ITO-19(3)(3), Mumbai, MUMBAI V. Sethi Motors Corporation, MUMBAI

ITA 5078/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3456 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5078/MUM/2019 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER 19(3)(3), 2 ND FLOOR, ROOM NO. 201, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400007 VS. SETHI MOTORS CORPORATION, 384, SHAPOORJI BHARUCHA BAUG, VITHAL BHAI PATEL ROAD, MUMBAI - 400 004 PAN NO. AAGFS 8456 C APPELLANT RESPONDENT REVENUE BY : MR. SANJAY J. SETHI , DR ASSESSEE BY : NONE DATE OF HEARING : 22/02/2021 DATE OF PRONOUNCEMENT : 08/03/2021 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-7, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE I NCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 04.01.2021 AND 22.02.2021, NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTAT IVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATES. AS THERE IS NON-COMPLI ANCE BY THE ASSESSEE, WE ARE PROCEEDING TO DISPOSE OFF THIS APPEAL AFTER EXA MINING THE MATERIALS ITA NO. 5078/M/2019 SETHI MOTORS 2 AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPAR TMENTAL REPRESENTATIVE (DR). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION @ 12.5% AS AGAINST @ 25% MADE BY THE AO ON BOGUS PURCHASES DESPITE THE FACT THAT THE ADDITION WAS MADE ON BASIS OF CREDIBLE INFORMATION RECEIVED FROM DGIT (I NV.) BASED INFORMATION SUPPLIED FROM SALES TAX AUTHORITIES. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A ) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009-10 ON 17.0 9.2009 DECLARING TOTAL INCOME AT RS. NIL. ON RECEIPT OF INFORMATION FROM T HE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBT AINED ACCOMMODATION ENTRIES TO THE TUNE OF RS.34,16,566/-, THE ASSESSIN G OFFICER (AO) ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE CONCERNED PARTIES IN THE ADDRESS GIVEN BY THE ASSESSEE. THE PURPOSE OF THOSE NOTICES WAS TO ASCERTAIN THE GENUINENESS OF THE PURCHASES. HOWEVER, THOSE NO TICES WERE RETURNED UN- SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN OR NO SUCH ADDRESS OR LEFT ETC. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED BEFORE THE AO THE STOCK REGI STER, BANK STATEMENT AND COPY OF PURCHASE AND SALE INVOICES. HOWEVER, THE AO WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND ESTIMATED PROFIT @ 25% ON THE TOTAL DISPUTED PURCHASES OF RS.34,16,566/- WHICH COMES TO RS.8,54,142/-. ITA NO. 5078/M/2019 SETHI MOTORS 3 ACCORDINGLY, HE MADE AN ADDITION OF RS.8,54,142/- T REATING IT AS ON ACCOUNT OF NON-GENUINE PURCHASES. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 29.05.2019 THE LD. CIT(A) BY FOLLOWING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIMIT P. SHETH (ITA NO. 553 OF 2012) ORDER DATED 16.01.2013 AND CIT V. BHOLANATH POLY FAB (P.) LTD. (ITA NO. 63 OF 2012) ORDER DATED 23.10.2012, DIRECTED THE AO TO ESTIMATE PROFIT @ 12.5% OF THE A LLEGED BOGUS PURCHASES, WHICH WORKS OUT TO RS.4,27,071/- (12.5% OF RS.34,16 ,566/-). ACCORDINGLY, HE RESTRICTED THE DISALLOWANCE TO RS.4,27,071/-. 5. BEFORE US, THE LD. DR RELIES ON THE ORDER OF THE AO. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIALS ON RECORD. IN THE INSTANT CASE, THE NOTICES ISSUED BY THE AO U /S 133(6) OF THE ACT TO THE PARTIES IN THE ADDRESS GIVEN BY THE ASSESSEE WERE R ETURNED UN-SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN OR NO SUCH ADDRESS OR LEFT ETC. HOWEVER, THE ASSESSEE FILED BEFORE THE AO STOC K REGISTER, BANK STATEMENT AND COPY OF PURCHASE AND SALE INVOICES. CONSIDERING THE ABOVE FACTS, THE LD. CIT(A) HAS RI GHTLY FOLLOWED THE DECISION IN SIMIT P. SHETH (SUPRA) AND BHOLANATH POLY FAB (P.) LTD. (SUPRA) AND ARRIVED AT A FINDING THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WHAT CAN BE DISALLOWED OR TAXED IN THE INSTANT CASE IS THE EXCESS PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES SHOWN TO HAVE BEEN MADE FROM THE CONCERNED PARTIES. RIGHTLY, THE LD. CIT(A) HAS DIRECTED THE A O TO ESTIMATE THE PROFIT ITA NO. 5078/M/2019 SETHI MOTORS 4 EMBEDDED IN SUCH SUSPICIOUS PURCHASES @ 12.5%. WE C ONCUR WITH THE FINDINGS OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/03/2021. SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 08/03/2021 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI