ITO - 27(1)(4), MUMBAI V. DEEPAK NALIN ASHAR, MUMBAI

ITA 4968/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0411 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 148

Judgement Text

1 ITA 4968/MUM/2018 A.Y.2010-11 DEEPAK NALIN ASHAR - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4968/MUM/2018 ( / ASSESSMENT YEAR:2010-11 ) INCOME TAX OFFICER - 27(1)(4) TOWER 6, 4 TH FLOOR ROOM NO.409 VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI. / VS. DEEPAK NALIN ASHAR 144-2923/202, C-WING, PREM SMRUTI 6 TH ROAD, BEHIND RAJAWADI HOSPITAL GHATKOPAR (E) MUMBAI-400 077. '# ./ ./PAN/GIR NO. ACRPA-5751-H ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE B Y : SHRI JAYANT R. BHATT-LD.AR / DATE OF HEARING : 09/09/2019 / DATE OF PRONOUNCEMENT : 09/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-24 MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-24/IT- 570/793/ITO-27(1)(4)/2017-18 DATED 09/05/2018 QUA DELETION OF CERTAIN 2 ITA 4968/MUM/2018 A.Y.2010-11 DEEPAK NALIN ASHAR ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE GROUNDS RAISED BY REVENUE READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,87,278/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT T HAT THE ASSESSEE HAD FAILED TO PRODUCE BILLS, VOUCHERS AND OTHER DOCUMENTARY EVIDE NCES IN SUPPORT OF HIS CLAIM AND WITHOUT CONSIDERING THE LATEST APEX COURT DECIS ION IN THE CASE OF N K PROTEIN LTD. WHEREIN IT IS HELD THAT ONCE IT IS PROVED THAT THE PURCHASES ARE BOGUS THEN ADDITION SHOULD BE MADE ON ENTIRE PURCHASES AND NOT ON PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT FROM HAWALA PURCHASES BY DISALLOWING ONL Y RS.41,040/- BEING 12.5% OF THE BOGUS PURCHASES AS EVEN THE BASIC ONUS OF PRODU CING TRANSPORT BILLS, DELIVERY CHALLANS ETC. WERE NOT FULFILLED BY THE ASSESSEE. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN FABRICATION OF C HEMICAL AND PHARMA EQUIPMENTS UNDER PROPRIETORSHIP CONCERN NAMELY M/S RIGHT FABRICATORS, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8.95 LACS, INTER-ALIA, AFTER ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.3.28 LACS AS AGAINST RETURNED INCOME OF RS.3.95 LACS FILED BY THE ASSESSEE ON 11/08/2010 WH ICH WAS PROCESSED U/S.143(1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRAN SPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ALLEGED BOGUS PURCHASES TO THE TUNE OF RS.3.28 LACS FROM AN ENTITY NAMELY M/S GOODLUCK INDUSTRIES. ACCO RDINGLY, AS PER DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INIT IATED AGAINST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 1 9/03/2015. IN 3 ITA 4968/MUM/2018 A.Y.2010-11 DEEPAK NALIN ASHAR RESPONSE, THE ASSESSEE OFFERED ORIGINAL RETURN OF I NCOME. THE STATUTORY NOTICES U/S143(2) & 142(1) WERE ISSUED IN DUE COURS E WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 2.3 TO CONFIRM THE PURCHASES TRANSACTIONS, NOTICE U /S 133(6) WAS ISSUED TO THE SAID PARTY WHICH REMAINED UN-RESPONDED. UPON CONFRONTATION, THE ASSESSEE SUBMITTED THAT THE PURCHASES WERE GENUINE AND THE PAYMENT TO THE SAID SUPPLIER WAS THROUGH BANKING CHANNELS. HOW EVER, THE ASSESSEE FAILED TO PRODUCE THE SUPPLIER WHICH LED THE LD. AO TO DISALLOW THESE PURCHASES. THE LEARNED FIRST APPELLATE AUTHORITY, R ELYING UPON THE DECISION IN EARLIER YEAR, RESTRICTED THE ADDITIONS TO 12.5% AND DELETED THE BALANCE ADDITIONS. AGGRIEVED, THE REVENUE IS IN FURTHER APP EAL BEFORE US. IT APPEARS THAT THE ASSESSEE IS NOT IN FURTHER APPEAL. 3. BOTH THE REPRESENTATIVE HAD ADVANCED ARGUMENTS W HICH WE HAVE DULY CONSIDERED. 4. WE ARE OF THE CONSIDERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASS ESSEES NATURE OF BUSINESS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIER WAS THROUGH BANKIN G CHANNELS. THE SALES TURNOVER REFLECTED BY THE ASSESSEE HAS NOT BEEN DIS TURBED / DISPUTED BY LD. AO. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERAB LY FAILED TO SUBSTANTIATE THE PURCHASES DURING ASSESSMENT PROCEE DINGS. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAIN ED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTI ONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY 4 ITA 4968/MUM/2018 A.Y.2010-11 DEEPAK NALIN ASHAR MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE. THEREFO RE, CONCURRING WITH THE APPROACH OF LEARNED FIRST APPELLATE AUTHORITY IN RE STRICTING THE ADDITIONS TO 12.5%, WE DISMISS THE APPEAL. SO FAR AS THE DECISIO N OF HONBLE GUJARAT HIGH COURT RENDERED IN N.K. INDUSTRIES LTD. VS DCIT [72 TAXMANN.COM 289] IS CONCERNED, WE FIND THAT THE FACTS OF THAT CASE H AS ALREADY BEEN DISTINGUISHED BY HONBLE BOMBAY HIGH COURT IN PR.CIT VS. M/S MOHOMMAD HAJI ADAM & CO. [ITA NO.1004 & OTHERS OF 2 016, DATED 11/02/2019] WHEREIN HONBLE COURT HAS APPROVED THE ESTIMATION, ON SIMILAR FACTUAL MATRIX, BASED ON GROSS PROFIT RATE. 5. IN RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 09/09/2019 SR.PS:-JAISY VARGHESE #$ %$ / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. . ( ) / THE CIT(A) 4. . / CIT CONCERNED 5. /0 &)1 , 1 , / DR, ITAT, MUMBAI 6. 0234 / GUARD FILE 5 ITA 4968/MUM/2018 A.Y.2010-11 DEEPAK NALIN ASHAR / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.