ITO19(3)(4), , MUMBAI V. SHRI SURESH CHANDMAL PARMAR, VASAI

ITA 5045/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3603 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SETHI
• Keywords: Bogus purchase; Reassessment proceedings; Set aside
• Section: 69; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 5045/MUM/2019 (A.Y: 2010-11) INCOME TAX OFFICER - 19 (3) (4), 2 ND FLOOR, ROOM NO. 210, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400007 / VS. SHRI SURESH CHANDMAL PARMAR, 21, OBERAY INDSTRIAL ESTATE, CHINCHPADA, VASAI, THANE - 401201 ./ ./ PAN/GIR NO. : AAHPP3109L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SANJAY SETHI, DR / RESPONDENT BY : NONE / DATE OF HEARING 16/02/2021 / DATE OF PRONOUNCEMENT 17/02/2021 / O R D E R PER PAVAN KUMAR GADALE: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 7, ITA NO. 5045/MUM/2019 SHRI SURESH CHANDMAL PARMAR - 2 - MUMBAI, PASSED U/S. 143 (3) R.W.S. 147 OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @ 12.5% OF TOTAL BOGUS PURCHASES AND COMPUTING THE PROFIT FOR THE PURPOSE OF SECTION 28 OF THE IT. ACT, 1961 TAKING IN TO CONSIDERATION THE BOGUS BILLS AGAINST WHICH NO GOODS HAVE BEEN RECEIVED?' 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @ 12.5% OF TOTAL BOGUS PURCHASES IN PRESUMING THAT THE PURCHASE HAVE BEEN MADE FROM UNKNOWN PARTIES WHEREAS BILLS HAVE BEEN RECEIVED FROM HAWALA DEALER?' 3. LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @12.5% OF TOTAL BOGUS PURCHASES THAT PURCHASES HAVE BEEN MADE FROM UNKNOWN PARTIES WITHOUT CLARIFICATION HOW THE PAYMENT WAS MADE AND WHETHER SECTION 69 OF THE IT ACT, 1961 WILL BE APPLICABLE OR NOT?' 4. ''WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) ERRED IN NOT CONSIDERING THE ORDER OF THE HON'BLE SUPREME COURT M THE CASE M/S N.K, PROTEIN LTD VS DCIT(SLA-CC NOS. 769 OF 2017 DT 16.01,2017) , WHICH IS ON THE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF THE LAND WHEN THE LD. CIT (A) HAS PRONOUNCED ITS ORDER ON 22.05.2019.? ITA NO. 5045/MUM/2019 SHRI SURESH CHANDMAL PARMAR - 3 - 5. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) ERRED BY NOT FOLLOWING THE HON'BIE GUJRAT HIGH COURT DECISION IN THE CASE OF CIT VS. N K INDUSTRIES (IN TAX APPEAL NO. 240 OF 2009 VIDE ORDER DATED 26.02.2016} WHEREIN 100% OF THE BOGUS PURCHASE WAS HELD LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE REVERSING THE ORDER PASSED BY THE HON 'DIE ITA T RESTRICTING ADDITION TO 25%. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER OR ADD A NEW GROUND WHICH MAY BE NECESSARY. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COPPER SUPER ENAMEL WIRES AND FILED THE RETURN OF INCOME ON 26.09.2010 DISCLOSING TOTAL INCOME OF RS.1,55,060/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, THE AO FOUND THAT THE ASSESSEE HAS OBTAINED PURCHASE BILLS FROM M/S PRADEEPKUMAR BABULAL & CO. OF RS. 5,78,511/-. FURTHER, AS PER THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT AND DGIT (INV.) MUMBAI THAT, THE ASSESSEE HAS OBTAINED THE BOGUS PURCHASE BILLS FROM THE HAWALA TRADERS. THEREFORE, THE AO HAS REASON TO BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT. THE LD. ITA NO. 