT OF THE PURCHASES MADE; HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED. AS OBSERVED BY THE ASSESSING OFFICER, NOTICES ISSU ED U NDER SECTION 133(6) OF THE ACT TO THE CONCERNED SELLING DEALER S ALSO RETURNED BACK UNSERVED. THEREFORE, OUT OF THE PURCHASES OF RS.12,37,674/ - THE ASSESSING OFFICER TREATED PURCHASES WORTH RS.10,14,469/ - MADE FROM SUMIT SALES AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. ASSESSEE CONTESTED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANC E TO 12.5% OF THE DISPUTED PURCHASES. THUS, THE ADDITION MADE BY THE ASSESSING OFFICER WAS REDUCED TO RS.1,26,808/ - . 4. 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 PERUSAL OF MATERIALS ON RECORD. 5. HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THOUGH , THE A SSESSING O FFICER HAS DISALLOWED ENTIRE PURCHASES MADE FROM M/S SUMIT SALES ON THE REASONING THAT THE ASSESSEE WAS UNABLE TO FURNISH ANY E VIDENCE TO PROVE THAT PURCHASES, H OWEVER, AS OBSERVED BY LEARNED 3 I.T.A. NO.48 75 /MUM/2019 COMMISSIONER (APPEALS), THE A SSESSING O FF ICER HAS NOT DISPUTED THAT THE ASSESSEE HAD EFFECTED THE CORRESPONDING SALES . THIS , IN OTHER WORDS, LEADS TO THE CONCLUSION THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GREY MARKET BY SUPPRESSING THE PROFIT ELEMENT. IN SUCH CIRCUMSTANCES, AS RIGHT LY HELD BY THE LEARNED COMMISSIONER (APPEALS), ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. FURTHER, IN MY CONSIDERED OPINION, THE DISALLOWANCE SUSTAINED BY LEARNED COMMISSIONER (APPEALS) BY ESTIMATING THE PROFIT RATE AT 12.5% IS FAIR AND REASONABLE; HENCE, DO ES NOT REQUIRE ANY INTERFERENCE. GROUND RAISED IS DISMISSED. 6. IN THE RESULT, APPEAL IS DISMISSED . ORDER PRONOUNCED ON 25 / 02/2021. SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DT : 25 /02/2021 PAVANAN 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