NIRANJAN B. MAJANI, MUMBAI V. INCOME TAX OFFICER - 24(3)-2, MUMBAI

ITA 5025/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8877 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: ASHWIN S CHHAG LD
• Keywords: Bogus purchase; Principle of natural justice; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA.NO.5025/MUM/2017 NIRANJAN B MAJANI ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5025/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) NIRANJAN B MAJANI B/209, AMARNATH APARTMENT SIR M.V.ROAD, 3 RD GUNDAVALI, ANDHERI(E) MUMBAI-400 069 / VS. INCOME TAX OFFICER 24(3) ( 2 ) 515, PIRAMAL CHAMBERS LALBAUGH, PAREL MUMBAI- 400 013 ! ./ ./PAN/GIR NO. AHWPM-1549-H ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : ASHWIN S. CHHAG, LD.AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 25/10/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 / 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 THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-51 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-36/IT-417/ITO- 24(3)(2)/14-15 DATED 01/05/2017. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER 24(3)(2), MUMBAI [AO] U/S 14 3(3) READ ITA.NO.5025/MUM/2017 NIRANJAN B MAJANI ASSESSMENT YEAR-2009-10 2 WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 30/01/2015. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. LD. CIT(A) IS ERRED TO ADJUDICATE THE GROUNDS OF APPEAL ON PRINCIPLE OF NATURAL JUSTICE DESPITE ISSUE BEING RAISED PRECISELY BY THE APPELLANT THAT THE PROCEEDING U/S.147 IS WITHOUT AUTHORITY OF THE LAW FOR WANT OF JURISDICTION AS IT IS EVIDENT FROM THE REASONS RECORDED THAT THE PROCE EDING INITIATED BY THE AO ON HIS BORROWED BELIEF RATHER THAN HIS OWN BELIEF. 2. LD. CIT(A) IS ERRED TO MINGLE THE ISSUE OF JURIS DICTION WITH THE PROCEDURE WHICH AO HAS FOLLOWED WITHOUT APPRECIATING THAT BOTH ARE DISTINCT AND IN THE ABSENCE OF THE FORMER THE AO HAS NO AUTHORITY TO IN ITIATE THE LATER AND HENCE, IT IS INCONSEQUENTIAL TO DELIBERATE ON THE PROCEDUR AL ASPECT. 3. LD. CIT(A) IS ERRED TO CONFIRM THE ESTIMATED ADD ITION WITHOUT APPRECIATING THE FACTS AS EVIDENT FROM THE ORDER OF ASSESSMENT THAT AO DOES NOT HAVE ANY MATERIAL FROM THE CREDITORS OR DEPARTMENT OF SALES TAX TO HOLD THAT TRANSACTION OF PURCHASE WERE BOGUS. ON MERIT: 4. LD. CIT(A) IS ERRED TO CONFIRM THE ORDER ESTIMAT ING THE PROFIT WITHOUT APPRECIATING THE REASONS TO HOLD TRANSACTION OF PUR CHASE AS SUSPICIOUS BY THE SALES TAX AUTHORITY AND UPLOAD ON ITS WEBSITE VIZ A VIZ FACTS OF THE CASE, THUS, THE ADDITION CONFIRMED IS MERELY ON SURMISES AND UN DER WRONG BELIEF OF BOGUS PURCHASE. 5. LD. CIT(A) IS ERRED TO CONFIRM THE ADDITIONS MAD E ON FAILURE TO SERVE THE NOTICE ISSUES U/S.133(6) OF THE ACT AND PRODUCED BE FORE THE AO OVERLOOKING THE FACTS THAT THE CREDITORS WERE THE DEFAULTERS OF THE REVENUE AND THERE DEFAULT HAVE MADE THE APPELLANT LIABLE TO COMPENSAT E THE REVENUE. 6. LD. CIT(A) IS FAILED TO APPRECIATE THAT THE RATE OF GP APPLIED IS WITHOUT BRINGING ANY COMPARATIVE CASE WITH THAT OF THE APPE LLANT, IT IS ALSO NOT APPRECIATED THAT FOLLOWING THIS ADDITION APPLICABLE RATE OF GP IS 19.6% IN CONTRAST TO PRIMA FACIE CLAIMED @12.5% 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS AS TRADER OF IRON AND STEEL WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 30/01/2015 AT RS.13,48,730/- AFTER S OLE ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.8,80,899/- THE ORIGINAL RETURN WAS FILED ON 30/09/2010 AT RS.4,67,830/- WHICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.70,47,195/- FROM FIVE SUCH PARTIES. CONSEQUENTLY , NOTICE U/S 148 ITA.NO.5025/MUM/2017 NIRANJAN B MAJANI ASSESSMENT YEAR-2009-10 3 DATED 10/03/2014 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). 