PRITI PRAKASH SHAH, THANE V. ITO WD 3(2), THANE

ITA 4973/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9899 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD
• Assessee Lawyers: MANDAR VAIDYALD
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.4973/MUM/2015 PRITI PRAKASH SHAH ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 4973/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) PRITI PRAKASH SHAH SHOP NO.1 LAXMI JYOT APARTMENTS OFF ALMEDA ROAD CHANDINEALA COMPLEX CHANDAN WADI PANCHPAKAHADI THANE(W) 400 601 / VS. INCOME TAX OFFICER WARD 3(2) ASHAR IT PARK WAGLE INDUSTRIAL ESTATE THANE ./ ./PAN/GIR NO. AGPPS-8533-D ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : MANDAR VAIDYA,LD. AR REVENUE BY : RAJAT MITTAL, LD. DR / DATE OF HEARING : 27/06/2017 / DATE OF PRONOUNCEMENT : 07/07/2017 ITA NO.4973/MUM/2015 PRITI PRAKASH SHAH ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 [CIT(A)], MUMBAI DATED 29/07/2015 QUA CONFIRMATION OF ADDITION TO THE EXTENT OF 25% AGAINST CERTAIN BOGUS PURCHASES. 2. BRIEFLY STATED THE ASSESSEE, BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF IRON, STEEL, CEMENT & BUILDING MATERIAL , WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY WHERE THE INCOME OF THE ASSESSEE WAS DE TERMINED AT RS.1,40,09,030/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.1,36,27,462/-. THE ORIGINAL RETURN OF INCOME WAS FILED ON 29/09/2009 DECLARING INCOME OF RS.3,64,360/- WHICH WAS ASSESSE D U/S 143(1). THE CASE OF THE ASSESSEE WAS REOPENED PURSUANT TO RECEI PT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS BILLING. CONSEQUENTLY, NOTICE U/S 148 DATED 28/03/2013 WAS ISSUED TO THE ASSESSEE WHICH WERE FO LLOWED BY NOTICES U/S 143(2) AND 142(1). 2.1 THE ASSESSEE WAS FOUND TO HAVE MADE BOGUS PURCHASES FROM THE FOLLOWING FOUR PARTIES:- NO. NAME AMOUNT (RS.) 1. MOKSH TRADING COMPANY 28,04,175/- 2. MAGNUM ENTERPRISES 59,78,475/- 3. MERIDIAN SALES AGENCY PVT. LTD. 33,25,050/- 4. RAMDEV TRADING 15,19,762/- TOTAL 1,36,27,462/ - ITA NO.4973/MUM/2015 PRITI PRAKASH SHAH ASSESSMENT YEAR 2009-10 3 TO CONFIRM THE PURCHASES TRANSACTIONS, NOTICES U/S 133(6) WERE SENT TO THESE PARTIES BY THE SAME REMAINED UN-SERVED BY THE POSTAL AUTHORITIES AND THEREAFTER, VISIT OF THE INSPECTOR AT THE RESPE CTIVE ADDRESSES REVEALED THAT THE SAID PARTIES WERE NOT TRACEABLE AT THE GIV EN ADDRESSES. 2.2 THE ASSESSEE WHILE DENYING HAVING ENTERED INTO ANY SUCH BOGUS TRANSACTIONS SUPPLIED LEDGER EXTRACT / BILLS ETC. T O SUBSTANTIATE THE PURCHASES. HOWEVER, NOT CONVINCED, LD. AO TREATED T HE SAME AS BOGUS PURCHASES AND MADE THE IMPUGNED ADDITIONS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME BEFOR E LD. CIT(A) WITH PARTIAL SUCCESS VIDE IMPUGNED ORDER DATED 29/0 7/2015 WHERE THE ASSESSEE CONTENDED THAT THE PAYMENTS WERE THROUGH B ANKING CHANNELS AND CORRESPONDING SALES WAS ACCEPTED BY THE REVENUE AND HENCE