5045/MUM/2019 SHRI SURESH CHANDMAL PARMAR - 4 - AR OF THE ASSESSEE HAS FILED A LETTER DATED 06.01.2016 TO TREAT THE RETURN OF INCOME FILED ON 26.09.2010 IN COMPLIANCE TO NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY, NOTICE U/S 143 (2) AND 142 (1) OF THE ACT ARE ISSUED. THE LD.AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE DETAILS IN THE REASSESSMENT PROCEEDINGS. THE AO HAS CALLED FOR THE EXPLANATIONS ON GENUINITY OF THE PURCHASES TRANSACTION AND ISSUED NOTICE U/S 133 (6) OF THE ACT ON THE HAWALA OPERATOR M/S PRADEEPKUMAR BABULAL & CO. BUT THE SAID NOTICE WAS RETURNED UN-SERVED WITH REMARKS NOT KNOWN. THE AO REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS AND FINANCIAL STATEMENTS. FURTHER, ON VERIFICATION OF DETAILS, THE A.O. OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASE TRANSACTION AND MADE AN ADDITION OF RS. 5,78,511/- AND ASSESSED THE TOTAL INCOME OF RS. 7,33,570/- AND PASSED THE ORDER U/S 143 (3) R.W.S. 147 OF THE ACT DATED 07.03.2016. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE HAS FILED THE APPEAL WITH THE LD. CIT (A). THE LD.CIT (A) CONSIDERED THE GROUNDS OF APPEAL AND SUBMISSIONS OF THE ASSESSEE, FINDINGS OF THE A.O. AND RELIED ON THE JUDICIAL DECISIONS. THE LD.CIT(A) FIND THAT, THE A.O. IS OF THE OPINION THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE ITA NO. 5045/MUM/2019 SHRI SURESH CHANDMAL PARMAR - 5 - TRANSACTION, BUT THE AO HAS NOT DOUBTED THE SALES AND WHEREAS THE ASSESSEE HAS MADE PURCHASES TO SAVE TAXES. THEREFORE, ONLY PROFIT ELEMENT HAS TO BE ESTIMATED. ACCORDINGLY, THE LD. CIT (A) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 12.5% OF THE PURCHASES VALUE OF GOODS AND PARTLY ALLOWED THE ASSESSEE APPEAL. 5. AGGRIEVED BY THE CIT(A)ORDER, THE REVENUE HAS FILED THE APPEAL WITH THE HONBLE TRIBUNAL. NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. THE LD.DR SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN GRANTING THE PARTIAL RELIEF, WHEREAS THE A.O. HAS MADE ENQUIRES AND FOUND THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION AND PRAYED FOR RESTORATION OF THE ORDER OF THE AO. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE LD.CIT (A) HAS CONSIDERED THE FACTS AND CIRCUMSTANCES AND THE JUDICIAL DECISIONS OF THE HONBLE HIGH COURT AND COORDINATE BENCH OF HONBLE TRIBUNAL AND HAS RESTRICTED THE ADDITION TO THE EXTENT OF@ 12.5% OF BOGUS PURCHASES. THE LD.DR HAS SUPPORTED THE ORDER OF THE AO AND COULD NOT CONTROVERT THE FINDINGS OF THE LD. CIT (A) WITH ANY NEW COGENT EVIDENCE OR INFORMATION. WE FIND THAT, THE ITA NO. 5045/MUM/2019 SHRI SURESH CHANDMAL PARMAR - 6 - LD.CIT (A) HAS PASSED A REASONED ORDER RELYING ON THE JUDICIAL DECISIONS. ACCORDINGLY, WE DO NOT FIND INFIRMITY IN THE ORDER OF THE LD. CIT (A) AND UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 7.IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.02.2021. SD/- SD/- (M. BALAGANESH) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 17.02.2021 AK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. ITA NO. 5045/MUM/2019 SHRI SURESH CHANDMAL PARMAR - 7 - / BY ORDER, //TRUE COPY// 1. / ( ASST. REGISTRAR) , / ITAT, MUMBAI 2. OTHER MEMBER ON WHICH THE