HITESH TILOKCHAND BOHRA, MUMBAI V. INCOME TAX OFFICER-19(1)(5), MUMBAI

ITA 4946/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5919 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Reopening of assessment; Bogus purchase; Tangible material; Accommodation entries; Reason to believe
• Section: 143(1); 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO S . 4945 & 4946 /MUM/201 7 (A.Y S : 2010 - 11 & 2011 - 12) SHRI HITESH TILOKCHAND BOHRA SHREE CHANDRA BHAWAN 11/13, PARSIWADA LANE MUMBAI 400 004 PAN: AERPB 7638 E V. INCOME TAX OFFICER - 19(1)(5 ) ROOM NO. 45, MATRU MANDIR TARDEV ROAD, MUMBAI 400 007 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH PANDIT DEPARTMENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 03 .06.2019 DATE OF PRONOUNCEMENT : 26 .07 .2019 O R D E R PER C. N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) 29 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 04.04.2 017 FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. 2 ITA NOS. 4945 & 4946/MUM/2017 (A.YS: 2010 - 11 & 2011 - 12) SHRI HITESH TILOKCHAND BOHRA 2. ASSESSEE HAS RAISED TWO GROUNDS IN BOTH THESE APPEALS . ONE IS IN RESPECT OF SUSTAINING THE REOPENING OF ASSESSMENT U/S. 147 OF THE ACT AND ON MERITS ESTIMATING THE PROFIT ELEMENT ON ALLEGED BOGUS PURCHASES @6%. 3. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IRON AND STEE L , FILED RETURN OF INCOME ON 16.09.2010 FOR THE A.Y.2010 - 11 AND THE RETURN FOR THE A.Y. 2 011 - 12 ON 30.09.2011 DECLARING INCOME OF .3 , 00 , 912 / - AND . 3 , 03 , 573 / - RESPECTIVELY AND T HE RETURNS WERE PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT (INV.) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS A L SO ONE OF THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT WAS REOPENED BASED ON THE INFORMATION RECEIVED FROM DGIT (INV.), MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCO MMODATION ENTRIES FROM VARIOUS DEALERS WHO ARE ALL PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANSPORTATION OF ANY GOODS. IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM VARIOUS PAR TIES WHICH WERE REFERRED TO IN THE ASSESSMENT ORDER. THE ASSESSEE PRODUCED SOME OF THE DETAILS CALLED FOR AND SUBMITTED THAT THE PURCHASES MADE ARE GENUINE. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY 3 ITA NOS. 4945 & 4946/MUM/2017 (A.YS: 2010 - 11 & 2011 - 12) SHRI HITESH TILOKCHAND BOHRA ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER THAT THOUGH FEW DETAILS WERE FURNISHED BUT THE ASSESSEE COULD NOT LINK THE PURCHASES WITH CORRESPONDING SALES AND BOOKS OF ACCOUNTS WERE ALSO NOT PRODUCED FOR VERIFICATION AND HENCE NO VERIFICATION COULD BE MADE. HOWEVER, ASSESSING OFFICER ESTIMATED THE PROFI T ELEMENT AT 12.5% FROM SUCH PURCHASES TREATED AS NON - GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL THE LD.CIT(A) UPHELD THE REOPENING OF THE ASSESSMENT. HOWEVER, COMING TO THE MERITS HE SUSTAINED THE DISA LLOWANCE TO THE EXTENT OF 6% IN STEAD OF 12.5%. BEFORE ME , LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 5. LD.DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW. 6. HEARD RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. SO FAR AS THE REOPENING OF ASSESSMENT IS CONCERNED , I AM OF THE VIEW THAT THE ASSESSMENT WAS REOPENED BASED ON THE INFORMATION RECEIVED FROM THE DGIT(INV.) AND THEREFORE, I AM OF THE VIEW THAT THERE ARE TANGIBLE MATERIAL S CAME ON RECORD AFTER PASSING INTIMATI ON U/S.143(1) OF THE ACT. IN THE CASE OF CIT V. RAJESH JHAVERI STOCK BROKERS (P) LTD. [291 ITR 500], THE HONBLE SUPREME COURT HELD THAT INTIMATION 4 ITA NOS. 4945 & 4946/MUM/2017 (A.YS: 2010 - 11 & 2011 - 12) SHRI HITESH TILOKCHAND BOHRA U/S . 