2.3 TO CONFIRM THE IMPUGNED TRANSACTIONS, NOTICES U /S 133(6) DATED 15/07/2014 WAS ISSUED TO THE SUPPLIERS. HOWEVER, TH E SAME COULD NOT BE SERVED AND RETURNED BACK UN-SERVED WITH REMARKS LIKE LEFT, NOT KNOWN ETC. THE ASSESSEE, IN TURN, CONTENDED THAT THE PURCHASES WERE GENUINE SINCE PAYMENT TO THE SUPPLIERS WAS MADE THROUGH BAN KING CHANNELS. HOWEVER, NOT CONVINCED, LD. AO NOTED THAT THE ASSES SEE COULD NOT SUBSTANTIATE THE DELIVERY OF MATERIAL WITH DELIVERY CHALLANS ETC. AND HENCE FAILED TO DISCHARGE THE ONUS CASTED ON HIM TO PROVE THE PURCHASE TRANSACTIONS. FINALLY, LD. AO ESTIMATED ADDITION AG AINST THE SAME @12.5% WHICH CAME TO RS.8,80,899/-. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS ON LEGAL GROUNDS AS WELL AS ON MERITS BEFORE LD. CI T(A) VIDE IMPUGNED ORDER DATED 01/05/2017 WHERE THE LD. CIT(A), AFTER CONSIDERING VARIOUS CONTENTIONS & SUBMISSIONS, CONFIRMED THE STAND OF L D. AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] HAS FILED WRIT TEN SUBMISSION TO CONTEST THE ADDITIONS ON LEGAL GROUNDS AS WELL AS O N MERITS. THE LD. AR HAS CONTENDED THAT REOPENING HAS BEEN RESORTED TO B Y LD. AO WITHOUT ANY APPLICATION OF MIND AND DONE MERELY ON THE BASI S OF MARKET RUMORS. ON MERITS, LD. AR HAS CONTENDED THAT GROSS PROFIT R ATE IN THE IMPUGNED AY WAS IN LINE WITH OTHER YEARS AND HENCE, THE IMPU GNED ADDITIONS WERE JUSTIFIED. PER CONTRA, LD. DR CONTENDED THAT ESTIMATION MADE BY LOWER AUTHORITIES WAS QUITE FAIR AND REASONABLE. ITA.NO.5025/MUM/2017 NIRANJAN B MAJANI ASSESSMENT YEAR-2009-10 4 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS LEGAL GROUND RAISED B Y THE ASSESSEE IS CONCERNED, THE SAME IS DEVOID OF ANY MERIT. THE COP Y OF REASONS RECORDS BY LD. AO AS PLACED ON RECORD REVEAL THAT T HE REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED UPON RECEIPT OF CER TAIN INFORMATION FROM THE SALES TAX DEPARTMENT, MAHARASHTRA WITH RESPECT TO PARTIES INDULGING IN PROVIDING ACCOMMODATION ENTRIES WITHOUT DELIVERI NG ANY GOODS. THE LD. AO, AFTER DULY CONSIDERING THE SAME, HAS RESORT ED TO REASSESSMENT PROCEEDINGS. IT IS NOTED THAT THE AY UNDER QUESTION IS 2009-10 AND THE NOTICE HAS BEEN ISSUED WITHIN 4 YEARS OF RELEVANT A Y AND THE ORIGINAL RETURN OF INCOME HAS BEEN PROCESSED U/S 143(1). HEN CE, THE ONLY CONDITION AS ENVISAGED BY SECTION 147 IS THAT THE A SSESSING OFFICER HAS REASON TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT AND NOTHING MORE. THIS BELIEF MAY BE BASED UPON ANY COG ENT MATERIAL WHICH COMES TO HIS NOTICE SUBSEQUENTLY. THE INFORMATION A S RECEIVED FROM STATE GOVERNMENT AUTHORITY, IN OUR OPINION, WAS SUF FICIENT ENOUGH TO TRIGGER ACTION ON THE PART OF LD. AO. HENCE, FINDIN G THE SAME TO BE QUITE VALID, WE REJECT THE LEGAL GROUNDS RAISED BY THE AS SESSEE. 6. ON MERITS, WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL SINCE THE ASSESSE E WAS ENGAGED IN TRADING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED / DISTURBED BY THE REVENUE AND THE PA YMENTS WERE THROUGH BANKING CHANNELS. AT THE SAME TIME, THE ASS ESSEE COULD NOT PRODUCE EVEN A SINGLE CONFIRMATION FROM ANY OF THE FIVE PARTIES AND ALL NOTICES ISSUED U/S 133(6) WERE RETURNED BACK, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION , THE ADDITION, WHICH ITA.NO.5025/MUM/2017 NIRANJAN B MAJANI ASSESSMENT YEAR-2009-10 5 COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH BOTH THE LOWER AUTHORITIES HAVE RIGHTLY DONE. THEREFORE, FINDING T HE SAME QUITE FAIR & REASONABLE, WE SEE NO REASON TO DISTURB THE SAME. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11 .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