SMT. SHANTA ANIL GARAD, AMBERNATH V. ITO -WD 2(4), KALYAN

ITA 4961/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2382 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Principle of natural justice; Reassessment proceedings; Set aside
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO . 4961 /MUM/2018 ( / ASSESSMENT YEAR : 2009 - 1 0 ) SMT. SHANTA ANIL GARAD H. NO. 606, LAXMI NIWAS, WARD NO.8, MORIVALI VILLAGE, AMBERNATH - 421505 . / VS. ITO WARD 2(4) 1 ST FLOOR, MOHAN PLAZA, WAYLE NAGAR, KHADAKPADA KALYAN - 421301. ./ ./ PAN/GIR NO. : AGLPG8260F ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 05 / 0 9 / 201 9 /DATE OF PRONOUNCEMENT: 07 / 11 / 201 9 / O R D E R PER AMA RJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 02 .0 5 .2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y . 20 0 9 - 1 0 . 2 . THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS: - 1. THE LD CIT (A PPEALS) HAS SERIOUSLY ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING VALIDLY COMPLETED ASSESSMENT OIL THE BASIS OF: ONLY ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT TO THE EFFECT THAT ASSESSEE HAD TAKEN HAWALA BILLS FROM SOME PARTIES INSTEAD OF ACTUALLY PURCHASING GOODS. ASSESSEE BY : SHRI SUMIN MAKHIJA REVENUE BY: SHRI CHAITANYA ANJARIA (DR) ITA NO. 49 6 1 / M/201 8 A.Y. 2009 - 1 0 2 II WITHOUT MAKING ANY INDEPENDENT INQUIRIES! DUE APPLICATION OF KID. III IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY NEITHER PROVIDING THE COPY OF STATEMENT RECORDED/ AFFIDAVIT TILED BEFORE SALES TAX DEPARTMENT OF THE ALLEGED HAWALA DEALER. 2. WITHOUT PREJUDICE TO THE ABOVE APPELLANT SUBMITS THAT THE CIT (APPEALS) HAS SERIOUSLY ERRED IN CONFIRMING THE ADDITION @ 12.5% OF THE ALLEGED BOGUS PURCHASES WITHOUT APP RECIATING THAT: I) AS DECIDED BY VARIOUS JUDICIAL FORUMS UNDER SITUATIONS ALIKE OF THE ASSESEE WHAT IS TO BE ADDED IS THE PROFIT ELEMENT EMBADED IN THE TRANSACTION WHICH IN ASSESSES CASE IS 4.9% ONLY. II) THAT ASSESSEE HAS PAID VAT ON ALLEGED BOGUS PURCHAS E TO THE MAHARASTRA VAT AUTHORITIES @12.5%, DEDUCTION FOR WHICH HAS TO BE ALLOWED WHILE MAKING ADDITION. III) ASSESSEE HAS ALREADY DECLARED GROSS PROFIT ON ALL THE PURCHASE RECORDED INCLUDING ALLEGED BOGUS PURCHASES @ 13.3% WHICH SUM ALSO IS REQUESTED TO B E REDUCED OUT OF THE ESTIMATED ADDITION @12.5% PROPOSED TO BE ADDED AS HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIES. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR ANY OF THE GROUNDS AT THE TIME OF OR BEFORE THE HEARING OF APPEAL. 4. THE APPELL ANT THEREFORE PRAYS THAT INITIATION OF REASSESSMENT PROCEEDINGS MAY PLEASE BE HELD AS ILLEGAL, ORDER PASSED IN PURSUANCE THERETO MAY BE QUASHED OR ALTERNATIVELY ADDITION MADE/CONFIRMED MAY BE SUITABLY REDUCED. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FILED HER RETURN OF INCOME ON 30 .09.20 0 9 DECLARING TO TAL INCOME TO THE TUNE OF RS . 3,73,320 / - . T HE RETURN WAS ACCEPTED U/S 143(3 ) OF THE I.T. ACT, 1961 ON 10.08.2010 . THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SUPPLY CHEMICALS, PIGMENT AND SOLVENTS TO VARIOUS PARTIES WITH THE NAME AND STYLE OF M/S. SHIVSHAKTI TRADING CO. THE ASSESSMENT OF THE ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT(INV.) WING , MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE ACCOMMODAT ION ENTRIES OF BOGUS P URCHASE IN SUM OF RS. 11,01,236 / - FROM THE FOLLOWING SEVEN PARTIES. ITA NO. 49 6 1 / M/201 8 A.Y. 2009 - 1 0 3 NAME OF THE ENTRY PROVIDER AMOUNT IN THE BILLS TAKEN BY THE ASSESSEE IN MAGNUM ENTERPRISES RS.5,70,076 SMARTLINK TRADEX PRIVATE LIMITED RS.75,296 SHAH INDUSTRIES RS .11,024 MR CORPORATION RS.23,088 ARIHANT CORPORATION RS.30,368 MERIDIAN SALES AGENCY PVT. LTD. RS.2,73,510/ - PAYAL ENTERPRISE RS.1,17,874 TOTAL RS.11,01,236 4 . AFTER THE REPLY OF THE ASSESSEE, THE AO RAISED THE 100% ADDITION AND ASSESSED THE TOTAL IN COME TO THE TUNE OF RS.14,74,556/ - . FEELING AGGRIEVED, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION