JAWATARAM S. DEWASI, MUMBAI V. ITO - 19 (2)(1), MUMBAI

ITA 5087/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0649 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: IN PERSON
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

1 JAWATARAM S. DEWASI ASSESSMENT YEARS 2010-11 & 2011-12 - 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.5087/MUM/2018 ( / ASSESSMENT YEAR:2010-11 ) & ./ I.T.A. NO.5137/MUM/2018 ( / ASSESSMENT YEAR:2011-12 ) SHRI JAWATARAM S. DEWASI M/S. SUPERMAX METAL, ROOM NO.4 92, KRISHNA BHAVAN 2 ND KUMBHARWADA, SANT SENA MAHARAJ MARG MUMBAI-400 004. / VS. INCOME TAX OFFICER - 19(2)( 1 ) TARDEO MUMBAI-400 007. !'#$ ./ ./PAN/GIR NO. AHZPD-1052-B ( #$ /APPELLANT ) : ( %&#$ / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : ASSESSEE-IN-PERSON / DATE OF HEARING : 17/09/2019 / DATE OF PRONOUNCEMENT : 17/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [IN SHORT REFERRED TO AS AY] 2010-11 AND 2011-12 CONTEST COMM ON ORDER OF LD. 2 JAWATARAM S. DEWASI ASSESSMENT YEARS 2010-11 & 2011-12 COMMISSIONER OF INCOME-TAX (APPEALS)-30, MUMBAI, [I N SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-30/19(2)(1)/134&1196 /2016-17 DAT ED 08/08/2018. THE GROUNDS RAISED IN AY 2010-11 READS AS UNDER: - (1) THE ORDER OF COMMISSIONER OF INCOME TAX APPE ALS IS BAD AND UNJUSTIFIED. (2) THE LD. COMMISSIONER OF INCOME TAX IN CONFIRMA TION THE ADDITION OF RS.1174922/- WHICH IS BAD IN LAW AND UNJUSTIFIED. (3) THE LD. COMMISSIONER OF INCOME TAX HAD ERRED I N LAW IN CONFIRMING THE CHARGE OF INTEREST UNDER SECTION 234 A, 234 B, 234 C, WHIC H IS BAD IN LAW. (4) THE LEARNED COMMISSIONER OF INCOME TAX HAS ERR ED IN LAW IN CONFIRMING THE INITIATION PENALTY PROCEEDING UNDER SECTION 271(1)( C) OF THE INCOME TAX 1961 . WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE SIDES. 2.1 FACTS FOR AY 2010-11, IN BRIEF, ARE THAT THE AS SESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF METAL S UNDER PROPRIETORSHIP CONCERN NAMELY M/S SUPERMAX METAL INDUSTRIES, WAS A SSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 17/03/2016 WH EREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.16.03 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.11.74 LACS AS AGAINST RETURNED INCOME OF RS.4.28 LACS FILED BY THE ASSESSEE ON 10/09/2010 WH ICH 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.93.99 LACS FROM 16 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN TABULATED AT PARA- 5.1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, A S PER DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INITIATED AGAIN ST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 05/11/2014. TH E STATUTORY NOTICES U/S 3 JAWATARAM S. DEWASI ASSESSMENT YEARS 2010-11 & 2011-12 143(2) & 142(1) WERE ISSUED IN DUE COURSE WHEREIN T HE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 2.3 ALTHOUGH, THE ASSESSEE DEFENDED THE PURCHASES, HOWEVER, NOTICES ISSUED U/S 133(6) TO ALL THE SUPPLIERS REMAINED UNS ERVED AS WELL AS UN- RESPONDED TO. THE ASSESSEE FAILED TO SUBSTANTIATE D ELIVERY OF MATERIAL AND ALSO FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONF IRM THE STATED TRANSACTIONS WHICH LED THE LD. AO TO BELIEVE THAT THE ASSESSEE R EMAINED UNSUCCESSFUL IN DISCHARGING THE ONUS CASTED UPON HIM, IN THIS REGAR D. CONSEQUENTLY, THE ADDITIONS WERE MADE AGAINST THESE PURCHASES ON ESTI MATED BASIS @12.5%. THE STAND OF LD. AO, UPON CONFIRMATION BY FIRST APP ELLATE AUTHORITY, IS UNDER CHALLENGE 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 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. NOTICES IS SUED U/S 133(6) REMAINED UN-RESPONDED TO IN ALL THE CASES. THE ASSE SSEE FAILED TO PROVE THE DELIVERY OF MATERIAL. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEME NT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIRST A PPELLATE AUTHORITY HAS RIGHTLY DONE SO. HOWEVER, KEEPING IN VIEW THE FACT THAT THE ASSESSEE WAS 4 JAWATARAM S. DEWASI ASSESSMENT YEARS 2010-11 & 2011-12 DEALING IN LOW MARGIN ITEM LIKE IRON & STEEL, WE RE DUCE THE ESTIMATION TO 5% OF ALLEGED BOGUS PURCHASES OF RS.93,99,405/- WHICH COMES TO RS.4,69,970/-. THE IMPUGNED ORDER STAND MODIFIED TO THAT EXTENT. THE LEARNED AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF OUR ABOVE ORDER. THE APPEAL STANDS PARTLY ALLOWE D. THE GROUNDS RELATING TO INTEREST & PENALTY WOULD NOT REQUIRE ANY ADJUDIC ATION. 4. FACTS ARE PARI-MATERIA THE SAME IN AY 2011-12 WH EREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.12.91 LACS ON ACCO UNT OF ALLEGED BOGUS PURCHASES IN AN ASSESSMENT FRAMED U/S 143(3) R.W.S. 147 ON 07 /12/2016. THE LD. CIT(A) CONFIRMED THE SAME. THE IMPUGNED ORD ER IS COMMON ORDER FOR BOTH THE YEARS. HENCE, OUR OBSERVATION, CONCLUS ION AS WELL AS ADJUDICATION AS FOR AY 2010-11 SHALL MUTATIS MUTANDIS APPLY TO THIS YEAR ALSO. THE ADDITIONS STAND CONFIRMED TO THE EXTENT O F 5% OF ALLEGED BOGUS PURCHASES OF RS.1,03,32,713/- WHICH COMES TO RS.5,1 6,635/-. THE BALANCE ADDITIONS STAND DELETED. RESULTANTLY, THE APPEAL ST ANDS PARTLY ALLOWED. 5. BOTH THE APPEALS STAND PARTLY ALLOWED. 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 5 JAWATARAM S. DEWASI ASSESSMENT YEARS 2010-11 & 2011-12 () *) / 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.