DCIT-1(2)(2), MUMBAI V. M/S PATKON CONSTRUCTION (I) PVT. LTD, MUMBAI

ITA 5319/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4078 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 14-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANPREET DUGGAL
• Assessee Lawyers: RAKESH GANDHI
• Keywords: Bogus purchase
• Section: 201; 147

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 5319/MUM/2019 (ASSESSMENT YEAR 2009-10) THE DCIT-14(2)(2) ROOM NO. 461 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. PATKON CONSTRUCTION (I) PVT. LTD. 16, SHIVNUM D, MAHTANEY PARK, R.C. MARG VASHI NAKA, CHEMBUR MUMBAI-400 074. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 5318/MUM/2019 (ASSESSMENT YEAR 2009-10) M/S. PATKON CONSTRUCTION (I) PVT. LTD. 16, SHIVNUM D, MAHTANEY PARK, R.C. MARG VASHI NAKA, CHEMBUR MUMBAI-400 074. VS. THE ITO-14(2)(2) ROOM NO. 461 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (APPELLANT) (RESPONDENT) PAN : AAACP0526F ASSESSEE BY SHRI RAKESH GANDHI DEPARTMENT BY SHRI MANPREET DUGGAL DATE OF HEARING 04.05.2021 DATE OF PRONOUNCEMENT 05 .0 5 .2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE CROSS APPEALS BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEAL) DATED 14.6.2019 PERTAINING T O ASSESSMENT YEAR 2009-10. 2. THE REVENUE IS AGGRIEVED THAT LEARNED CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE TO 4% AS AGAINST 6.10% MADE BY THE ASSESSING OFFICER. THE ASSESSEE IN ITS APPEAL H AS CHALLENGED REOPENING UNDER SECTION 147 OF THE INCOME TAX ACT. M/S. PATKON CONSTRUCTION (I) PVT. LTD. 2 3. AT THE OUTSET IN THIS CASE LEARNED COUNSEL OF TH E ASSESSEE STATED THAT THIS ITAT IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 201 1-12 BY THE ORDER DATED 24.11.2020 HAS RESTRICTED THE DISALLOWANCE ON ACCOU NT OF BOGUS PURCHASE TO 3%. HENCE LEARNED COUNSEL OF THE ASSESSEE PLEADED T HAT THE DISALLOWANCE IN THE PRESENT CASE ALSO CAN BE SIMILARLY RESTRICTED T O 3% ON THE BASIS OF ITAT ORDER IN ASSESSEE'S OWN CASE. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. 5. BRIEF FACTS OF THE CASE ARE THAT CONSEQUENT UPON INFORMATION THAT ASSESSEE HAS ENGAGED INTO BOGUS PURCHASES THE ASSES SING OFFICER MADE AN ESTIMATED DISALLOWANCE OF 6.10% OF THE ALLEGED BOGU S PURCHASES. UPON ASSESSEE'S APPEAL LEARNED CIT(APPEALS) FOUND THE SA ME TO BE ON HIGHER SIDE AND RESTRICTING THE SAME TO 4%. 6. THE BRIEF FACTS OF THE CASE FOUND BY ASSESSING O FFICER ARE AS UNDER : I T IS SEEN THAT THE SALE TAX DEPARTMENT OF THE GOVERNMENT O F MAHARASHTRA HAD CONDUCTED EXTENSIVE ENQUIRIES AGAINST SUCH DEALE RS WHO USED TO PROVIDE BILLS FACILITATING BOGUS PURCHASES/SALES. AS A RESULT OF THIS INQUIRY, INFORMATION ABOUT MANY ASSESSES WERE FORWARDED TO THE I NCOME TAX DEPARTMENT. THE A.O. HAS STATED IN THE ASSESSMENT ORDER THAT THE APPELLANT IS ONE SUCH PERSON WHO HAS INFLATED HIS PURCHASES B Y SHOWING PURCHASES FROM MANY SUCH PERSONS WHO APPEAR IN THE LIST OF BOGU S ENTRIES PROVIDERS AS PREPARED BY THE SALES TAX DEPARTMENT. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAD NOT B EEN ABLE TO ESTABLISH THE GENUINENESS OF PURCHASES IN DISPUTE. THE MAIN AR GUMENTS OF THE AO ON THE BASIS OF WHICH HE HAD FORMED HIS OPINION WERE :- (1) THE ASSESSEE WAS NOT ABLE TO SUBMIT ANY LORRY RECE IPTS OR ANY DETAILS REGARDING TRANSPORTATION OF GOODS. (2) THE SUPPLIERS FROM WHOM THE DISPUTED PURCHASES HAVE BEEN ARE INCLUDED IN THE LIST OF HAWALA OPERATORS PREPARED BY THE SALES TAX DEPARTMENT. (3) THE SUPPLIERS FROM WHOM THE DISPUTED PURCHASES H AVE BEEN MADE, WERE NOT PRODUCED BEFORE THE AO. (4) EVEN IF THE PURCHASES ARE NOT TREATED AS BOGUS, THE EXPENDITURE ON SUCH PURCHASES REMAIN UNEXPLAINED. M/S. PATKON CONSTRUCTION (I) PVT. LTD. 3 7. WE FIND THAT IN ASSESSEE'S OWN CASE THE ITAT IN THE AFORESAID ORDER HAS GIVEN THE FINDING THAT FROM STANDARD DISALLOWANCE O F 12.5% THE GROSS PROFIT DECLARED WHICH WAS FOUND TO BE 9.5% SHOULD BE DEDUC TED AND THE RESULTANT 3% SHOULD BE DISALLOWED. THE LEARNED COUNSEL OF THE ASSESSEE WANTS THIS RATIO TO BE FOLLOWED IN AS MUCH AS HIS CONTENTION IS THAT DURING THE PRESENT YEAR THE GROSS PROFIT RATIO IS 9.34%. 8. UPON CAREFUL CONSIDERATION WE NOTE THAT THE SUBM ISSION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE GROSS PROFIT RATIO IN THE PRESENT YEAR IS 9.34% IS NOT SUPPORTED BY ANY AUDIT REPORT BUT IT IS GIVE N IN A PLAIN PAPER COMPUTATION. IN OUR CONSIDERED OPINION THIS FACET O F THE GROSS PROFIT BEING 9.34% SHOULD BE EXAMINED BY THE ASSESSING OFFICER. THEREAFTER AS PER THE ITAT'S ORDER IN ASSESSEE'S OWN CASE THE SAID GROSS PROFIT SHOULD BE DEDUCTED FROM 12.5% AND THE RESULTANT DISALLOWANCE SHOULD BE MADE. BOTH THE PARTIES WERE FAIRLY AGREED TO THIS PROPOSITION. 9. IN THE RESULT, THESE APPEALS STANDS PARTLY ALLOW ED AS ABOVE. PRONOUNCED IN THE OPEN COURT ON 5.5.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YA HYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 05/05/2021 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// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI