ITO, 32(3)(1), MUMBAI V. POOJA RAJESH DHRUV, LEGAL HEIR OF LATE RAJESH R. DHRUV, MUMBAI

ITA 532/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3587 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Keywords: Unexplained expenditure
• Section: 69C; 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I G. MANJUNATH A , ACCOUNTANT MEMBER ITA NO. 532 / MUM . /201 9 ( ASSESSMENT YEAR : 20 10 11 ) INCOME TAX OFFICER WARD 32(3)(1), MUMBAI . APPELLANT V/S POOJA RAJESH DHRUV L/H LATE SHRI RAJESH R. DHRUV A 204, PREM APARTMENTS SAI BABA NAGAR, BORIVALI (W) MUMBAI 400 092 PAN ADNPD5749F . RESPONDENT REVENUE BY : S HRI SAURABH DESHPANDE ASSESSEE BY : NONE DATE OF HEARING 03 .0 2 .2020 DATE OF ORDER 04.03.2020 O R D E R PER SAKTIJIT DEY. J.M. THE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 1 0 TH OCTOBER 2018 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 1 0 11 . 2 POOJA RAJESH DHRUV 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO PARTIAL RELIEF GRANTED BY THE LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 3. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS P RESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER . ACCORDINGLY, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL R EPRESENTATIVE AND ON THE BASIS O F MATERIAL AVAILABLE ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICAL S , SOLVENT S , DYES AND INTERMEDIATES AS WELL AS OTHER ALLIED ITEMS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HER RETURN OF INCOME ON 15 TH OCTOBER 2010, DECLARING TOTAL INCOME OF ` 7,99,350. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORM ATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS PROVIDED IN RELATION TO PURCHASES WORTH ` 7,40,402, CLAIMED TO HAVE BEEN MADE DURING T HE YEAR FROM FOUR PARTIES, T HE ASSESSIN G OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE 3 POOJA RAJESH DHRUV THE GENUINENESS OF PURCHASES MADE. FURTHER, TO INDEPENDENTLY VERIFY THE PURCHASES, THE ASSESSING OFF ICER ISSUED NOTICES UNDER SECTION 133(6) OF THE AC T TO THE SELLING DEALERS, WHICH, AS ALLEGED BY THE ASSESSING OFFICER , RETURNED BACK UN SERVED WITH THE POSTAL REMARK LEFT . FURTHER, THE ASSESSEE WAS ALSO UNABLE TO PRODUCE THE CONCERNED PARTIES BEFORE THE ASSESSING OFFICER. IN VIEW OF THE AFORESAID, THE ASSESSING OFFICER CONCLUDED THAT PURCHASES WORTH ` 7,40,402, ARE NON GENUINE AND ACCORDINGLY TREATING SUCH PURCHASES AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT, HE ADDED BACK TO THE INCOME OF T HE ASSESSEE. THE ASSESSEE DISPUTED THE AFORESAID ADDITION IN APPEAL PREFERRED BEFORE THE FIRST APPELLATE AUTHORITY. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE ALLEGED NON GENUINE PURCHASES. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED T HE MATERIAL ON RECORD. I T MAY BE A FACT THAT THE EVIDENCES FURNISHED BY THE ASSESSEE DURING THE ASS ESSMENT PROCEEDINGS COULD NOT SATISFY THE ASSESSING OFFICER REGARDING THE GENUINENESS OF THE PURCHASES , FOR WHICH , HE TREATED SUCH PURCHASES AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, 4 POOJA RAJESH DHRUV IT IS ALSO EVIDENT , THE ASSESSING OFFICER HAS NOT DISPUTED THE SALES EFFECTED BY THE ASSESSEE. THAT BEING THE CASE, A PRESUMPTION HAS TO BE DRAWN THAT IN THE ABSENCE OF SUCH PURCHASES THE ASS ESSEE COULD NOT HAVE EFFECTED THE SALES. THEREFORE, IT HAS TO BE CONCLUDED THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM UNVERIFIED SOURCES AND TO REGULARIZE SUCH PURCHASE S HAS AVAILED ACCOMMODATION BILLS. IN SUCH CIRCUMSTANCES, ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. THEREFORE, IN OUR VIEW, THE LEARNED COMMISSIONER (APP EALS) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO THE PROFIT ELEMENT IN SUCH PURCHASES. FURTHER, THE RATE OF 12.5% ADOPTED BY THE LEARNED COMMISSIONER (APPEALS) IS NOT ONLY JUST AND REASONABLE, BUT ALSO IN CONSONANCE WITH THE CONSISTENT VIEW EXPRESSED BY THE TRIBUNAL IN SIMILAR NATURE OF CASES. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUND S RAISED BY THE REVENUE. 7. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 04.03.2020 SD/ - G. MANJUNATH A ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMB AI, DATED: 04.03.2020 5 POOJA RAJESH DHRUV COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI