ACIT-31(1), MUMBAI V. SHRI CHANDRAKANT L. NANDWANA, MUMBAI

ITA 5214/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1439 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHREEKALA PARADESHI
• Keywords: Bogus purchase; Accommodation entries; Right to appeal; Reassessment proceedings
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) C BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER SHRI N.K. PRADHAN, HON'BLE ACCOUNTANT MEMBER ITA NO . 5214 /MUM/2019 (A.Y: 20 11 - 12) ACIT 3 1(1 ) ROOM NO. 602 , 6 TH FLOOR KAUTILYA BHAWAN, B.K.C. BANDRA(E) MUMBAI - 400051 V . SHRI CHANDRAKANT L. NANDWANA 41, VEENA DALVI INDUSTRIAL ESTATE OSHIWARA, JOGESHWARI (W) MUMBAI 4000102 PAN: AAEPN4505B (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : MS. SHREEKALA PARADESHI DATE OF HEARING : 10.02 .2021 DATE OF PRONOUNCEMENT : 10 .02 .2021 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 42 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 28.05.2019 FOR THE ASSESSMENT YEAR 2011 - 12 . THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS LD.CIT(A) ERRED IN RESTRICTING 2 ITA NO.5214/MUM/2019 (A.Y: 2011 - 12) SHRI CHANDRAKANT L. NANDWANA THE DISALLOWANCE OF PURCHASES TO 12.5% AS AGAINST 25% DISALLOWED BY THE ASSESSING OFFICER AS NON - GENUINE/BOGUS . 2. BRIEFLY STA TED THE FACTS ARE THAT, THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURER AND EXPORTER OF PLASTIC RECYCLING MACHINERY , FILED RETURN OF INCOME ON 09.09.2011 FOR THE A.Y.2011 - 12 DECLARING INCOME OF .52,46,860/ - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT (INV.,), MUMBAI ABOUT THE ACCOMMODATION EN TRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DGIT(INV.) MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIE S FROM M/S. SAILEELA TRADING PVT. LTD., WHO IS SAID TO BE PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANSPORTATION OF ANY GOODS. IN THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM M/S. SAILEELA TRADING PVT. LTD. IN RESPONSE, ASSESSEE FURNISHED PARTY WISE PURCHASES, COPY OF STOCK REGISTER CONTAINING THE QUANTITATIVE DETAILS OF INWARD OF RAW MATERIALS AND SUBMITTED THAT THE PURCHASES MADE ARE GENUINE. ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE 3 ITA NO.5214/MUM/2019 (A.Y: 2011 - 12) SHRI CHANDRAKANT L. NANDWANA THROUGH ACCOUNT PAYEE CHEQUES AS SUCH CONTENDED THAT ALL THE PURCHASES ARE GENUINE. HOWEVER, PART Y WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER. 3. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESS EE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER THAT ASSESSEE HAS NEITHER PRODUCED THE PARTY FOR EXAMINATION NOR FILED ANY OF THE MATERIAL TO SUBSTANTIATE HIS CLAIM. ASSESSING OFFICER OBSERVED THAT TH E NOTICE I SSUED U/S. 133(6) OF THE ACT TO THE PARTY WAS RETURNED UNSERVED WITH A REMARK NOT KNOWN AND THE ASSESSEE HAS NOT PRODUCED THE PART Y BEFORE THE ASSESSING OFFICER. THEREFORE, ASSESSING OFFICER TREATED 25% OF ALLEGED BOGUS PURCHASES OF . 7,40,663 / - AS NON - GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDENCES AND VARIOUS SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO AN EXTENT OF 12.5% OF THE NON - GENUINE PURCHASES. 4 ITA NO.5214/MUM/2019 (A.Y: 2011 - 12) SHRI CHANDRAKANT L. NANDWANA 4. INSPITE OF ISSUE OF NOTICE NONE APPE ARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THEREFORE, WE PROCEED TO DISPOSE OFF THIS APPEAL ON HEARING LD. DR ON MERITS. 5. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENTS IN THE ASSESSMENT ORDER AND FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V . SIMIT P. SHETH [356 ITR 451] RESTRICTED THE DISALLOWANCE TO 12.5% OF THE NON - GENUINE PURCHASES. WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - 6. AS REGARDS GROUND NO. 2 & 3, THE ASSESSEE SUBMITS THAT HE HAS NOT AGREED TO ANY ADDITION. IN ANY CASE ASSESSE E HAS A RIGHT TO APPEAL AGAINST ANY ADDITION MADE IN HIS CASE. NO PARTICULAR REASON IS GIVEN BY AO FOR ESTIMATION OF 25% GP. THE AO HAS MENTIONED THAT THE SUPPLIERS HAVE GIVEN AFFIDAVIT THAT THEY HAVE SUPPLIED BILLS WITHOUT ACTUAL DELIVERY. HOWEVER, THE AS SESSEE CONTENDS THAT SUCH ITEMS ARE USED IN MANUFACTURE OF GOODS. THE AO ADDED 25% OF SUCH PURCHASES AS ON THE GROUND THAT ASSESSEE HAS HOWEVER PRODUCED EVIDENCE IN SUPPORT OF MOVEMENT OF GOODS AND THUS THERE IS EVIDENCE OF UTILIZATION OF SUCH GOODS. HOWEV ER, THE FACTS OF THE CASE AND THE AFFIDAVIT POINTS TOWARDS OVERWHELMING EVIDENCE OF PURCHASES BEING MADE FROM THE GREY MARKET. AS EVIDENCE OF MOVEMENT OF GOODS IS SUBMITTED RELYING ON THE DECISION IN THE CASE OF CIT V. SIMIT P. SHETH 356 ITR 451 (GUJ.) 12.5% OF SUCH PU RCHASES IS DIRECTED TO BE ADDED ON ACCOUNT OF GP ON SUCH PURCHASES AND CONSEQUENT SALES. 5 ITA NO.5214/MUM/2019 (A.Y: 2011 - 12) SHRI CHANDRAKANT L. NANDWANA 6. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN RESTRICTING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 12.5% OF THE PURCHASES. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN VIRTUAL COURT ON 10.02.2021 . SD/ - SD/ - (N.K. PRADHAN) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 10/02/2021 GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM