DINESH P. PAREKH, DOMBIVALI V. ITO -WD- 3(2), KALYAN

ITA 4987/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0403 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Assessee Lawyers: BHADRESH K DOSHILD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 143(2); 148

Judgement Text

1 DINESH P. PAREKH 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.4987/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) & ./ I.T.A. NO.4988/MUM/2018 ( / ASSESSMENT YEAR:2010-11 ) DINESH P. PAREKH 8, BALARAM BHAVAN CORPORATION, SAGAON MANPADA ROAD DOMBIVLI EAST-421 201. / VS. INCOME TAX OFFICER - WARD 3(2) 2 ND FLOOR, RANI MANSION MURBAD ROAD, KALYAN (WEST). #$ ./ ./PAN/GIR NO. AHEPP-0886-E ( $& /APPELLANT ) : ( '($& / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : SHRI BHADRESH K. DOSHI-LD. AR / DATE OF HEARING : 11/09/2019 / DATE OF PRONOUNCEMENT : 11/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [AY] 2009-10 & 2010-11 CONTEST COMMON ORDER OF FIRST APPELLATE AUT HORITY ON CERTAIN 2 DINESH P. PAREKH ASSESSMENT YEARS 2009-10 & 2010-11 GROUNDS OF APPEAL. SINCE THE FACTS AS WELL AS ISSUE S ARE IDENTICAL, BOTH THE APPEALS ARE BEING DISPOSED-OFF BY WAY OF THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. THE ASSESSEE IS AGGRIEVED BY ESTIMATION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2.1 FACTS OF AY 2009-10 ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF HARDWARE / ENGIN EERING ITEMS WAS ASSESSED U/S. 143(3) R.W.S. 147 ON 18/02/2015 WHERE IN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.13.15 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.10.97 LACS AS AGAINST RETURNED INCOME OF RS .1.91 LACS FILED BY THE ASSESSEE ON 29/09/2009 WHICH 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.10.97 LACS FROM 9 PARTIES, THE DETAILS OF WHICH HAS ALREADY BE EN EXTRACTED AT PARA-3 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, AS PER D UE PROCESS OF LAW, RE- ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE A SSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 05/04/2013. THE STATU TORY NOTICES U/S 143(2) & 142(1) WERE ISSUED IN DUE COURSE OF ASSESSMENT PR OCEEDINGS WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCH ASE TRANSACTIONS. 2.3 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASE TRA NSACTIONS, HOWEVER, THE ASSESSEE, IN THE OPINION OF LD. AO, FAILED TO D EMONSTRATE THE DELIVERY OF MATERIAL. ACCORDINGLY, THE STATED PURCHASES WERE DI SALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 3 DINESH P. PAREKH ASSESSMENT YEARS 2009-10 & 2010-11 3. THE LEARNED FIRST APPELLATE AUTHORITY, APPLYING THE GROSS PROFIT RATE OF AY 2012-13, WORKED OUT SUPPRESSED GROSS PROFIT TO T HE EXTENT OF RS.6.49 LACS AND DELETED THE BALANCE ADDITIONS. AGGRIEVED, THE ASSESSEE IS UNDER APPEAL BEFORE US. IT APPEARS THAT THE REVENUE IS NO T IN FURTHER APPEAL. 3. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS OF RE SPECTIVE REPRESENTATIVES. 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 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 AND COULD NOT PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSAC TIONS. THE ASSESSEE ALSO FAILED TO PROVE THE DELIVERY OF MATERIAL. UNDER SUC H CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN T HE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE. HOWEVER, THE APPROACH OF LD. FIRST APPELLATE AUTHORITY IN ESTIMATING THE SUPPRESSED GR OSS PROFIT BY ADOPTING THE GP RATE OF SUBSEQUENT YEAR, IN OUR CONSIDERED O PINION, WAS NOT CORRECT APPROACH. WE ESTIMATE THE ADDITIONS @12.5% OF ALLEG ED BOGUS PURCHASES 4 DINESH P. PAREKH ASSESSMENT YEARS 2009-10 & 2010-11 OF RS.10,97,982/- WHICH COMES TO RS.1,37,248/-. THE BALANCE ADDITION STANDS DELETED. THE APPEAL STANDS PARTLY ALLOWED. 5. IN AY 2010-11, THE FIRST APPELLATE AUTHORITY HAS CONFIRMED FULL ADDITION OF RS.2,52,691/- AS MADE BY LEARNED AO. TAKING THE SAME STAND, WE RESTRICT THE SAME TO 12.5% AND SUSTAIN ADDITION TO THE EXTENT OF RS.31,586/-. THIS APPEAL ALSO STANDS PARTLY ALLOWED. 6. IN THE RESULT, BOTH APPEALS STAND PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/09/2019 SR.PS:-JAISY VARGHESE #$ %$ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. / ( ) / THE CIT(A) 4. / / CIT CONCERNED 5. 01 '*2 , 2 , / DR, ITAT, MUMBAI 6. 1345 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.