THE EXTENT OF 12.5% OF THE BOGUS PURCHASE BUT THE ASSESSEE WAS NOT SATISFIED , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT AP PEAL BEFORE US. 5 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS DECLARED THE GP @ 13.30% AND AVERAGE G.P. FR OM THE LAST 4 YEARS WAS @ 13.04%, THEREFORE, IN THE SAID CIRCUMSTANCES, NO ADDITION IS REQUIRED IN VIEW OF THE DECISION OF HONBLE ITAT IN THE CASE OF TITLED AS SHRI ANIL DADARAO GARAD IN ITA. NO.6161/M/2017 DATED 12.01.2018 AND IN VIEW OF THE DECISION OF HONBLE ITAT IN THE CASE OF TITLED AS ITO VS. M/S. J.K. JEWELLERS INTERNATIONAL IN ITA. NO.1117 & 1118/M/JP/2018 DATED 06.06.2019 , THEREFORE, THE ADDITION RAISED ON ACCOUNT OF BOGUS PURCHASE IS LIABLE TO BE DELETED. HOWEVER, ON THE OTHER HAND, THE LD. REPR ESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN ITA NO. 49 6 1 / M/201 8 A.Y. 2009 - 1 0 4 QUESTION. THE ASSESSEE HAS GIVEN THE PROFIT COMPARABLE CHART WHICH IS HEREBY MENTIONED BELOW .: - 6 . IF THE 100% ADDITION BE RAISED THEN THE G.P. WOULD GO @ 23.74%. I N SUCH TYPE OF CASES, THE HONBLE ITAT HAS ALREADY GIVEN THE DECISION IN WHICH IT IS HELD THAT WHEREAS THE GROSS PROFIT IS MORE THAN THE ADDITION RAISED @ 12.5% THEN NO ADDITION IS REQUIRED. IN THIS REGARD, WE ALSO FIND THE SUPPORT OF THE DECISION OF THE H ONBLE ITAT IN ITA. NO.1117 & 1118/M/JP/2018 DATED 06.06.2019 WHICH IS HEREBY REPRODUCED AS UNDER: - 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT SIMILAR ADDITION MADE WITH REGARD TO BOGUS PURCHASES HAS BEEN DELETED BY THE TRIBUNAL AFTER OBSERVING THAT THE G.P. RATE FOR THE YEAR UNDER CONSIDERATION IS MORE THAN THE G.P. RATE FOR THE EARLIER A.Y. WHICH WAS ACCEPTED BY THE TRIBUNAL. THE PRECISE OBSERVATION OF THE TRI BUNAL WAS AS UNDER: ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION CONFIRMED BY THE LD. CIT(A) WHEN THE GP DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS MORE THAN THE GP FOR THE EARLIER ASSESSMENT WH ICH WAS ACCEPTED BY THIS TRIBUNAL. THOUGH THE ASSESSEE HAS RAISED OTHER GROUNDS REGARDING THE VALIDITY OF REOPENING, HOWEVER, ONCE THE APPEAL OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE ON THE MERITS AND THE ADDITION IS DELETED, THEN THE LEGAL ISS UE RAISED BY THE ASSESSEE BECOMES ACADEMIC IN NATURE AND ACCORDINGLY WE DO NOT PROPOSE TO GO INTO THE SAME. 9. WE HAD CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL AS WELL AS THE ORDER PASSED BY THE LOWER AUTHORITIES AND FOUND THAT AS PER CHARTS PRODU CED HEREINABOVE FOR THE A.Y. 2005 - 06 TO 2009 - 10 AND 2009 - 10 TO 2014 - 15, THE G.P. DECLARED IN BOTH THE YEARS IS MORE THAN THE AVERAGE ITA NO. 49 6 1 / M/201 8 A.Y. 2009 - 1 0 5 G.P., ACCORDINGLY, NO ADDITION IS WARRANTED. HOWEVER, THE A.O. IS DIRECTED TO VERIFY THE CORRECTNESS OF G.P. RATE CALCULATE D BY THE ASSESSEE WHICH HAS BEEN REPRODUCED ABOVE AND WE DIRECT THE A.O. NOT TO MAKE ANY ADDITION IF THE G.P. FOR THE A.Y. 2009 - 10 IS FOUND TO BE AT 18.89% AND FOR THE A.Y. 2014 - 15 AT18.78%, WHICH ARE MORE THAN THE G.P. RATE DECLARED BY THE ASSESSEE IN TER MS OF THE ABOVE CHARTS. 7. HOWEVER THE OTHER LAW RELIED BY THE LD. REPRESENTATIVE OF THE ASSESSEE(SUPRA) ALSO SPEAKS THE SAME THING SO THE FINDING OF THE ABOVE MENTIONED LAW IS NOT LIABLE TO BE REPEATED. IN VIEW OF THE DECISION OF THE HONBLE ITAT MENTION ED ABOVE, WE ARE OF THE VIEW THAT THE SAME PRINCIPAL IS LIABLE TO BE APPLICABLE IN THE PRESENT CASE ALSO WHEREIN THE GROSS PROFIT RATE HAS BEEN DECLARED MORE THAN THE ADDITION RAISED ON ACCOUNT OF BOGUS PURCHASE, THEREFORE, THE SAID CIRCUMS TANCES, NO ADDIT ION IS REQUIRED, HENCE, WE DELETE THE ADDITION AND ALLOWED THE CLAIM OF THE ASSESSEE. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED ACCORDINGLY . ORDER PRONOUNCED IN THE OPEN COURT ON 07 /11 /2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICI AL MEMBER MUMBAI; DATED : 07 /11 /2019 V IJAY SR. P.S. ITA NO. 49 6 1 / M/201 8 A.Y. 2009 - 1 0 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI