ITO 26(1)(5), Mumbai V. SHRI. GUL NARAINDAS MULCHANDANI, Mumbai

ITA 4937/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1706 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: SITARAM PAREEK
• Keywords: Sale consideration of property below Jantri Value
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 4937 / MUM . /201 9 ( ASSESSMENT YEAR : 2010 11 ) ITA NO. 4938 /MUM./201 9 ( ASSESSMENT YEAR : 2011 12 ) INCOME TAX OFFICER WARD 26(1)(5), MUMBAI . APPELLANT V/S SHRI GUL NARAINDAS MULCHANDANI NARAYAN TAILORS PREM KUNJ SOCIETY SION CIRCLE, SION MUMBAI 400 022 PAN ABHPT6150C . RESPONDENT REVENUE BY : MS. SMITA VERMA ASSESSEE BY : SHRI SITARAM PAREEK DATE OF HEARING 03.02.2021 DATE OF ORDER 16.02.2021 O R D E R PER SAKTIJIT DEY. J.M. THE CAPTIONED APPEAL S FILED BY THE REVENUE ARISE OUT OF T WO SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 38, MUMBAI, FOR THE ASSESSMENT YEAR S 2010 11 AND 2011 12. 2 SHRI GUL NARAINDAS MULCHANDANI 2. THE O NLY COMMON DISPUTE IN BOTH THE APPEALS RELATE TO PARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 3. BRIE F FACTS , WHICH ARE COMMON IN BOTH THE APPEALS ARE, THE ASSESSEE , AN INDIVIDUAL , IS STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN TEXTILES. FOR THE ASSESSMENT YEARS UNDER CONSIDER ATION, THE ASSESSEE HAD FILED HIS RETURN S OF INCOME IN REGULAR COURSE WHI CH WERE PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THROUGH INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS BY WAY OF NON GENUI NE PURCHASES AMOUNTING TO ` 3,40,275 IN ASSESSMENT YEAR 2010 11 AND ` 40,063 IN ASSESSMENT YEAR 2011 12. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENTS UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS THE A SSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES. THOUGH , THE ASSESSEE FURNISHED SOME DOCUMENTARY EVIDENCES, HOWEVER, THEY WERE NOT TO THE SATISFACTION OF THE ASSESSING OFFICER. FURTHER, AS OBSERVED BY THE ASSESSING OFFICER, NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT TO INDEPENDENTLY VERIFY THE GENUINENESS OF PURCHASES ALSO RETURNED BACK UN SERVED. THUS, THE ASSESSING OFFICER ULTIMATELY CONCLUDED THAT THE PURCHASES ARE NON GENUINE. HOWEVER, CONSIDERING THE FACT THAT THE 3 SHRI GUL NARAINDAS MULCHANDANI AS SESSEE HAD EFFECTED CORRESPONDING SALE S, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE WAS IN POSSESSION OF THE DISPUTED GOODS. THEREFORE, INSTEAD OF DISALLOWING THE ENTIRE PURCHASES, HE DISALLOWED 20% AND 21.27% OF THE ALLEGED NON GENUINE PURCHASES IN ASSESSMENT YEAR S 2010 11 AND 2011 12 RESPECTIVELY . EFFECTIVELY, THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF ` 68,055 IN ASSESSMENT YEAR 2010 11 AND ` 8,521 IN ASSESSMENT YEAR 2011 12. THE ASSESSEE CONTESTED THE AFORESAID DISALLOWANCES BEFORE LEARNED COMMISSIONER (APPEALS). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE ALLEGED NON GENUINE PURCHASES IN BOTH THE ASSESSMENT Y EARS UNDER DISPUTE. 5. I HAVE CONSIDERED RIVAL SUBMISSIONS THE MATERIAL ON RECORD. THOUGH , IT MAY BE A FACT THAT THE ASSESSEE WAS UNABLE TO FURNISH COMPLETE EVIDENCES TO CONCLUSIVELY PROVE THE SOURCE OF PURCHASES, HOWEVER, THE FACT THAT THE ASSESSEE HAD PURC HASED THE GOODS , POSSIBLY FROM UNVERIFIED SOURCES , HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER SINCE HE HAS ACCEPTED THAT THE DISPUTED GOODS REPRESENTING SUCH PURCHASES WERE IN POSSESSION OF THE ASSESSEE. THEREFORE, INSTEAD OF DISALLOWING THE ENTIRE PUR CHASES, HE HAS RESTRICTED THE DISALLOWANCE TO GROSS PROFIT RATE DECLARED BY THE ASSESSEE. WHEREAS, LEARNED 4 SHRI GUL NARAINDAS MULCHANDANI COMMISSIONER (APPEALS) HAS RESTRICTED SUCH DISALLOWANCE TO 12.5% OF NON GENUINE PURCHASES. THUS, THE DISPUTE IS BASICALLY WITH THE PERCENTAGE OF DISA LLOWANCE. KEEPING IN VIEW THE GENERALLY FOLLOWED LEGAL POSITION IN THESE TYPES OF CASES, I AM OF THE CONSIDERED OPINION THAT THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES IS FAIR AND RE ASONABLE , HENCE , DESERVES TO BE UPHELD. ACCORDINGLY, I DO SO. GROUNDS ARE DISMISSED. 6. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 16.02.2021 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMB AI, DATED: 16.02.2021 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI