M/S. NOBEL IMPEX, MUMBAI V. ITO-19(2)(4), MUMBAI

ITA 5165/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3511 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 143(3); 133(6); 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5165/MUM/2019 ASSESSMENT YEAR: 2010-11 & ITA NO. 5166/MUM/2019 ASSESSMENT YEAR: 2011-12 M/S NOBEL IMPEX, 104, NANDAVAN BUILDING, 1 ST FLOOR, ROOM NO. 6, C.P. TANK ROAD, MUMBAI - 400 004 VS. INCOME TAX OFFICER 19(2)(4), MATRU MANDIR ROOM NO. 217, TARDEO ROAD, MUMBAI-400 007. PAN NO. AAFFN 9233 P APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MR. SANJAY J. SETHI , DR DATE OF HEARING : 03/03/2021 DATE OF PRONOUNCEMENT : 05/03/2021 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE ORDER OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-6, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COM PLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 13.01.2021 AND 03.03.2021, NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTAT IVE APPEARED BEFORE THE BENCH ON THE ABOVE DATES. AS THERE IS NON-COMPLIANC E BY THE ASSESSEE, WE ARE ITA NO. 5165 & 5166/M/2019 M/S NOBEL IMPEX 2 PROCEEDING TO DISPOSE OFF THIS APPEAL AFTER EXAMINI NG THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL RE PRESENTATIVE (DR). FACTS BEING IDENTICAL, WE BEGIN WITH THE ASSESSMENT YEAR (AY) 2010-11. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN UPHOLDING THE ASSESSMENT WHERE THE ASSESSING OFFICE R HAS ADDED 12.5% OF THE ALLEGED BOGUS PURCHASES TO THE INCOME OF THE APPELL ANT. 2. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APPELL ANT WAS NOT GIVEN ANY DOCUMENT OR STATEMENT OF THE PARTIES INVESTIGATED BY THE SAL ES TAX DEPARTMENT STATING THE NAME OF THE APPELLANT HAS BENEFITTED FROM BOGUS ENT RIES. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE G.P. R ATIO OF THE APPELLANT BECOMES UNREASONABLE AS COMPARED TO THE PERSONS ENGAGED IN SIMILAR BUSINESS AND APPELLANTS OWN BUSINESS FOR EARLIER AND SUBSEQUENT YEARS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2010-11 ON 12.10.2010 DECLARING T OTAL INCOME OF RS.9,20,520/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNME NT OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FRO M SHREE SUNDHA STEELS PVT. LTD. OF RS.39,96,252/- AND ROOPAM IMPEX OF RS. 7,40,200/-, THE ASSESSING OFFICER (AO) RE-OPENED THE ASSESSMENT BY ISSUING NO TICE U/S 148 OF THE ACT. IN RESPONSE TO IT, THE ASSESSEE SUBMITTED THAT THE RET URN FILED ON 12.10.2010 BE TREATED AS RETURN FILED U/S 148 OF THE ACT. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE ABOVE TWO PARTIES TO VERIFY THE GENUINENESS OF THE PURCHASES. THOUGH THE NOTICE S WERE SENT BY REGISTERED POST IN THE ADDRESS GIVEN BY THE ASSESSEE, THOSE WE RE RETURNED BACK UN-SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNO WN OR NO SUCH ADDRESS OR ITA NO. 5165 & 5166/M/2019 M/S NOBEL IMPEX 3 LEFT ETC. IN RESPONSE TO A QUERY RAISED BY THE AO , THE ASSESSEE FILED COPIES OF LEDGER ACCOUNTS ALONG WITH PURCHASE INVOICES OF THE SAID