ITO 27(1)(4), NAVI MUMBAI V. DATTAKUMAR PANDHARINATH JAMBAVALIKAR, MUMBAI

ITA 4976/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0414 (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: 2009-2010
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 143(2); 148

Judgement Text

1 DATTAKUMAR PANDHARINATH JAMBAVALIKAR ASSESSMENT YEARS 2009-10 & 2010-11 - 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.4976/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) & ./ I.T.A. NO.4970/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. DATTAKUMAR PANDHARI NATH JAMAVALIKAR 10, LILLA VILA, GOVANDI ROAD CHEMBUR MUMBAI-400 071. '# ./ ./PAN/GIR NO. ABOPJ-4112-H ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : NONE / DATE OF HEARING : 09/09/2019 / DATE OF PRONOUNCEMENT : 09/09/2019 / O R D E R PER BENCH: - 1.1 AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEA RS [AY] 2009-10 & 2010-11 CONTEST SEPARATE ORDERS OF FIRST APPELLATE AUTHORITY. SINCE COMMON 2 DATTAKUMAR PANDHARINATH JAMBAVALIKAR ASSESSMENT YEARS 2009-10 & 2010-11 ISSUES ARE INVOLVED AND FACTS ARE IDENTICAL, WE DIS POSE-OFF THE APPEALS BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E & BREVITY. NONE HAS APPEARED FOR ASSESSEE AND THEREFORE, THE MATTER IS PROCEEDED WITH EX-PARTE QUA THE ASSESSEE. 1.2 THE APPEAL FOR AY 2009-10 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-550/16/ITO-27(1)(4)/2017-18 DATED 09/05/2018 QUA DELETION OF CERTAIN 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.1,43,138/- 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.40,067/- BEING 21.87% OF THE BOGUS PURCHASES AS EVEN THE BASIC ONUS OF PR ODUCING TRANSPORT BILLS, DELIVERY CHALLANS ETC. WERE NOT FULFILLED BY THE AS SESSEE. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN ALUMINUM FABRICA TION UNDER PROPRIETORSHIP CONCERN NAMELY M/S AASTHA CLEANROOM SYSTEMS, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 18/02/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.14. 24 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.1.83 LACS AS AGAINST RETURNED INCOME OF RS.10.49 LACS FILED BY THE ASSESSEE ON 22 /09/2009 WHICH WAS PROCESSED U/S.143(1). 3 DATTAKUMAR PANDHARINATH JAMBAVALIKAR ASSESSMENT YEARS 2009-10 & 2010-11 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.1.83 LACS FROM AN ENTITY NAMELY M/S RUPANI & CO. ACCORDINGLY, AS PER DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INITIATED AGAIN ST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 27/03/2015. IN RESPONSE, THE ASSESSEE OFFERED ORIGINAL RETURN OF INCOME. THE STA TUTORY NOTICES U/S 143(2) & 142(1) WERE ISSUED IN DUE COURSE WHEREIN THE ASSE SSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 2.3 THE ASSESSEE DEFENDED THE PURCHASES BY SUBMITT ING THAT THE MATERIAL PURCHASED FROM THE SAID SUPPLIER WAS UTILIZED IN TH E MANUFACTURING PROCESS. HOWEVER, THE ASSESSEE REMAINED UNABLE TO PRODUCE TH E SUPPLIER WHICH LED THE LD. AO TO DISALLOW THESE PURCHASES. THE LEARNED FIRST APPELLATE AUTHORITY, RELYING UPON THE DECISION OF HONBLE GUJ ARAT HIGH COURT RENDERED IN CIT V/S SIMIT P. SHETH [356 ITR 451] RESTRICTED THE ADDITION TO THE EXTENT OF GP RATE I.E. 21.87% OF DISPUTED PURCHASES WHICH CAME TO RS.40,067/- AND DELETED THE BALANCE ADDITIONS. AGGRIEVED, THE R EVENUE IS IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE IS N OT IN FURTHER APPEAL. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS RAISED BY L D. DR BEFORE US. 3. 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. 4 DATTAKUMAR PANDHARINATH JAMBAVALIKAR ASSESSMENT YEARS 2009-10 & 2010-11 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 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 THE EXTENT OF GP RATE, WE DISMISS THE APPEAL. SO FA R AS THE DECISION 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 C OURT IN PR.CIT VS. M/S MOHOMMAD HAJI ADAM & CO. [ITA NO.1004 & OTHERS OF 2016, DATED 11/02/2019] WHEREIN HONBLE COURT HAS APPROVED THE ESTIMATION, ON SIMILAR FACTUAL MATRIX, BASED ON GROSS PROFIT RATE. 4. FACTS ARE PARI-MATERIA THE SAME IN AY 2010-11 WH EREIN THE ASSESSEE WAS SADDLED WITH ADDITION OF RS.1.08 LACS ON ACCOUN T OF ALLEGED BOGUS PURCHASES IN AN ASSESSMENT FRAMED U/S 143(3) R.W.S.147 ON 29/ 01/2016. THE FIRST APPELLATE AUTHORITY CONFIRMED THE SAME TO THE EXTENT OF GP RATE I.E. 19.83%. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. SINCE THE FACTS ARE IDENTICAL, OUR OBSERVATION, CONCLUSION AS WELL AS ADJUDICATION AS FOR AY 2009-10, SHALL MUTATIS MUTANDIS APPLY TO THIS YEAR ALSO. 5. IN RESULT, BOTH THE APPEALS STAND DISMISSED. 5 DATTAKUMAR PANDHARINATH JAMBAVALIKAR ASSESSMENT YEARS 2009-10 & 2010-11 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 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.