ASHOK CHAMPALAL BOKADIA, MUMBAI V. ITO , 19(1)(2), MUMBAI

ITA 5035/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0460 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Assessee Lawyers: AKASH KUMAR LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 142(1); 133(6); 143(1); 143(2); 147; 148

Judgement Text

1 ITA NOS.5035-36/MUM/2018 ASHOK CHAMPALAL BOKADIA ASSESSMENT YEARS : 2009-10 & 2011-12 - 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.5035/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) & ./ I.T.A. NO.5036/MUM/2018 ( / ASSESSMENT YEAR:2011-12 ) SHRI ASHOK CHAMPALAL BOKADIA 77, 3RD KUMBHARWADA DR. M.G. MAHIMTURA, MUMBAI-400 004. / VS. INCOME TAX OFFICER - 19(1)(2) MATRU MANDIR, ROOM NO.204 2ND FLOOR, TARDEO, MUMBAI-400 007. !'#$ ./ ./PAN/GIR NO. AABPB-4013-F ( #$ /APPELLANT ) : ( %&#$ / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : SHRI AKASH KUMAR-LD. AR D A T E O F HEARING : 12/09/2019 DATE OF PRONOUNCEMENT : 12/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [AY] 2009-10 & 2011-12 CONTEST SEPARATE ORDERS OF FIRST APPELLATE AUTHORITY ON CERTAIN COMMON GROUNDS OF APPEAL. SINCE THE FACTS AS WELL A S ISSUES ARE IDENTICAL, BOTH THE APPEALS ARE BEING DISPOSED-OFF BY WAY OF T HIS COMMON ORDER FOR 2 ITA NOS.5035-36/MUM/2018 ASHOK CHAMPALAL BOKADIA ASSESSMENT YEARS : 2009-10 & 2011-12 THE SAKE OF CONVENIENCE & BREVITY. THE GROUNDS RAIS ED FOR AY 2009-10 READ AS UNDER: - THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN RE-OPENING OF THE ASSESSMENT U/S. 147 OF THE INCOME TAX ACT, 1961 AS THE PRESCRIBED CONDITIONS THEREIN ARE NOT SATISFIED. 2. A)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.12,12,1 54/- MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF POSSIBLE PROFIT ELEMENT @12.5% EMBEDDED IN PURCHASES MADE THROUGH ALLEGED NON-GENUINE PARTIES ON THE BAS IS OF INFORMATION OF THE SALES TAX DEPARTMENT ABOUT SUSPICIOUS DEALERS. B)THE LD. CIT(A) FAILED TO APPRECIATE THAT: - I) ALL THE PURCHASES ARE GENUINE BEYOND DOUBT AND S UPPORTED BY SUFFICIENT MATERIALS; II) ALL THE GOODS PURCHASED FROM THESE PARTIES HAVE BEEN BACKED BY CORRESPONDING SALES WHICH ARE ACCEPTED TO BE GENUINE; III) THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELL ANT ARE CORRECT AND COMPLETE IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY AND CONSISTENTLY FOLLOWED BY THE APPELLANT. IV) THE GROSS PROFIT RATIO SHOWN BY THE APPELLANT IS QUITE REASONABLE; V) NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO THAT MONEY HAS BEEN EXCHANGED IN THE HANDS IN LIEU OF PAYMENT MADE FOR THESE PURC HASES BY ACCOUNT PAYEE CHEQUE; AND VI) THE AO HAD NEITHER PROVIDED COPY OF MATERIA LS AND STATEMENTS RELIED UPON BY HIM NOR ALLOWED ANY OPPORTUNITY TO THE APPELLANT TO CRO SS EXAMINE THOSE PARTIES WHO HAVE BEEN ALLEGED TO HAVE PROVIDED THE ACCOMMODATIO N ENTRIES OF SUCH PURCHASES. C)IN REACHING TO THE CONCLUSION AND CONFIRMING SUCH ADDITION MADE BY THE AO, THE ID. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSID ERATIONS, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PR EJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. D) WITHOUT PREJUDICE, THE RATE OR PERCENTAGE OF PRO FIT ELEMENT EMBEDDED IN SUCH PURCHASES AS CONFIRMED BY THE CIT(A) IS EXCESSIVE A ND UNREASONABLE ON THE FACTS OF THE CASE. 3. THE LD. CIT(A) ERRED IN HOLDING THAT LEVY OF I NTEREST U/S.234B AND 234C OF THE INCOME TAX ACT, 1961. 4. THE LD. AO ERRED IN INITIATING THE PENALTY U/ S.27L(1)(C) OF THE INCOME TAX ACT. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESI DENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF METAL UNDER PROPRIETORSHIP CONCERN NAMELY M/S PRAVEEN METAL CORPORATION, WAS ASSESSED FOR IMPUGNE D AY U/S. 143(3) R.W.S. 147 ON 23/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS 3 ITA NOS.5035-36/MUM/2018 ASHOK CHAMPALAL BOKADIA ASSESSMENT YEARS : 2009-10 & 2011-12 DETERMINED AT RS.14.99 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.12.12 LACS AS AGAINST RETURNED INCOME OF RS. 2.87 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.96.97 LACS FROM 4 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN TABULATED 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 11/02/2014. THE STATU TORY NOTICES U/S 143(2) & 