PARTIES ; COPIES OF BANK STATEMENTS; DETAILS IN RESPECT OF PURCHASES FR OM THE ABOVE PARTIES AND THE CORRESPONDING SALES. HOWEVER, THE AO WAS NOT CONVIN CED WITH THE ABOVE SUBMISSION OF THE ASSESSEE INTER ALIA ON THE GROUND THAT THE ASSESSEE COULD NOT FILE IMPORTANT DOCUMENTS SUCH AS DELIVERY CHALLANS, TRANSPORT RECEIPTS, OCTROI RECEIPTS, RECEIPTS OF WEIGHBRIDGE, EXCISE GATE PASS , GOODS INWARD REGISTER. FURTHER OBSERVING THAT ONLY THE PROFIT EMBEDDED IN SUCH DISPUTED PURCHASES BE BROUGHT TO TAX, THE AO RELYING ON THE JUDGMENT OF T HE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) ESTIMATED THE PROFIT @ 12.5% OF THE DISPUTED PURCHASES OF RS.47,3 6,452/- WHICH COMES TO RS.5,92,057/-. 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) CONFIRMED THE DISALLOWANCE OF RS.5,92,057/- MADE BY THE AO BY OBSERVING THAT : 5.3.8 THE FACTS OF THE PRESENT CASE ARE EXACTLY SI MILAR TO THE CASE OF CIT VS. SIMIT P. SHETH (SUPRA). THE APPELLANT MADE PURCHASES FROM TW O PARTIES WHO ARE SAID TO BE HAWALA OPERATORS, WHO ARE INDULGED IN PROVIDING BOG US BILLS WITHOUT SUPPLY OF ANY MATERIAL. UNDER THESE CIRCUMSTANCES, AS THE APPELLA NT COULD NOT PROVE HIS CLAIM OF PURCHASES DEBITED TO THE PROFIT & LOSS ACCOUNT, THE RE IS NO OTHER WAY TO THE AO, BUT TO ESTIMATE THE PROFIT ELEMENT EMBEDDED ON SUCH PURCHA SES. AS STATED EARLIER, THE FACTS OF THE PRESENT CASE ARE EXACTLY SIMILAR TO THE CITE D CASE AND RESPECTFULLY FOLLOWING THE ABOVE CITED DECISION, THE ACTION OF THE AO IN ESTIM ATING THE ADDITION @12.5% ON THE TOTAL PURCHASES FROM THE TWO PARTIES IS CONFIRMED. 5. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). ITA NO. 5165 & 5166/M/2019 M/S NOBEL IMPEX 4 WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE NATURE OF BUSINESS OF THE ASSESSEE IS TRADING I N FERROUS AND NON-FERROUS METALS. IN THE INSTANT CASE, THE NOTICES U/S 133(6) SENT BY THE AO BY REGISTERED POST TO THE SUSPECTED PARTIES IN THE ADDRESS GIVEN BY THE ASSESSEE WERE RETURNED UN-SERVED BY THE POSTAL AUTHORITIES WITH T HE REMARKS NOT KNOWN OR NO SUCH ADDRESS OR LEFT. FURTHER, THOUGH THE AS SESSEE WAS ASKED BY THE AO TO PRODUCE THE SAID PARTIES FOR EXAMINATION, HE FAILED TO DO SO. THE ASSESSEE ALSO COULD NOT PRODUCE BEFORE THE AO EVIDENCE LIKE DELIV ERY CHALLANS, TRANSPORT RECEIPTS, OCTROI RECEIPTS. THE NATURE OF BUSINESS OF THE ASSESSEE IS TRADING IN FERROUS AND NON- FERROUS METALS. WE ARE OF THE CONSIDERED VIEW THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROFIT BE ESTIMATED @ 6% OF THE DISPUTED PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO ESTIMATE THE PROFIT @ 6% ON THE DISPUTED PURCHASES OF RS.47,36,452/-. FACTS BEING IDENTICAL, OUR ABOVE DECISION FOR AY 2 010-11 APPLIES MUTATIS MUTANDIS TO AY 2011-12. 6. IN THE RESULT, THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/03/2021. SD/- SD/- (VIKAS AWASTHY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 05/03/2021 RAHUL SHARMA, SR. P.S. ITA NO. 5165 & 5166/M/2019 M/S NOBEL IMPEX 5 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