RADHESHYAM BABULAL, DOMBIVALI V. ITO - WD- 3 (3), KALYAN

ITA 5062/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0619 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• 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: AKHTAR H ANSARILD
• Assessee Lawyers: SANJAY R PARIKHLD
• Keywords: Bogus purchase
• Section: 69C; 143(3); 143(2); 148

Judgement Text

1 ITA NO.5062/MUM/2018 A.Y.2009-10 SHRI RADHESHYAM BABULAL VYAS - 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.5062/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) SHRI RADHESHYAM BABULAL VYAS 9, ANAGHA CO-OPERATIVE SOCIETY PANDIT DEENDAYAL MARG DOMBIVALI, MUMBAI-421 201. / VS. INCOME TAX OFFICE R WARD 3(3) KALYAN '# ./ ./PAN/GIR NO. ACDPV-9022-C ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : SHRI SANJAY R. PARIKH-LD. AR / DATE OF HEARING : 16/09/2019 / DATE OF PRONOUNCEMENT : 16/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, THANE [IN SHORT REFERRED TO AS CIT(A)], ITA NO. 979/2014-15 DATED 20/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 2 ITA NO.5062/MUM/2018 A.Y.2009-10 SHRI RADHESHYAM BABULAL VYAS ADDITION U/S. 69C - RS. 3,26,134/- 1) THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) - 1, THANE [(CIT-A)] ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE INC OME TAX OFFICER, WARD 3(3), KALYAN (AO) MAKING AN ADDITION OF RS. 3,26,134/- U/S. 69C OF THE INCOME-TAX ACT. 2) THE LEARNED CIT(A) FURTHER ERRED IN HOLDIN G THAT THE APPELLANT WAS CAPABLE OF HARVESTING THE GP AT 14.16% AS DECLARED IN ASSESSME NT YEAR 2011-12 AND THE SAME IS LIABLE TO BE RE-ESTIMATED BY REJECTING THE ACCOUNTS CONSIDERING THE FACTS AND DEFECTS NARRATED BY HIM IN THE ORDER. 3) THE LEARNED CIT(A) FURTHER ERRED IN COMPUT ING THE DISALLOWANCE/ADDITION TO BE MADE BY ADOPTING THE HIGHEST GP WITHOUT CONSIDERING THE GP OF EARLIER YEARS AND APPLYING THE SAME TO THE ENTIRE TURNOVER OF THE APP ELLANT AS AGAINST ONLY THE PURCHASES FROM THE ALLEGED BOGUS PARTIES. 4) THE LEARNED CIT(A) AND AO FAILED TO APPREC IATE THAT THE PURCHASES WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS AND HENCE, NO ADD ITION U/S. 69C WAS CALLED FOR. 5) THE APPELLANT PRAYS THAT THE ADDITION OF R S. 3,26,134/- MADE BY THE AO U/S. 69C ON ACCOUNT OF ALLEGED BOGUS PURCHASE AND AS CONFIRM ED BY THE CIT(A) MAY BE DELETED. 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 MANUFACTURING OF ELECTRONIC PANEL UNDER PROPRIETORSHIP CONCERN NAMELY M/S POWER SWITCHGEARS & CONTROLS WAS ASSESSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX AC T, 1961 ON 11/08/2014 WHEREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.3.26 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. PURSUANT TO REC EIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA, IT TRANSPIRED THE ASSESSEE MADE PURCHASES OF RS.3.26 LACS FROM 3 SUSP ICIOUS ENTITIES, THE DETAILS OF WHICH HAS ALREADY BEEN EXTRACTED ON PAGE -1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, AS PER DUE PROCESS O F LAW, THE CASE WAS REOPENED VIDE ISSUANCE OF NOTICE U/S 148 ON 04/10/2 013 FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1), WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASES. 3 ITA NO.5062/MUM/2018 A.Y.2009-10 SHRI RADHESHYAM BABULAL VYAS 2.2 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, H OWEVER, THE FIELD INQUIRIES REVEALED THAT NONE OF THE SUPPLIERS EXIST ED AT THE GIVEN ADDRESSES. THE ASSESSEE COULD NOT PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS. THE DELIVERY OF MATERIAL COULD NOT BE ESTABLISHED. CONSEQUENTLY, THE STATED PURCHASES WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 69C. THE LEARNED FIRST A PPELLATE AUTHORITY, AFTER APPRECIATING THE TREND OF GROSS / NET PROFIT RATES REFLECTED IN OTHER YEARS AND RELYING UPON CERTAIN JUDICIAL PRONOUNCEMENTS, S USTAINED FULL DISALLOWANCE AS MADE BY LEARNED AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 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. THE DELIVERY OF MATERIAL ALSO COULD N OT BE ESTABLISHED. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SU STAINED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POS SIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VA T AGAINST SUCH BOGUS PURCHASES. THEREFORE, WE ESTIMATE THE ADDITION AGAI NST THESE PURCHASES @8% OF ALLEGED BOGUS PURCHASES OF RS.3,26,134/- WHI CH COMES TO 4 ITA NO.5062/MUM/2018 A.Y.2009-10 SHRI RADHESHYAM BABULAL VYAS RS.26,091/-. THE BALANCE ADDITION STANDS DELETED. T HE LEARNED AO IS DIRECTED TO RE-COMPUTE THE INCOME IN TERMS OF OUR O RDER. 4. IN RESULT, THE APPEAL STANDS PARTLY ALLOWED. 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.