ITO WARD 3(2), KALYAN V. SHRI DILIP RAJARAM KOKATE, MUMBAI

ITA 5305/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6062 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR A ANSARI
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 143(2); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL SMC BENCH MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 5305/MUM/2018 (ASSESSMENT YEAR 2010-11 ) ITA NO. 5306/MUM/2018 (ASSESSMENT YEAR 2011-12 ) ITO WARD- 3(2) KALYAN, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN (W)-421301 VS. SHRI DILIP RAJARAM KOKATE A/18, ASHIRWAD, 2 ND CROSS LANE, SWAMI SAMARTH NAGAR, ANDHERI (W), MUMBAI- 400053. PAN: AGOPK7906R APPELLANT RESPONDE NT APPELLANT BY : SHRI AKHTAR A. ANSARI (DR) RESPONDENT BY : SHRI JAYANT BHATT (AR) DATE OF HEARING : 01.10.2019 DATE OF PRONOUNCEMEN T : 01.10.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THESE TWO APPEAL BY REVENUE ARE DIRECTED AGAINST TH E CONSOLIDATED ORDER OF LD. CIT(A)-3 NASIK (CAMP OFFICE THANE) DAT ED 15.06.2018 FOR ASSESSMENT YEAR 2010-11 & 2011-12. IN BOTH THE APPEALS, THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL. FAC TS FOR BOTH THE ASSESSMENT YEARS ARE IDENTICAL, THEREFORE, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE DECIDED BY COMMON O RDER. FOR APPRECIATION OF FACT, THE APPEAL FOR ASSESSMENT YEA R 2010-11. THOUGH THE REVENUE HAS RAISED AS MANY AS SEVEN GROU NDS OF APPEAL, HOWEVER, IN OUR CONSIDERED VIEW, THE ONLY SUBSTANTI AL GROUND OF ITA NO. 5305 & 5306 MUM 2018-SHRI DILIP RAJARAM KOKATE 2 APPEAL IS WHETHER THE LD. CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE OF BOGUS PURCHASES TO THE EXTENT OF 12 .5% OF BOGUS/HAWALA DEALERS/NON-EXISTENT VENDORS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FIRM IS ENGAGED IN THE BUSINESS OF RESALE OF COMPUTER AND ITS ACCESSORIES , FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 DECLARING TOTAL INCOME OF RS. 203888/-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1). THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON T HE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTMENT, GOVE RNMENT OF MAHARASHTRA THAT CERTAIN HAWALA OPERATORS ARE INDUL GING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOOD S. THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA REFERRED THE LIST OF SUCH HAWALA DEALERS AND THE BENEFICIARY TO THE DGIT (INV ESTIGATION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST O F BENEFICIARY. THE ASSESSEE ALLEGEDLY MADE THE PURCHASES OF RS. 73 ,660/- FROM GLOBE IMPEX (INDIA), WHOSE NAMES WERE INCLUDED IN T HE LIST SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE AS SESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAP ED ASSESSMENT, THEREFORE, RE-OPENED THE ASSESSMENT UNDER SECTION 1 47. NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE. THE ASSESSE E IN RESPONSE TO THE NOTICE UNDER SECTION 148 FILED ITS REPLY DATED 20.08.2013 AND FURNISHED COPY OF RETURN AND AUDIT REPORT. THE ASSE SSING OFFICER ITA NO. 5305 & 5306 MUM 2018-SHRI DILIP RAJARAM KOKATE 3 AFTER SERVING NOTICE UNDER SECTION 143(2) PROCEEDED FOR RE- ASSESSMENT. DURING THE ASSESSMENT, THE ASSESSING OF FICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES OF RS. 73,660/- FR OM THE FOLLOWING PARTY, WHICH WAS DECLARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. NAME OF THE PARTY BILL AMOUNT (RS.) 1 GLOBE IMPEX (INDIA) 73,660/- 3. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASE S AND TO FURNISH THE BOOKS, LEDGER, SALES REGISTER, DESCRIPTION OF G OODS, QUANTITY, RATE AND AMOUNT. THE DATE OF DISPATCH OF GOODS AND THE N AME OF PLACE ALONG WITH MODE OF TRANSPORTATION BY ROAD OR OTHER MODE, VEHICLE NUMBER, AND PAYMENT DETAILS. THE ASSESSEE WAS ALSO ASKED TO FURNISH THE CORRESPONDING SALES OF GOODS. THE ASSESSING OFF ICER NOTED THAT THE ASSESSEE VIDE REPLY DATED 19.11.2013 FURNISHED THE LEDGER REGISTER FOR PURCHASES MADE FROM GLOBE IMPEX (INDIA) OF RS. 35,220/-. THE ASSESSING OFFICER IN ORDER TO VERIFY THE TRANSACTIO N ISSUED NOTICE UNDER SECTION 133(6) TO GLOBE IMPEX (INDIA). THE NO TICE SENT THROUGH REGISTERED POST WAS RETURNED BACK WITH THE REMARK LEFT. THE ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF AS SESSEE, COPIES OF BILLS AND ON THE BASIS OF REPORT OF INVESTIGATION W ING OF SALE TAX DEPARTMENT REJECTED THE BOOKS OF ACCOUNT OF ASSESSE E AND DISALLOWED ITA NO. 5305 & 5306 MUM 2018-SHRI DILIP RAJARAM KOKATE 4 THE ENTIRE PURCHASES SHOWN FROM GLOBE IMPEX (INDIA) IN ASSESSMENT ORDER DATED 08.07.2014 PASSED UNDER SECTION 143(3) R.W.S 147. 