ITO - 27(1)(4), MUMBAI V. DUSHYANT U. BHATIA, MUMBAI

ITA 4977/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0410 (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
• Assessee Lawyers: MALLIKA DEVENDRA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

1 ITA NO.4977/MUM/2018 A.Y.2009-10 DUSHYANT U BHATIA - 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.4977/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) INCOME TAX OFFICER - 27(1)(4) TOWER 6, 4 TH FLOOR ROOM NO.409, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI. / VS. DUSHYANT U. BHATI A B-14, SHIVSAGAR CHS, 180 GARODIA NAGAR GHATKOPAR (E), MUMBAI-400 077. ./ ./PAN/GIR NO. AJAPB-6078-L ( /APPELLANT ) : ( / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : MS. MALLIKA DEVENDRA-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] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-24 2 ITA NO.4977/MUM/2018 A.Y.2009-10 DUSHYANT U BHATIA MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-24/IT- 20/526/ITO-27(1)(4)/2018-19 DATED 24/05/2018 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.8,41,303/- 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.5,13,594/- BEING 12.5% 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 AS DEALER IN HARDWA RE ITEMS UNDER PROPRIETORSHIP CONCERN NAMELY M/S KRISHNA ENTERPRIS ES WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 27/03/2015 WH EREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.16.05 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.13.54 LACS AS AGAINST RETURNED INCOME OF RS.2.50 LACS FILED BY THE ASSESSEE ON 23/09/2009 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.41.08 LACS FROM 10 PARTIES, THE DETAILS OF WHICH HAS ALREADY B EEN EXTRACTED AT PARA-6.1 3 ITA NO.4977/MUM/2018 A.Y.2009-10 DUSHYANT U BHATIA OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, AS PE R DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST TH E ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 31/03/2014. IN RESPON SE, THE ASSESSEE OFFERED ORIGINAL RETURN AND RAISED OBJECTIONS AGAIN ST REASSESSMENT PROCEEDINGS, WHICH WERE DULY DISPOSED-OFF VIDE ORDE R DATED 12/03/2014. THE STATUTORY NOTICES U/S 142(1) AND 143(2) WERE IS SUED IN DUE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN THE ASSESSEE WAS DIR ECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 2.3 TO CONFIRM THE PURCHASES TRANSACTIONS, NOTICES U/S 133(6) WERE ISSUED TO ALL PARTIES, HOWEVER THE SAME WERE RETURNED BACK UNSERVED BY POSTAL AUTHORITIES WITH THE REMARKS LEFT. THE FIELD INQU IRIES REVEALED, DID NOT THROW ANY LIGHT ON THE WHEREABOUTS OF THE SUPPLIERS. THES E FACTS WERE CONFRONTED TO THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE PU RCHASES WERE GENUINE AND CORRESPONDING SALES WERE MADE AND THE PAYMENT T O SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER REFLEC TED BY THE ASSESSEE HAS NOT BEEN DISTURBED / DISPUTED BY LD. AO. HOWEVE R, THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS. RESULTANTLY, LD. A O WORKED OUT PEAK OF THE PURCHASES AT RS.13.54 LACS AND ADDED THE SAME TO TH E INCOME OF THE ASSESSEE. THE LEARNED FIRST APPELLATE AUTHORITY, RE LYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN CIT V/S SIMIT P. SHETH [356 ITR 451] RESTRICTED THE ADDITION TO 12.5% OF DISPUTED PURCHA SES WHICH CAME TO RS.5.13 LACS AND DELETED THE BALANCE ADDITIONS. AGG RIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE AS SESSEE IS NOT IN FURTHER APPEAL. 4 ITA NO.4977/MUM/2018 A.Y.2009-10 DUSHYANT U BHATIA 3. THE RESPECTIVE REPRESENTATIVES HAVE ADVANCED ARG UMENTS, WHICH 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 SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER HAS NOT BEEN DISPUTED / DISTURBED BY THE R EVENUE. HOWEVER, AT THE SAME TIME, NOTICE ISSUED U/S 133(6) TO ALL THE ENTI TIES REMAINED UNSERVED AND FIELD INQUIRES DID NOT THROW ANY LIGHT ON THE W HEREABOUTS OF THE SUPPLIERS. THE ASSESSEE FAILED TO PRODUCE EVEN A SI NGLE PARTY TO CONFIRM THE TRANSACTION AND THE PRIMARY ONUS CASTED UPON ASSESS EE, TO SUBSTANTIATE THE PURCHASE TRANSACTIONS, REMAINED UN-DISCHARGED. UNDE R 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 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 5 ITA NO.4977/MUM/2018 A.Y.2009-10 DUSHYANT U BHATIA 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. !'#$% , % , / DR, ITAT, MUMBAI 6. #'() / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.