ADDITION THEREOF WAS NOT JUSTIFIED. HOWEVER, LD. CI T(A) NOTED THAT THE ASSESSEE FAILED TO PRODUCE THE QUANTITATIVE DETAILS IN THE PRESCRIBED FORMAT AND ALSO COULD NOT PRODUCE LEDGER CONFIRMATI ON / DELIVERY CHALLANS / TRANSPORT RECEIPTS ETC. TO SUBSTANTIATE THE PURCH ASES. AFTER NOTICING MANY MORE SHORTCOMINGS / DISCREPANCIES, LD. CIT(A) APPRECIATED THE SALES / PURCHASES / GP RATE DECLARED BY THE ASSESSE E AND RESTRICTED THE SAID DISALLOWANCE TO 25% WHICH CAME TO RS.34,06,866 /- AS AGAINST FULL DISALLOWANCE OF RS.1,36,27,464/- MADE BY THE LD. AO . STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4 . THE LD. COUNSEL FOR ASSESSEE [AR] REITERATING THE S AME CONTENTIONS, ASSAILED THE ADDITION CONFIRMED BY LD. CIT(A) AND CONTENDED THAT THE ADDITION OF 25% WAS ON THE HIGHE R SIDE SINCE THE ASSESSEE WAS DEALING IN LOW MARGIN COMMODITIES. OUR ATTENTION WAS ITA NO.4973/MUM/2015 PRITI PRAKASH SHAH ASSESSMENT YEAR 2009-10 4 DRAWN TO THE FACT THAT THE ASSESSEE WAS IN POSSESSI ON OF PURCHASE INVOICES, ALL PAYMENTS WERE THROUGH BANKING CHANNEL S, QUANTITATIVE DETAILS WERE FURNISHED BY THE ASSESSEE AND CORRESPO NDING SALES HAVE BEEN ACCEPTED BY THE REVENUE AND THEREFORE, IMPUGNE D ADDITIONS WERE NOT JUSTIFIED. RELIANCE WAS PLACED ON THIS TRIBUNAL S DECISION IN SISTER CONCERN OF THE ASSESSEE WHERE UNDER SIMILAR CIRCUMS TANCES, THE ADDITION WAS RESTRICTED TO 12.5%. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] OPPOSED THE SAME ON THE GROUND THAT ADEQUATE RELIEF HAS ALREADY BEEN GRANTED TO THE ASSESSEE BY LD. CIT(A) WHEREAS THE ASSESSEE COULD N OT EVEN PROVE THE ACTUAL DELIVERY OF MATERIAL AND THEREFORE, NO FURTH ER RELIEF COULD BE GRANTED TO HIM. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUM ENTS OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS OF PROVING THE PURCHASES AND IT COULD NOT PRODUCE EVIDENCES TO SHO W ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFIRMATORY LE TTERS FROM THE ALLEGED BOGUS SUPPLIERS. HOWEVER, WE ALSO FIND THAT THE ASS ESSEE IS IN POSSESSION OF PURCHASE INVOICES AND THE PAYMENTS AR E THROUGH BANKING CHANNELS. THEREFORE, EVEN IF ALL THE PURCHASES ARE FOUND TO BE BOGUS, IT IS NOTED THAT SALES TURNOVER HAS NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH ITA NO.4973/MUM/2015 PRITI PRAKASH SHAH ASSESSMENT YEAR 2009-10 5 LD. CIT(A) HAS RIGHTLY DONE SO. HOWEVER, WE FIND SO ME STRENGTH IN THE ARGUMENTS OF THE LD. AR THAT THE CONFIRMATION OF AD DITION TO THE EXTENT OF 25% WAS ON THE HIGHER SIDE KEEPING IN VIEW THE NATU RE OF GOODS TRADED BY THE ASSESSEE AND THEREFORE, WE RESTRICT THE SAME TO 12.5% WHICH COMES TO RS.17,03,433/-. THE BALANCE ADDITION SHALL STAND DELETED. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JULY, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07.07.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. #&. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI