REETU ATUL JAIN, MUMBAI V. INCOME TAX OFFICER-30(3)(2), MUMBAI

ITA 5221/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9553 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: RUCHI RATHOD
• Keywords: Bogus purchase; Deemed owner of house property
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.5221/M/2017 ASSESSMENT YEAR: 2012-13 SMT. REETA ATUL JAIN, 901, AHIMSA TOWER, CHINCHOLI BUNDER, MALAD (W), MUMBAI-400 064 PAN: AAAFD0959P VS. ITO-30(3)(2), 6 TH FLOOR, C-13, B.K.C., MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. RUCHI RATHOD, A.R. REVENUE BY : MS. N. HEMALATHA, D.R. DATE OF HEARING : 31.10.2017 DATE OF PRONOUNCEMENT : 18.12.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 04.05.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND CARRYING ON THE BUSINESS OF DEALING IN ALL KIND S OF PAPERS IN THE NAME OF M/S SHOBHIT ENTERPRISE. THE ASSESSING OFFI CER (HEREINAFTER REFERRED TO AS THE AO) IN ORDER TO VERIFY THE GENUI NENESS OF PURCHASE TRANSACTIONS MADE BY THE ASSESSEE, ISSUED NOTICE U/ S 133(6) TO NINE PARTIES AS PER THE DETAILS SUBMITTED BY THE ASSESSE E. THE AO EXAMINED THE DETAILS WITH RESPECT TO THE IMMOVABLE PROPERTY AND ON ITA NO.5221/M/2017 SMT. REETA ATUL JAIN 2 PERUSAL OF SCHEDULE OF THE BALANCE SHEET IT WAS REV EALED THAT THE ASSESSEE OWNED FLAT NOS. 901-902, FLAT NO.703-704 A ND FLAT NO.304 IN AHIMSA TOWER. IN THE COMPUTATION OF INCOME IT WA S SEEN THAT THE ASSESSEE HAS SHOWN FLAT NO.308 AS LET OUT. ACCORDIN GLY, THE AO ISSUED QUESTIONNAIRE ASKING TO SUBMIT THE STATUS OF THE REST OF THE FLATS, BARRING THE SOP AND LET OUT FLAT AND ALSO IS SUED SHOW CAUSE AS TO WHY THE REST OF THE PROPERTIES SHOULD NOT BE TRE ATED AS DEEMED LET OUT. IN RESPONSE TO THE SAME, THE A.R OF THE ASSESS EE EXPLAINED THAT FLAT NO.308 IS LET OUT AND THERE IS A TYPOGRAPHICAL ERROR IN SHOWING FLAT NO.304 AS LET OUT. COPY OF THE LEAVE AND LICENSE AG REEMENT WAS ALSO SUBMITTED BY THE ASSESSEE AS PROOF FOR THE SAME. O N PERUSAL OF THE LEAVE AND LICENSE AGREEMENT, THE AO STATED THAT THE RENT CHARGED IS RS.2,500/- PER MONTH EFFECTIVE FROM 01.04.11. ACCOR DINGLY, THE ASSESSEE WAS ASKED AS TO WHY THE OTHER PART SHOULD NOT BE TREATED AS DEEMED LET OUT AS THE ASSESSEE IS ALREADY SHOWING A N SOP FLAT. THE A.R OF THE ASSESSEE AGREED TO OFFER THE INCOME FROM THE PROPERTY AS DEEMED LET OUT. THE AO STATED THAT THE ASSESSEE HAS LET OUT ONE PART OF THE PROPERTY FOR RS.2,500/- P.M. HENCE THE DEEME D RENT FOR THE OTHER PART IS ALSO TAKEN AT RS.2,500/- PER MONTH. ACCORDINGLY, THE AO IN THE ASSESSMENT ORDER HAS SHOWN THE CALCULATIO N DONE TO ARRIVE AT THE NET ANNUAL VALUE FOR THIS PROPERTY I.E. 703- 704 AHIMSA TOWER, WHICH IS AMOUNTING TO RS.1,23,900/-. THE AO MENTIONS THAT THE ASSESSEE HAS ALSO LOSS FROM SOP AMOUNTING AT RS .(-)1,16,468/- AND HENCE THE LOSS ON SOP IS ALLOWED TO BE SET OFF AGAINST THE INCOME FROM LOP AND THE NET HOUSE PROPERTY INCOME IS TAKEN AT RS.7,432/- WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. ITA NO.5221/M/2017 SMT. REETA ATUL JAIN 3 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL BY OBSERVING AS UNDER: 5.2 ON THE ISSUE OF BOGUS PURCHASE, DECISIONS LIKE VIJAY PROTEINS LTD. VS. CIT [2015] 58 TAXMANN.COM 44 (GUJ) , CIT VS. SIMIT P. SHETH [2 013] 356 1TR 451 (GUJ.) SUPPORT DISALLOWANCE OF CERTAIN PERCENTAGE OF PURCHASE PRIC E. THE DISALLOWANCE IS JUSTIFIED BECAUSE THE EXACT SOURCE OF GOODS OR EXACT AMOUNT O F INFLATION IS KNOWN TO THE ASSESSEE ONLY. FURTHER, WITHOUT A MUCH BIGGER BENEF IT THAN THE NORMAL GP RATIO, NO PRUDENT PERSON WILL ENTER INTO TRANSACTIONS OF PURC HASING MATERIALS FROM ONE SOURCE AND TAKING BILLS FROM ANOTHER. AS A CONSEQUENCE, TH E PROFIT EMBEDDED IN SUCH TRANSACTIONS OF PURCHASE AND SALES WILL BE MUCH HIG HER THAN NORMAL GP RATIO. 5.3 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I F IND ESTIMATION OF GROSS PROFIT MADE BY THE AO AT 7.04% AS AGAINST 5.52 % SHOWN BY THE APPELLANT TO BE MOST FAIR AND REASONABLE IN THIS CASE. IN VIEW OF ABOVE, DISA LLOWANCE OF RS. 13,51,980/- IS SUSTAINED. THE GROUND IS REJECTED. 5.4 SECOND GROUND IS RELATED TO COMPUTATION OF INCO ME FROM HOUSE PROPERTY. THE APPELLANT HAS NOT FILED ANY SUBMISSION OR EVIDENCE TO PROVE AS TO HOW THE APPROACH OR CALCULATION OF THE AO IS WRONG. IN VIEW OF ABOVE , THIS GROUND IS ALSO REJECTED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. I DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LD. CIT(A). HENCE, I HAVE NO ALTERNAT IVE BUT TO ACCEPT THE SAME. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 18.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO.5221/M/2017 SMT. REETA ATUL JAIN 4 THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.