CHANDRASHEKHAR DANDKAR, MUMBAI V. INCOME TAX OFFICER -2(1), KALYAN

ITA 4970/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7792 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.4970/M/2017 ASSESSMENT YEAR: 2009-10 MR. CHANDRASHEKHAR DANDKAR, PROP. NISHIKANT POWER HOUSE, AT POST SHAHPUR, TAL. SHAHPUR, DIST. THANE 421 601 PAN: ADDPD 8810B VS. INCOME TAX OFFICER-2(1), KALYAN (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DEVENDRA JAIN, A.R. REVENUE BY : MS. N. HEMALATHA, D.R. DATE OF HEARING : 11.12.2017 DATE OF PRONOUNCEMENT : 22.12.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 20.04.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE ONLY EFFECTIVE GROUND IS GROUND NO.4 WHICH I S IN RELATION TO THE ADDITION OF RS.16,59,438/-. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS A PROPRIETOR OF NISHIKANT POWER HO USE, ENGAGED IN THE BUSINESS OF ERECTION, COMMISSIONING AND INSTALLATION OF ELECTRICAL GOODS. THE CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE PARTIES ITA NO.4970/M/2017 MR. CHANDRASHEKHAR DANDKAR 2 NAMELY M/S. OM CORPORATION, M/S. BLUE NINE ENTERPRI SES AND M/S. MANIBHADRA TRADING CO. FROM WHOM THE ASSESSEE HAD M ADE PURCHASES WERE INVOLVED IN PROVIDING HAWALA ENTRIES AND ASSESSEE WAS ONE OF THE BENEFICIARIES. THE NOTICE WAS ISSUE D TO THE PARTIES BUT THEY WERE REMAINED ABSENT. THEREFORE, THE ASSESSIN G OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAS MADE ADDITI ON OF RS.16,59,438/- UNDER SECTION 69C OF THE ACT. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING, THE LD. A.R. RELIE D UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF ASHTAVINAYA KA CONSTRUCTION WITH IDENTICAL FACTS OF THE PRESENT CASE IN ITA NO. 3821/M/2015 FOR A.Y. 2011-12 WHEREIN THE TRIBUNAL ESTIMATED 12.5% O F THE SAID PURCHASES TO BE MADE ADDITION. THEREFORE, THIS ISS UE MAY BE CONSIDERED ACCORDINGLY. 5. THE LD. D.R. OBJECTED TO IT. 6. HAVING HEARD BOTH THE PARTIES, WE FIND THAT IN I TA NO.3821/M/2015 FOR A.Y. 2011-12 THE TRIBUNAL HAS HE LD AS UNDER: 5. AFTER HEARING BOTH THE PARTIES, AND ON PERUSAL OF MATERIALS PLACED BEFORE US, WE OBSERVE THAT THE ASSESSEE IS UNDOUBTEDLY BENEFICIAR Y OF BOGUS PURCHASE BILLS ISSUED BY THESE THREE PARTIES AS MENTIONED HEREINABOVE TO THE TUNE OF RS.39,88,535/-. IN RESPECT OF FIRST TWO PARTIES VIZ. (A) EMCO INDUSTRI ES AND (B) MERCURY ENTERPRISES, THE PAYMENTS WERE WITHHELD DUE TO DEFECTIVE MATERIALS W HICH WERE DULY ENTERED INTO BY THE ASSESSEE IN THE STOCK REGISTER AND ALSO CONS UMED IN THE CONSTRUCTION AT THE VARIOUS SITES, WHEREAS IN RESPECT OF THE THIRD PART Y VIZ VIRAJ TRADING CO., THE MATERIAL WAS RECEIVED AND SHOWN IN THE STOCK REGISTER AND CO NSUMED. THE PAYMENT WAS MADE THROUGH BANKING CHANNEL. THE AO DOUBTED THE EN TIRE PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE WHICH WAS UP HELD BY THE LD. CIT(A) BY OBSERVING THAT THE PROVISIONS OF SECTION 69C OF THE ACT TREATING THE PURCHASES AS ITA NO.4970/M/2017 MR. CHANDRASHEKHAR DANDKAR 3 UNEXPLAINED EXPENDITURE WAS RIGHTLY APPLIED. IN THE CASE OF BOGUS PURCHASES, THE PRACTICE FOLLOWED BY THE BENEFICIARIES ARE THAT THE BILLS ARE PREPARED FROM THE HAWALA DEALERS WHILE PURCHASES THE GOODS FROM THE G REY MARKET THEREBY MAKING THE SAVING OF NON-PAYMENT OF VAT AND OTHER INCIDENT AL CHARGES. WE ARE NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD.CIT(A ) SPECIFICALLY WHEN THE ASSESSEE HAS FILED THE STATEMENT OF RECEIPT OF MATE RIALS AND CONSUMPTION THEREOF AT THE VARIOUS SITES AND HENCE AT THE MOST A REASONABL E DISALLOWANCE TO COVER THE LEAKAGES OF REVENUE AND VARIOUS TYPES OF SAVINGS MA DE BY THE ASSESSEE BY PURCHASING GOODS FROM THE GREY MARKET COULD BE MADE . IN THE SIMILAR CASES, THE CO- ORDINATE BENCHES OF THE TRIBUNAL HAVE TAKEN A CONSI STENT VIEW OF DIRECTING ADDITION RANGING FROM 5% TO 12.5% DEPENDING UPON THE FACTS O F THE CASE. IN THE PRESENT CASE, WE ARE OF THE VIEW THAT IT WOULD BE FAIR AND REASONABLE TO MAKE THE ADDITION TOWARDS GROSS PROFIT AT THE RATE OF 12.5% OF THE SA ID PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DIRECT THE AO TO MAKE ADDITION AT 12.5% OF THE BOGUS PURCHASES. GROUND NO.1 IS PARTLY ALLOW ED. 7. RESPECTFULLY FOLLOWING THE SAME, I DIRECT THE AO TO MAKE THE ADDITION TOWARDS THE GROSS PROFIT @ 12.5% OF THE SA ID PURCHASES WHICH COMES TO RS.2,07,430/-. 8. GROUND NO.2 IS NOT PRESSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.12.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 22.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.