4. ON APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) RES TRICTED THE ADDITION TO THE EXTENT OF 12.5%. THE LD. CIT(A) WHI LE RESTRICTING THE DISALLOWANCES RELIED UPON THE DECISION OF HONBLE G UJARAT HIGH COURT IN CASE OF SIMITH P. SETH (356 ITR 451). THE LD. CIT(A) ALSO CONCLUDED THAT ASSESSEE MIGHT HAVE MADE THE PURCHAS ES FROM GREY MARKET, OPERATING IN THE GREY MARKET LEADS TO VARIO US SAVINGS ON ACCOUNT OF NON-PAYMENTS OF VARIOUS TAXES BY USE OF UNACCOUNTED MONEY AND ON SUCH PURCHASES, WHEN SALES ARE NOT DI SPUTED, THE REASONABLE DISALLOWANCES SHOULD BE CONSIDERED TO AV OID THE REVENUE LEAKAGE. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A ), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTAT IVE (AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECO RD. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICE R. THE LD. DR FURTHER SUBMITS THAT INVESTIGATION WING OF INCOME-T AX DEPARTMENT HAS MADE FULL-FLEDGED INVESTIGATION IN RESPECT OF H AWALA TRADERS. THE HAWALA TRADERS WERE/ARE ENGAGED IN PROVIDING BOGUS BILL WITHOUT ACTUAL DELIVERY OF GOODS. THE ASSESSEE HAS SHOWN BO GUS PURCHASES ONLY TO INFLATE THE PROFIT. THE LD. DR FOR THE REVE NUE SUBMITS THAT THE ITA NO. 5305 & 5306 MUM 2018-SHRI DILIP RAJARAM KOKATE 5 ASSESSING OFFICER HAS BROUGHT SUFFICIENT MATERIAL O N RECORD TO PROVE THAT THE PURCHASES SHOWN BY ASSESSEE WERE BOGUS. TH E ASSESSEE IS NOT ENTITLED FOR ANY RELIEF. 6. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMI TS THAT THE ASSESSEE FURNISHED COMPLETE DETAILS OF PURCHASES AN D THE SALES MADE AGAINST THE ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HAS WRONGLY REJECTED THE BOOKS OF ACCOUNT. THE ASSESSIN G OFFICER MADE THE DISALLOWANCE OF 100% OF THE ALLEGED BOGUS PURCH ASES. THE ADDITION MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES WAS UNREASONABLE. THE LD. CIT(A) RESTRICTED THE DISALLO WANCE ON REASONABLE BASIS. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE REPR ESENTATIVES AND PERUSED THE RECORD. 8. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND LD. AR OF THE ASSESSEE. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF 100% OF THE ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HAS NOT DISPUTED THE SALES OF THE ASSESSEE. THE ASSESSING O FFICER SOLELY RELIED UPON THE REPORT OF INVESTIGATION WING OF SALE TAX D EPARTMENT. BEFORE THE LD. CIT(A), THE ASSESSEE URGED THAT THE PURCHASES SHOWN BY ASSESSEE ARE GENUINE. THE PAYMENTS OF PURCHASES WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. THE GOODS WERE RECEI VED BY ASSESSEE AND QUANTITATIVE DETAILS AND CORRESPONDING SALES OF SHOWN. THOUGH ITA NO. 5305 & 5306 MUM 2018-SHRI DILIP RAJARAM KOKATE 6 THE ASSESSEE FAIRLY STATED THAT THEY ARE UNABLE TO PRODUCE THE SUPPLIER FOR VERIFICATION. HOWEVER, THE ASSESSEE HAS PAID SA LE TAX ON BEHALF OF THE DEALERS AND RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN SIMITH P. SETH (SUPRA). THE LD. CIT(A) AFT ER CONSIDERING THE MATERIAL PLACED BEFORE HIM AND THE RATIO OF THE DEC ISIONS INCLUDING THE DECISION OF SIMITH P. SETH CONCLUDED THAT IT HA S BEEN HELD BY VARIOUS COURTS THAT WHERE ASSESSEE COULD SHOW THAT HE HAS MADE PURCHASES AND THERE ARE CORRESPONDING SALES AGAINST THE PURCHASES, IN SUCH CIRCUMSTANCES, IT IS APPROPRIATE TO TAX THE PO SSIBLE PROFIT OF SUCH PURCHASE FROM NON-GENUINE PARTIES. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE PURCHASES OF RS. 73,66 0/-. WE HAVE NOTED THAT THE LD. CIT(A) AFTER CONSIDERING THE MAT ERIAL AND THE VARIOUS DECISION OF SUPERIOR COURTS ARRIVED ON A FA IR CONCLUSION, WHICH WE AFFIRM. THE LD. DR FOR THE REVENUE FAILED TO BRING ANY CONTRARY DECISION TO OUR NOTICE TO TAKE ANY OTHER V IEW. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 5306/MUM/2018 A.Y. 2011-12 10. AS WE HAVE NOTED ABOVE, THE REVENUE HAS RAISED THE IDENTICAL GROUNDS OF APPEAL AS RAISED IN APPEAL FOR ASSESSMENT YEAR 2 010-11. THE DISALLOWANCE MADE BY ASSESSING OFFICER ON ACCOUNT O F ALLEGED BOGUS PURCHASES IS ALSO SIMILAR FROM THE SAME ALLEGED HAW ALA DEALER. CONSIDERING OUR ORDER FOR ASSESSMENT YEAR 2010-11 O N SIMILAR ITA NO. 5305 & 5306 MUM 2018-SHRI DILIP RAJARAM KOKATE 7 GROUND, THE APPEAL FOR THE YEAR UNDER CONSIDERATION IS ALSO DISMISSED WITH SIMILAR DIRECTION. 11. IN THE RESULT, APPEAL OF THE REVENUE FOR BOTH THE A YS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/010/2019. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 01.10.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI