ITO -WD- 3 (1) , KALYAN V. BHADRESH JAYANTILAL SHAH, DOMBIVALI

ITA 5079/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0651 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: VIMAL PUNAMIALD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

1 ITA NO.5079-80/MUM/2018 BHADRESH JAYANTILAL SHAH ASSESSMENT YEARS 2009-10 & 2010-11 - 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.5079/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) & ./ I.T.A. NO.5080/MUM/2018 ( / ASSESSMENT YEAR:2010-11) INCOME TAX OFFICER - WARD - 3(1) - KALYAN 2 ND FLOOR, RANI MANSION KALYAN-MURBAD ROAD NR. SBI, KALYAN (W)-421 301. / VS. SHRI BHADRESH JAYANTILAL SHAH B-106, SHIVAM APARTMENT VEER SAWARKAR ROAD, DOMBIVALI (E) MUMBAI-421 201. !'#$ ./ ./PAN/GIR NO. AEEPS-2956-R ( #$ /APPELLANT ) : ( %&#$ / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : SHRI VIMAL PUNAMIA-LD. AR / DATE OF HEARING : 17/09/2019 / DATE OF PRONOUNCEMENT : 17/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [IN SHORT REFERRED TO AS AY] 2009-10 AND 2010-11 CONTEST COMMON ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, THANE, [IN SHORT REFERRE D TO AS CIT(A)], ITA 2 ITA NO.5079-80/MUM/2018 BHADRESH JAYANTILAL SHAH ASSESSMENT YEARS 2009-10 & 2010-11 NO.932 & 931/14-15 D ATED 25/06/2018. THE GROUNDS RAISED IN AY 2009-10 READS AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN NOT APPRECIATING THE LAW C ORRECTLY THAT ONCE THE PURCHASES ARE UNVERIFIABLE/NOT GENUINE/BOGUS, THE SAME SHOULD HAVE BEEN DISALLOWED IN ENTIRETY?'. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN LAW BY NOT APPRECIATING THE FA CT THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE PURCHASES FROM THE NON-EXISTENT VENDORS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN LAW BY NOT APPRECIATING THE FA CT THAT THE ONUS TO JUSTIFY THE CLAIM OF EXPENSES IS ON THE ASSESSEE AND THE SAME H AS FAILED TO DISCHARGE IT IN RELATION TO THE PURCHASES MADE FROM THE NON-EXISTEN T VENDORS?. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN LAW BY IGNORING, THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF PURCHASES FROM NON-EXISTE NT VENDORS BY MEANS OF RELEVANT SUPPORTING DOCUMENTS RELATED TO MOVEMENT A ND DELIVERY OF GOODS, STOCK REGISTER, ETC. TO ARRIVE AT DISALLOWANCE AT 25% OF THE PURCHASES FROM THE NON- EXISTENT VENDORS? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN NOT APPRECIATING THE LAW C ORRECTLY THAT ONCE THE PURCHASES ARE UNVERIFIABLE / NOT GENUINE / BOGUS, THE SAME SH OULD HAVE DISALLOWED IN ENTIRETY, PARTICULARLY IN VIEW OF THE RATIO OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 242 OF 2003 DATED 20/0 6/2016 IN THE CASE OF N.K. PROTEINS LTD. AGAINST WHICH THE SLP WAS DISMISSED B Y THE HONBLE APEX COURT? WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES. 2.1 FACTS FOR AY 2009-10, IN BRIEF, ARE THAT THE AS SESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF IRON & STEEL ITEMS UNDER PROPRIETORSHIP CONCERN NAMELY M/S SHALIBHADRA STEEL , WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 30/12/2014 WH EREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.12.57 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.10.85 LACS AS AGAINST RETURNED INCOME OF 3 ITA NO.5079-80/MUM/2018 BHADRESH JAYANTILAL SHAH ASSESSMENT YEARS 2009-10 & 2010-11 RS.1.71 LACS E-FILED BY THE ASSESSEE ON 25/09/2009 WHICH WAS PROCESSED U/S.143(1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRAN SPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ALLEGED BOGUS PURCHASES TO THE TUNE OF RS.10.85 LACS FROM AN ENTITY NAMELY M/S S.M.TRADING CO. ACCORDING LY, AS PER DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INITIATED AG AINST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 FOLLOWED BY STATU TORY NOTICES U/S 143(2) & 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTAN TIATE THE PURCHASE TRANSACTIONS. 2.3 ALTHOUGH, THE ASSESSEE DEFENDED THE PURCHASES, HOWEVER, NOTICE ISSUED U/S 133(6) TO THE SAID ENTITY REMAINED UNSER VED AS WELL AS UN- RESPONDED TO. THE ASSESSEE FAILED TO SUBSTANTIATE D ELIVERY OF MATERIAL AND ALSO FAILED TO PRODUCE THE SAID SUPPLIER TO CONFIRM THE TRANSACTIONS WHICH LED THE LD. AO TO BELIEVE THAT THE ASSESSEE REMAINED UN SUCCESSFUL IN DISCHARGING THE ONUS CASTED UPON HIM, IN THIS REGAR D. CONSEQUENTLY, THE BOOKS WERE REJECTED U/S 145(3) AND THE SAID PURCHAS ES WERE ADDED TO THE INCOME OF THE ASSESSEE. THE LEARNED APPELLATE AUTHO RITY, APPLYING THE PROVISIONS OF SECTION 44AF, ESTIMATED ASSESSEES IN COME @5% OF THE TURNOVER. THE STAND OF FIRST APPELLATE AUTHORITY, C ONSIDERING THE GROSS PROFITS / NET PROFIT TRENDS IN OTHER YEARS, ESTIMATED THE A DDITIONS AT 25% OF THE SAID 4 ITA NO.5079-80/MUM/2018 BHADRESH JAYANTILAL SHAH ASSESSMENT YEARS 2009-10 & 2010-11 PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APP EAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT PREFERRED ANY FURTHER APP EAL. 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 I.E. TRADING. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIER WAS THROUGH BANKIN G CHANNELS. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCHASES DURING ASSESSMENT PROCEEDINGS. NOTICE ISS UED U/S 133(6) REMAINED UN-RESPONDED TO. THE ASSESSEE FAILED TO PR OVE THE DELIVERY OF MATERIAL. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS W HICH 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 LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. THEREFORE, CONCURRING WITH THE APPROACH OF LD. CIT(A), WE DISMISS THE APPEAL. 4. FACTS ARE PARI-MATERIA THE SAME IN AY 2010-11 WH EREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.1.46 LACS ON ACCOU NT OF ALLEGED BOGUS PURCHASES IN AN ASSESSMENT FRAMED U/S 143(3) R.W.S. 147 ON 30 /12/2014. THE FIRST APPELLATE AUTHORITY RESTRICTED THE SAME T O 25%. THE IMPUGNED ORDER IS COMMON ORDER FOR BOTH THE YEARS. HENCE, OU R OBSERVATION, CONCLUSION AS WELL AS ADJUDICATION AS FOR AY 2009-1 0 SHALL MUTATIS MUTANDIS APPLY TO THIS YEAR ALSO. RESULTANTLY, THE APPEAL ST ANDS DISMISSED. 5 ITA NO.5079-80/MUM/2018 BHADRESH JAYANTILAL SHAH ASSESSMENT YEARS 2009-10 & 2010-11 5. BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17/09/2019 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 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.