ITO 26(2)(3), MUMBAI V. NARESH RAVILAL DEDHIA , MUMBAI

ITA 526/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6669 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 01-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K GUBGOTRA
• Keywords: Bogus purchase
• Section: 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO. 526/MUM/2019 ( ASSESSMENT YEAR: 2010-11) I.T.O.-26(2)(3), BUILDING NO. C-11, 7 TH FLOOR, ROOM NO. 711, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI- 400051. VS. SHRI NARESH RAVILAL DEDHIA, 24, EDMOND DSOUZA COMPOUND, SAKINAKA, KHENARI ROAD, MUMBAI- 400072. PAN/GIR NO.AAIPD 5905 D (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI R.K. GUBGOTRA (DR) ASSESSEE BY NONE DATE OF HEARING 03/02/2020 DATE OF PRONOUNCEMENT 04/02/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD. CIT(A)-38, MUMBAI DATED 09/08/2018 FOR THE A.Y. 201 0-11 IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND THAT THE ASSESSEE IS IN AN INDIVIDUAL AND ENGAGED I N MANUFACTURING OF PVC MATERIAL AND HARDWARE. THE A.O. REOPENED ASSESS MENT ON GETTING INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS TAKEN ITA NO. 526/MUM/2019 ITO VS SHRI NARESH RAVILAL DEDHIA 2 ACCOMMODATION PURCHASE BILLS. THE A.O. ADDED 100% O F SUCH PURCHASES. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS RESTRICTE D THE ADDITION TO THE EXTENT OF 25% OF SUCH PURCHASES BY OBSERVING AS UND ER:- 5.3.5 THE HON'BLE HIGH COURTS HAVE ADOPTED ESTIMA TION OF VARYING PERCENTAGES TO ARRIVE AT THE PROFIT EMBEDDED IN SUC H TRANSACTIONS DEPENDING UPON THE NATURE OF BUSINESS AS LAID DOWN BY THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF SIMIT P. SETH REPORTED IN 356 ITR 451 AND IN THE CASE OF CIT VS. M/S. BHOLANATH POLYF AB PVT LTD (2013) REPORTED IN 355 ITR 290. AS PER THE DETAILS, SUBMIT TED BY THE APPELLANT IT IS OBSERVED THAT THE AVERAGE GROSS PROFIT RATIO IS 21.57% (22.4 + 20.74%) FOR A.Y. 2008-09 & 2009-10 WHEREIN THE ISSU E OF BOGUS PURCHASE HAS NOT BEEN FOUND WHILE THE GROSS PROFIT RATIO FOR THE INSTANT ASSESSMENT YEAR IS 20.91% AND NET PROFIT % IS 8.52% . TAKING INTO ACCOUNT THE ABOVE AVERAGE GROSS PROFIT OF 21.57%, I NFLATED PURCHASES RECORDED IN THE BOOKS OF THE APPELLANT, COST SAVING BENEFITS AVAILED IN PROCURING THE GOODS FROM THE GREY MARKET, AND ENTIR E FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED OPINION COMPUTING THE PROFIT @ 25% WOULD BE JUSTIFIED. HENCE THE PROFIT I S WORKED OUT AT RS.75,010/- (25/ 100 X 3,00,039). THE AO IS DIRECTE D TO RESTRICT THE ADDITION TO RS. 75,010/- AS AGAINST RS. 3,00,039/- THE GROUNDS OF APPEAL AT 2.1 TO 2.5 & 2.7 ARE ACCORDINGLY PARTLY A LLOWED. IT IS CLEAR FROM THE ORDER OF THE LD. CIT(A) THAT WHILE REDUCING ADDITION TO THE EXTENT OF 25%, THE LD. CIT(A) HAS PROPERLY A PPRECIATED THE FACTS WHICH SHOWS THAT THE ASSESSEE IS SHOWING G.P. OF 20 .91% AND N.P. OF 8.52%. IT WAS FURTHER OBSERVED THAT THE AVERAGE G.P . OF THE ASSESSEE IS 21.57%. AFTER CONSIDERING ALL THESE FACTS AND CIRCU MSTANCES, THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 25%. NOTHING WAS ITA NO. 526/MUM/2019 ITO VS SHRI NARESH RAVILAL DEDHIA 3 PLACED BEFORE ME SO AS TO PERSUADE ME TO DEVIATE FR OM THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, I CONFIRM THE ORDER OF THE LD. CIT(A). 3. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH FEBRUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 04/02/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//