ITO -WD- 3(3), THANE V. SACHIN RAMESH BEHARE, THANE

ITA 5061/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0622 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: IN PERSON
• Keywords: Bogus purchase
• Section: 143(3); 143(2); 148

Judgement Text

1 ITA NO.5061/MUM/2018 A.Y.2011-12 SACHIN RAMESH BEHARE - 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.5061/MUM/2018 ( / ASSESSMENT YEAR:2011-12 ) INCOME TAX OFFICER WARD-3(3), THANE ROOM NO.8, B-WING, 6TH FLOOR ASHAR IT PARK, ROAD NO.16-Z WAGLE INDL. ESTATE, THANE (W)-400 604. / VS. SHRI SACHIN RAMESH BEHARE A-501, SIDDHI APARTMENT NEAR VIJAY GARDEN THANE (W)-400 612. '# ./ ./PAN/GIR NO. AKYPB-8694-B ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : ASSESSEE-IN-PERSON / DATE OF HEARING : 16/09/2019 / DATE OF PRONOUNCEMENT : 16/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-2, THANE, 2 ITA NO.5061/MUM/2018 A.Y.2011-12 SACHIN RAMESH BEHARE [IN SHORT REFERRED TO AS CIT(A)], ITA NO.10033/16-17 DATED 27/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE LAW CO RRECTLY THAT ONCE THE PURCHASES ARE UNVERIFIABLE/NOT GENUINE/ BOGUS, THE SARAE SHOU LD HAVE BEEN DISALLOWED IN ENTIRETY? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANC E TO 28.21% OF THE BOGUS PURCHASES DESPITE THE FACT THAT EVEN DURING APPELLA TE/PROCEEDINGS THE ASSESSEE FAILED TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASES WITH SUPPORTING DOCUMENTARY EVIDENCES (PARA 6.2 ON PAGE(6) OF ORDER OF CIT(A). 3.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANC E TO 28.21% OF THE BOGUS PURCHASES DESPITE THE FACT THAT EVEN DURING THE APP ELLATE PROCEEDINGS THE ASSESSEE FAILED TO SUBSTANTIATE THE PHYSICAL DELIVE RY OF THE GOODS WITH SUPPORTING DOCUMENTARY EVIDENCES (PARA 6.2 ON PAGE(6) OF ORDER OF CIT(A). 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLO WANCE TO 28.21% OF THE BOGUS PURCHASES DESPITE THE FACT THAT EVEN DURING THE APP ELLATE PROCEEDINGS THE ASSESSEE FAILED TO RECONCILE THE QUANTITYWISE DETAI LS OF PURCHASES FROM THE HAWALA PARTIES VISA-A-VISA SALES THEREOF (PARA 6.2 ON PAGE(6) OF ORDER OF CIT(A)). WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE SIDES. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF INTERIOR DECORATION WAS ASSESSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX AC T, 1961 ON 11/03/2016 WHEREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.9.77 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. PURSUANT TO REC EIPT OF CERTAIN INFORMATION, IT TRANSPIRED THE ASSESSEE MADE PURCHA SES OF RS.9.77 LACS FROM 3 SUSPICIOUS ENTITIES, THE DETAILS OF WHICH HA S ALREADY BEEN EXTRACTED AT PARA-5.1 OF THE QUANTUM ASSESSMENT ORDER. ACCORD INGLY, AS PER DUE PROCESS OF LAW, THE CASE WAS REOPENED VIDE ISSUANCE OF NOTICE U/S 148 ON 3 ITA NO.5061/MUM/2018 A.Y.2011-12 SACHIN RAMESH BEHARE 28/07/2014 FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1), WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASES . 2.2 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, T HE ASSESSEE COULD NOT PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRA NSACTIONS. FINDING THAT THE ASSESSEE REMAINED UNSUCCESSFUL IN DISCHARGING T HE PRIMARY ONUS, THE STATED PURCHASES WERE DISALLOWED AND ADDED TO THE I NCOME OF THE ASSESSEE. THE LEARNED FIRST APPELLATE AUTHORITY RES TRICTED THE ADDITIONS TO 28.21% OF ALLEGED BOGUS PURCHASES, BEING GROSS PROF IT RATE REFLECTED BY THE ASSESSEE DURING THE YEAR. AGGRIEVED, THE REVENU E IS IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT PRE FERRED ANY FURTHER APPEAL. 3. WE ARE OF THE CONSIDERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOCUMENTS AND THE PAYMENTS TO SUPPLIERS WERE THROUGH BANKING CHANNELS . THE SALES TURNOVER REFLECTED BY THE ASSESSEE HAS NOT BEEN DISTURBED / DISPUTED BY LD. AO. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY F AILED TO PRODUCE ANY OF THE SUPPLIER. UNDER SUCH CIRCUMSTANCES, THE ADDITIO NS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDD ED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSE SSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE B ENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPELLATE AUT HORITY HAS RIGHTLY DONE. THEREFORE, CONCURRING WITH THE APPROACH OF LEARNED FIRST APPELLATE AUTHORITY 4 ITA NO.5061/MUM/2018 A.Y.2011-12 SACHIN RAMESH BEHARE IN RESTRICTING THE ADDITIONS TO THE EXTENT OF GROSS PROFIT RATE REFLECTED BY THE ASSESSEE, WE DISMISS THE APPEAL. 4. IN RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :16/09/2019 SR.PS:-JAISY VARGHESE #$ %$ / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. . ( ) / THE CIT(A) 4. . / CIT CONCERNED 5. /0 &)1 , 1 , / DR, ITAT, MUMBAI 6. 0234 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.