ITO 17(2)(5), MUMBAI V. PITAMBARLAL DHANANIA, MUMBAI

ITA 5025/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0459 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 143(2); 148

Judgement Text

1 ITA NO.5025/MUM/2018 A.Y. 2009-10 SHRI PITAMBARLAL DHANANIA - 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.5025/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) INCOME TAX OFFICER - 17(2)(5) AAYKAR BHAVAN, ROOM NO.123A 1 ST FLOOR, M.K. ROAD MUMBAI-400 020. / VS. SHRI PITAMBARLAL DHANANIA 6-KHADAK STREET, NEAR SATKAR HOTEL MASJID BUNDER MUMBAI-400 009. ./ ./PAN/GIR NO. AABPD-1236-G ( /APPELLANT ) : ( / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : NONE / DATE OF HEARING : 12/09/2019 / DATE OF PRONOUNCEMENT : 12/09/2019 / 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)-58, 2 ITA NO.5025/MUM/2018 A.Y. 2009-10 SHRI PITAMBARLAL DHANANIA MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-58/ MUMBAI/10458/2017-18 DATED 18/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN REDUCING THE DISALLOWANCE AT 6.25% AS AGAINST 12.5% ADOPTED BY THE A.O. IN RESPECT OF BOGUS ACCOMMODATION ENTRIES/BOGUS PURCHA SES. NONE HAS APPEARED FOR ASSESSEE AND THEREFORE, THE M ATTER IS PROCEEDED WITH EX-PARTE QUA THE ASSESSEE. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN TRADING OF PIPE FITTINGS UNDE R PROPRIETORSHIP CONCERN NAMELY M/S AMIT TUBE CORP, WAS ASSESSED FOR IMPUG NED AY U/S. 143(3) R.W.S. 147 ON 14/11/2014 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.16.37 LACS AFTER ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.9.39 LACS AS AGAINST RETURNED INCOME OF RS.6.98 LACS FILED BY THE ASSESSEE ON 26/09/2009 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.75.14 LACS FROM 6 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED AT PARA-2 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 29/01/2014 FOLLOWED B Y STATUTORY NOTICES U/S 143(2) & 142(1), WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3 ITA NO.5025/MUM/2018 A.Y. 2009-10 SHRI PITAMBARLAL DHANANIA 2.3 THE ASSESSEE DEFENDED THE PURCHASES BY SUBMITTI NG LEDGER EXTRACTS AS SUPPORTED BY THE FACT THAT THE PAYMENTS WERE THR OUGH BANKING CHANNELS. HOWEVER, RELYING UPON INVESTIGATIONS CARRIED OUT BY THE SALES TAX DEPARTMENT AND FINDING THAT THE ASSESSEE FAILED TO PROVE THE DELIVERY OF MATERIAL, LEARNED AO ESTIMATED THE ADDITIONS AGAINS T STATED PURCHASES @12.5% AND ADDED THE SAME TO THE INCOME OF THE ASSE SSEE. THE LEARNED CIT(A), CONSIDERING THE FACT THAT THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE WAS 12.18%, RESTRICTED THE ADDITIONS TO 6. 25% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APP EAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT APPEALED ANY FURTHER. 3. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS MAD E BY LD. DR. 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 THE SUPPLIER WAS THROUGH BANKIN G 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 DELIVERY OF MATERIAL. UNDER SUCH C IRCUMSTANCES, 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 CONSIDERING TH E FACT THAT THE ASSESSEE 4 ITA NO.5025/MUM/2018 A.Y. 2009-10 SHRI PITAMBARLAL DHANANIA HAD ALREADY DECLARED A GROSS PROFIT RATE OF 12.18%. THEREFORE, FINDING NO INFIRMITY IN THE ESTIMATION MADE BY LD. CIT(A), WE DISMISS THE APPEAL. 5. IN THE RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 12/09/2019 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. *./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.