NIYAZ AHMED S KHAN, MUMBAI V. INCOME TAX OFFICER-26(2)(3), MUMBAI

ITA 5054/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7807 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 143(3); 147; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 5054 / MUM/20 17 & ITA NO.5055/MUM/2017 ( ASSESSMENT YEAR : 2009 - 10 & 2010 - 11 ) SHRI NIYAZ AHMED S KHAN ROOM NO.3, SANGAM MARKET NETAJI NAGAR 90 FEET ROAD, SAKINAK A MUMBAI 400 072 VS. ITO 26(2)(3) MUMBAI PAN/GIR NO. AGU PK0087D APPELLANT ) .. RESPONDENT ) ASSESSEE BY NONE REVENUE BY MS.N. HEMALATHA DATE OF HEARING 26 / 10 /201 7 DATE OF PRONOUNCEME NT 19 / 12 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 38 MUMBAI DATED 24/04/2017 FOR A.Y. 2009 - 10 & 2010 - 11 IN THE MATTER OF ORDER PASSED U/S. 143(3) / 147 OF THE IT ACT. 2. IN BOTH THESE APPEALS ASSESSEE IS AGGRIEVED FOR ADDITION OF 25% IN RESPECT OF BOGUS PURCHASES. 3. NOBODY APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF GIVING OPPORTUNITY. BENCH, THEREFORE, DECIDED TO DISPOSE THE APPEAL AFTER HEARING LEARNED DR AND CONSIDERING THE MATERIAL PLACE D ON RECORD. 4. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF THE CONCERN UPKAR METALS MART, ENGAGED IN THE BUSINESS OF MANUFACTURING OF MS WASHERS. THE ITA NO. 5054/MUM/2017 & 5055/MUM/2017 SHRI NIYAZ AHMED S. KHAN 2 RETURN OF INCOME FOR A.Y.2009 - 10 WAS FILED BY THE ASSESSEE ON 25/09/2009 DECLARING THE TOTAL INCOME OF RS.4,52,860/ - .SUBSEQUENTLY, THE INFORMATION HAS BEEN RECEIVED FROM DGIT (INV) WING, MUMBAI THROUGH CIT - 21, MUMBAI, FORWARDING THERE WITH A LIST OF CONCERNS WHICH HAVE BEEN INVESTIGATE D BY THE SALES TAX AUTHORITIES AND HAVE HELD TO BE AS HAWALA BILLERS. THE NAMES OF THE PERSONS WHO HAVE OBTAINED THE BOGUS BILLS FROM SUCH HAWALA BILLERS ALONGWITH THE TRANSACTION DETAILS OF EACH PERSON HAS ALSO BEEN RECEIVED BY THE AO. THE SALES TAX AUTHO RITY DISPLAYED THE NAMES OF THESE HAWALA DEALERS ON THE WEBSITE OF SALESTAX DEPARTMENT OF MAHARASHTRA GOVERNMENT, WHO HAVE ONLY ISSUED BILLS WITHOUT ANY DELIVERY OF GOODS. IN ORDER TO VERIFY THE G ENUINENESS OF THE PURCHASES, THE AO ISSUED NOTICE U/S. 133(6 ) OF THE I.T ACT, TO AFOREMENTIONED PARTIES WHICH WERE RETURNED BY THE POSTAL AUTHORITIES UNSERVED WITH THE REMARK 'LEFT'/'NOT KNOWN'. 5. THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE BY THE AO VIDE LETTER DATED 16.02.2015. THEREAFTER THE AO ACCOR DED OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE H IS CLAIM OF PURCHASES MADE FROM THE AFORESAID PARTIES BY PRODUCING THEM ALONGWITH THEIR DELIVERY CHALLAN, STOCK REGISTER, BANK STATEMENT, ETC. FOR VERIFICATION AND TO PROVE THE GENUINENESS OF THE PURCHASES M ADE FROM THE AFORESAID PARTIES. THE ASSESSEE HAD FAILED TO PRODUCE THE SUPPLIERS OR ANY FURTHER MATERIAL EVIDENCE DESPITE GRANTING ENOUGH OPPORTUNITIES TO PROVE CONTRARY TO THE SUPPLIER'S DISPOSITION BEFORE THE SALES TAX AUTHORITIES. THE AO HELD THAT IT IS A SETTLED LAW THAT ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF ANY EXPENDITURE WHICH ITA NO. 5054/MUM/2017 & 5055/MUM/2017 SHRI NIYAZ AHMED S. KHAN 3 IS CLAIMED AS DEDUCTION IN COMPUTING ITS TAXABLE INCOME WHICH THE ASSESSEE HAD FAILED TO DISCHARGE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, TH E AO OBSERVED THAT THESE PURCHASES ARE BOGUS AS THE ASSESSEE HAS MERELY INDULGED IN INFLATING EXPENSES BY INTRODUCING BOGUS PURCHASES. THE AO OBSERVE D THAT THE AFORESAID PURCHASES THEMSELVES WERE NOT BOGUS BUT WERE MADE FROM OPEN MARKET WHILE THE RELEVANT BILLS WERE OBTAINED FROM BOGUS BILLING PARTIES TO WHOM CHEQUES WERE ISSUED BY THE ASSESSEE. THEREFORE, THE AO ESTIMATED PROFIT @ 25% ON THE ABOVE ALLEGED TRANSACTIONS AMOUNTING TO RS.56,17,961/ - , OVER AND ABOVE THAT DECLARED BY THE ASSESSEE WHICH WAS WORK ED OUT AT RS.14,04,490/ - AND WAS ADDED BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE . 6. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO. I FOUND THAT ALL RELEVANT INFORMATION RELATING TO ABOVE PURCHASES WERE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES TO THE AFORESAID PARTIES AND SHE HAD FILED COPY OF BILLS, COPY OF BANK STATEMENTS BEFORE THE AO. I ALSO FOUND THAT THE SAID MATERIAL WAS UTILIZED IN THE MAN UFACTURING & THAT THE AO DID NOT CONSIDER ALL THE DOCUMENTARY EVIDENCES RELIED UPON BY THE ASSESSEE AND MADE THE ADDITIONS BASED ON THE INFORMATION FROM S ALES TAX DEPARTMENT. 7. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE VIS - - VIS NATU RE OF ASSESSEES BUSINESS WHICH IS MANUFACTURING, I RESTRICT THE ADDITION TO THE EXTENT OF 15% OF THE PURCHASE SO MADE. ITA NO. 5054/MUM/2017 & 5055/MUM/2017 SHRI NIYAZ AHMED S. KHAN 4 8. FACTS AND CIRCUMSTANCES IN THE A.Y.2010 - 11 ARE PARAMETRIA, THEREFORE, FOLLOWING THE REASONING GIVEN IN A.Y.2009 - 10, ADDITION IS RESTR ICTED TO 15% OF THE ALLEGED BOGUS PURCHASES. 9. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 19 / 12 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 19 / 12 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//