142(1) WERE ISSUED IN DUE COURSE WHEREIN THE ASSE SSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. THE ASSESSE E WAS SUPPLIED WITH RECORDED REASONS FOR REOPENING THE CASE. 2.3 ALTHOUGH, THE ASSESSEE DEFENDED THE PURCHASES, HOWEVER, NOTICES ISSUED U/S 133(6) TO ALL THE SUPPLIERS REMAINED UNS ERVED AS WELL AS UN- RESPONDED TO. THE ASSESSEE FAILED TO SUBSTANTIATE D ELIVERY OF MATERIAL AND ALSO FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONF IRM THE STATED TRANSACTIONS WHICH LED THE LD. AO TO BELIEVE THAT THE ASSESSEE R EMAINED UNSUCCESSFUL IN DISCHARGING THE ONUS CASTED UPON HIM, IN THIS REGAR D. CONSEQUENTLY, THE BOOKS WERE REJECTED U/S 145(3) AND THE ASSESSEE WAS SADDLED WITH AN ESTIMATED ADDITION @12.5% AMOUNTING TO RS.12.12 LAC S IN THE QUANTUM ASSESSMENT ORDER. THE STAND OF LEARNED AO, UPON CON FIRMATION BY FIRST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS RAISED BY RESPECTIVE REPRE SENTATIVES BEFORE US. 4 ITA NOS.5035-36/MUM/2018 ASHOK CHAMPALAL BOKADIA ASSESSMENT YEARS : 2009-10 & 2011-12 3. SO FAR AS THE LEGAL GROUNDS ARE CONCERNED, WE FI ND THAT THE ORIGINAL RETURN OF INCOME WAS PROCESSED U/S 143(1) AND THE O NLY REQUIREMENT UNDER LAW TO INITIATE REASSESSMENT PROCEEDINGS WAS THAT L EARNED AO HAD REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSESSMENT I N THE HANDS OF THE ASSESSEE. THE LD. AO WAS CLINCHED WITH TANGIBLE MAT ERIAL IN THE SHAPE OF INFORMATION FROM INVESTIGATION WING / SALES TAX DEP ARTMENT WHICH, PRIMA- FACIE, SUGGESTED POSSIBLE ESCAPEMENT OF INCOME IN THE HAND S OF THE ASSESSEE. NOTHING MORE WAS REQUIRED AT THIS STAGE. THEREFORE, THE REASSESSMENT PROCEEDINGS WERE PERFECTLY VALID. NOTH ING ON RECORD SUPPORT THE LEGAL GROUNDS RAISED BY ASSESSEE BEFORE US. THE LEARNED FIRST APPELLATE AUTHORITY, IN OUR OPINION, HAS CLINCHED THE ISSUE I N THE PROPER PERSPECTIVE AND THEREFORE, THE SAME WOULD NOT REQUIRE ANY INTER REFERENCE ON OUR PART, THEREFORE, THE LEGAL GROUNDS STAND DISMISSED. 4. SO FAR AS THE ESTIMATION OF ADDITIONS ARE CONCE RNED, WE ARE OF THE CONSIDERED OPINION THERE COULD BE NO SALE WITHOUT A CTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF B USINESS I.E. TRADING. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCU MENTS AND THE PAYMENTS TO THE SUPPLIER WAS THROUGH BANKING CHANNE LS. THE SALES TURNOVER REFLECTED BY THE ASSESSEE WAS NOT DISPUTED / DISTUR BED BY LD.AO. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCHASES DURING ASSESSMENT PROCEEDINGS. NOTICES IS SUED U/S 133(6) REMAINED UN-RESPONDED TO IN ALL THE CASES. THE ASSE SSEE FAILED TO PROVE 5 ITA NOS.5035-36/MUM/2018 ASHOK CHAMPALAL BOKADIA ASSESSMENT YEARS : 2009-10 & 2011-12 THE DELIVERY OF MATERIAL. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEME NT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPEL LATE AUTHORITY HAS RIGHTLY DONE. HOWEVER, KEEPING IN VIEW THE FACT THAT THE AS SESSEE WAS DEALING IN A LOW-MARGIN ITEM LIKE IRON & STEEL WHICH ATTRACTS LO WER RATE OF TAX, THE ESTIMATION MADE BY LD. CIT(A) WOULD BE SLIGHTLY ON THE HIGHER SIDE. WE MODIFY THE SAME TO 5% OF SUSPICIOUS PURCHASES WHICH COMES TO RS.4,84,862/-. THE LD. AO IS DIRECTED TO RECOMPUTE THE INCOME IN TERMS OF OUR ORDER. THE GROUNDS, ON MERITS, STANDS PARTLY AL LOWED. THE APPEAL STANDS PARTLY ALLOWED. 5. FACTS ARE PARI-MATERIA THE SAME IN AY 2011-12 WH EREIN THE ASSESSEE WAS SADDLED WITH ESTIMATED ADDITION OF 12.5% AGAINS T ALLEGED BOGUS PURCHASES IN AN ASSESSMENT FRAMED U/S 143(3) R.W.S. 147 ON 18 /10/2016. THE FIRST APPELLATE AUTHORITY CONFIRMED THE SAME. S INCE FACTS ARE IDENTICAL, OUR OBSERVATION, CONCLUSION AS WELL AS ADJUDICATION AS FOR AY 2009-10 SHALL MUTATIS MUTANDIS APPLY TO THIS YEAR ALSO. ACCORDINGLY, THE IMPUGNED ADDITIONS STAND RESTRICTED TO 5% OF ALLEGED BOGUS PURCHASES. THE SAME COMES TO RS.2,57,185/-. THE ORDERS OF LOWER AUTHORI TIES STAND MODIFIED TO THAT EXTENT. THE LEGAL GROUNDS STAND REJECTED WHERE AS THE GROUNDS, ON MERITS, STANDS PARTLY ALLOWED. THE APPEAL STANDS PA RTLY ALLOWED. 6 ITA NOS.5035-36/MUM/2018 ASHOK CHAMPALAL BOKADIA ASSESSMENT YEARS : 2009-10 & 2011-12 CONCLUSION 6. BOTH THE APPEALS STAND PARTLY ALLOWED. 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. +/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.