143(1)(A) IS NOT AN ASSESSMENT AND UP HELD THE VALID ITY OF THE NOTICE ISSUED U/S 148 AND THE REO PENING OF ASSESSMENT . THEIR LORDSHIPS CLARIFIED THE MATTER AS UNDER: 17. THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM 1 - 41989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER SECTION 147(A ) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HA S OCCURRED BY REASON OF EITHER (I) OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BEL IEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVISO. IN THE CASE OF KONE ELEVATOR INDIA P. LTD. V. ITO [ 340 ITR 454 (MAD) ] , CIT V. IDEAL GARDEN COMPLEX P. LTD. [ 340 ITR 609 (MAD) ] , IT IS HELD THAT IN THE CASE OF RETURN OF INCOME PROCESSED U/S 143(1), THE ONLY CONDITION TO BE SATISFIED FOR REOPENING IS TAXABLE INCOME HAS ESCAPED ASSESSMENT AND THE ASSESSEES PLEA THAT NO FRESH MATERIAL BEFORE THE ASSESSING OFFICER WARRANTI NG REOPENI NG, IS NOT RELEVANT. IN VIEW OF THE ABOVE POSITION OF LAW, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE REOPENING DONE BY THE ASSESSING OFFICER BY ISSUING NOTICE U/S 148 OF THE ACT. 5 ITA NOS. 4945 & 4946/MUM/2017 (A.YS: 2010 - 11 & 2011 - 12) SHRI HITESH TILOKCHAND BOHRA 7. IN THE CIRCUMSTANCES, I HOLD THAT SINCE THE ASSESSMENT WAS REOPENED BASED ON TANGIBLE MATERIALS AND INFORMATION COMING INTO THE POSSESSION OF THE ASSESSING OFFICER AT LATER STAGE, I HOLD THAT THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT IS VALID, HENCE THE GROUND RAISED BY THE ASSESSEE AGAINST REOPENING OF ASSES SMENT IS DISMISSED. 8. COMING TO THE MERITS OF THE CASE , IT IS THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE COLD NOT FURNISH COMPLETE DETAILS INCLUDING THE DETAILS OF CORRESPONDING SALES OF GOODS TO LINK THE PURCHASES WITH THE SUPPORTING BILLS , VOUCHERS, STOCK REGISTER ETC. IT IS THE FINDING OF THE ASSESSING OFFICER THAT ASSESSEE WAS ALSO ASKED TO PRODUCE THE BOOKS OF ACCOUNTS FOR VERIFICATION. IT IS THE FINDING OF THE ASSESSING OFFICER THAT THOUGH T HE DETAILS WERE FURNISHED BUT THE ASSESSEE C OULD NOT LINK THE PURCHASES WI TH CORRESPONDING SALES AND BOOKS OF ACCOUNTS WERE ALSO NOT PRODUCED FOR VERIFICATION AND T HEREFORE NO VERIFICATION COULD BE MADE. NONE OF THESE FINDINGS WERE REBUTTED WITH EVIDENCES. I FIND THAT THE LD.CIT(A) CONSIDERING THE SUBMISSIONS AND THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V . SIMIT P. SETH [356 ITR 451] ESTIMATED THE PROFIT ELEMENT FROM THESE PURCHASES AT 6% I.E. 4% BEING VAT ON STEEL AND IRON AND ADDITIONAL MARGIN OF 2%. I SEE NO INFIRMITY I N THE ORDER PASSED BY THE LD.CIT(A) AND I UPHOLD THE SAME. 6 ITA NOS. 4945 & 4946/MUM/2017 (A.YS: 2010 - 11 & 2011 - 12) SHRI HITESH TILOKCHAND BOHRA 9. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH JULY , 2019 SD / - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 26 / 0 7 / 2019 GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM