Monish Kirtikumar Parekh, Mumbai V. Income Tax Officer, Ward29(2)(2), Mumbai

ITA 5027/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3748 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Accommodation entries
• Section: 43; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) SMC BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO. 5027/MUM/2019 (A.Y: 2011 - 12 ) MONISH KIRTIKUMAR PAREKH D/2, 606, SHEETAL APARTMENT SARVODAYA PASWANATH NAGAR MUMBAI - 400080 PAN: AGBPP7565J V. INCOME TAX OFFICER - 29(2)(2 ) KAUTILYA BHAVAN, C - 41 TO C - 43 G - BLOCK, BANDRA KURLA COMPLEX BANDRA(E), MUMBAI - 400051 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MITALI GOPANI DEPARTMENT BY : SHRI SANJAY J. SETHI DATE OF HEARING : 29.09.2021 DATE OF PRONOUNCEMENT : 04 . 10 .2021 O R D E R PER C.N. PRASAD (JM) 1. TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 40 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 27.06.2019 AND 15.10.2019 FOR THE A.Y. 2011 - 12 . 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS IN HIS APPEAL: - 1. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN RE - OPENING OF THE ASSESSMENT U/S. 147 OF THE ACT WHICH IS INVALID AND BAD IN LAW. 2. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF ALLEGED BOGUS PURCHASES OF .7,63,108/ - BEING 12.50% OF .61,04,870/ - . 2 ITA NO. 5027/MUM/2019 (A.Y: 2011 - 12) MONISH KIRTIKUMAR PAREKH 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT ON INSTRUCTIONS FROM THE ASSESSEE GROUND NO. 1 IS NOT PRESSED. ACCORDINGLY, GROUND NO. 1 IS DISMISSED AS NOT PRESSED. 4. COMING TO GROUND NO. 2, B RIEFLY STATED THE FACTS ARE THAT, ASSESSEE AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RETAILER IN COMPUTERS AND COMPUTER PARTS FILED RETURN OF INCOME ON 30.09.2011 DECLARING INCOME OF . 9,97,680 / - FOR THE A.Y . 2011 - 12 AND LATER ON T HE CASE IS SELECTED BY ISSUED OF NOTICE U/S. 148 OF THE ACT. SUBSEQ UENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT(INV.,) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIR ED TO PROVE THE GENUINE NESS OF THE PURCHASES MADE FROM VARIOUS DEALERS AS REFERRED IN ASSESSMENT ORDER. IN RESPONSE A SSESSEE FURNISHED COPIES OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT, COMPUTATION OF INCOME, BILLS, LEDGER ACCOUNT COPIES AND PAYMENT DETAILS AND SUBMITTED THAT THE PURCHASES MADE ARE GENUINE. ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES AS SUCH CONTENDED THAT ALL THE PURCHASES ARE GENUINE . 5. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS OF THE OPINION 3 ITA NO. 5027/MUM/2019 (A.Y: 2011 - 12) MONISH KIRTIKUMAR PAREKH THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE G RAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER THAT ASSESSEE FAILED TO PRODUCE THE PARTIES AND AS SUCH THE BOOKS OF ACCOUNTS REMAINED UNVERIFIABLE. THEREFORE, ASSESSING OFFICER TREATED . 7,63,108/ - AS NON - GENUINE BEING 12.5 % OF THE TOTAL ALLEGED NON - GENUINE PURCHASES OF . 61,04,870 / - FOR THE A.Y . 20 11 - 12 . ON APPEAL THE LD.CIT(A) SUSTAINED THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE GROSS PROFIT AT 12.5% FOR THE A.Y: 2011 - 12 . AGAINST TH IS ORDER OF THE LD.CIT(A) ASSESSEE IS IN APPEAL. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LEARNED PR.COMMISSIONER OF INCOME - TAX 29, MUMBAI [HEREINAFTER IN SHORT PR.CIT] BY ORDER DATED 23.03.2017 PASSED U/S. 263 OF THE ACT FOR THE A.Y. 2009 - 10 DIRECTED THE ASSESSING OFFICER TO ADOPT THE PROFIT ELEMEN T AT 5.94% ON THE BOGUS PURCHASES. LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT PR.CIT ALSO TAKEN NOTE OF THE FACT THAT THE DEPARTMENT HAS WORKED OUT AVERAGE GROSS PROFIT FOR THE YEARS FROM A.Y. 2006 - 07 TO A.Y. 2010 - 11 IS AT 5.94% AND T HEREFORE DIRECTED TO A DOPT THE GROSS PROFIT AT 5.94% ON THE BOGUS PURCHASES FOR THE A.Y. 2009 - 10. LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT SIMILAR PERCENTAGE MAY BE ADOPTED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E., A.Y. 2011 - 12. 4 ITA NO. 5027/MUM/2019 (A.Y: 2011 - 12) MONISH KIRTIKUMAR PAREKH 7. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. HEARD BOTH SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO PERUSED THE ORDER OF THE PR.CIT WHO DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT AT 5.94% ON BOGUS PURCHASES FOR THE A.Y. 2009 - 10. IT IS NOTICED THAT THE REVENUE HAS ARRIVED AT AVERAGE GROSS PROFIT AT 5.94% TAKING THE GROSS PROFITS FOR THE FINANCIAL YEARS 2006 - 07 TO 2010 - 11 AND THE PR.CIT THUS ADOPTED THE GROSS PROFIT AT 5.94% FOR THE PURPOSE OF DISALLOWING THE BOGUS PURCHASES. KEEPING IN VIEW THE AVER AGE GROSS PROFITS FURNISHED BY THE ASSESSEE AND THE ORDER OF THE PR.CIT PASSED DURING THE A.Y. 2009 - 10, I DIRECT THE ASSESSING OFFICER TO ADOPT PROFIT ELEMENT OF THE ALLEGED BOGUS PURCHASES AT 6% AND RESTRICT THE DISALLOWANCE TO 6% OF THE ALLEGED BOGUS PUR CHASES AS AGAINST 12.5% ADOPTED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 04 .10 .2021 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD SD/ - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 04 / 10 / 2021 GIRIDHAR, SR.PS 5 ITA NO. 5027/MUM/2019 (A.Y: 2011 - 12) MONISH KIRTIKUMAR PAREKH COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM