ITO 19 (1)(4), MUMBAI V. SHRI DHANPAT C. MUNOT, MUMBAI

ITA 5330/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0514 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 148

Judgement Text

1 ITA NO.5330 & 5331/MUM/2019 SHRI DHANPAT C.MUNOT IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NOS. 5330 & 5331/MUM/2019 ASSESSMENT YEARS: 2009-10 & 2010-11 INCOME TAX OFFICER-19(1)(4) 2 ND FLOOR, R.NO.222 TARDEO ROAD MUMBAI-400 007 VS. SHRI DHANPAT C.MUNOT 42, ALANKAR CINEMA BLDG. 245/247, SVP ROAD MUMBAI-400 004 PAN NO. AAVPM5435C APPELLANT RESPONDENT REVENUE BY : MS. SMITA VERMA , DR ASSESSEE BY : NONE DATE OF HEARING : 10/03/2021 DATE OF PRONOUNCEMENT : 1 2 / 0 3 / 2 0 2 1 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5 2, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). THOUGH, THE CASE WAS FIXED FOR HEARING ON 10.03.202 1, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE BENCH ON THE ABOVE DATE. AS THERE IS NON-COMPLIANCE BY THE ASSES SEE, WE ARE PROCEEDING TO 2 ITA NO.5330 & 5331/MUM/2019 SHRI DHANPAT C.MUNOT DISPOSE OFF THESE APPEALS AFTER EXAMINING THE MATER IALS AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE ( DR). FACTS BEING IDENTICAL, WE BEGIN WITH THE AY 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2009-10 ON 29.09.2010 DECLARING T OTAL INCOME OF RS.8,38,,010/-. ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBT AINED BOGUS PURCHASE BILLS AMOUNTING TO RS.54,36,930/- FROM RAJRATAN MET AL INDUSTRIES, AND RS.66,12,893/- FROM SWASTIK IMPEX, THE ASSESSING OF FICER (AO) ISSUED NOTICE U/S. 148 FOR REOPENING THE ASSESSMENT. IN RESPONSE TO IT, THE ASSESSEE FILED A LETTER BEFORE THE AO ALONG COPY OF RETURN FOR THE A BOVE AY. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO RAJRATAN METAL INDUSTRIES AND SWASTIK IMPEX TO VERIFY THE GENUINEN ESS OF THE PURCHASES. HOWEVER, THOSE NOTICES WERE RETURNED UN-SERVED BY T HE POSTAL AUTHORITIES WITH THE REMARK LEFT, NOT TRACEABLE, NOT KNOWN ETC . THEREAFTER, THE AO ASKED THE ASSESSEE TO PRODUCE THE ABOVE PARTIES BEFORE HIM FO R EXAMINATION SO THAT THE GENUINENESS OF THE TRANSACTION COULD BE VERIFIED. H OWEVER, THE ASSESSEE FAILED TO DO SO. CONSIDERING THE FACTS OF THE CASE, THE AO ESTIMATED THE PROFIT @ 12.5% OF THE DISPUTED PURCHASES OF RS.1,20,49,823/- AND A CCORDINGLY MADE AN ADDITION OF RS.15,06,228 /- ON ACCOUNT OF NON-GENUI NE PURCHASES. 3. IN APPEAL, THE LD.CIT(A) VIDE ORDER DATED 28.05. 2019 HELD THAT 5.5 FROM THE AFORESAID CITED DECISION OF GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHETH (SUPRA), IT CAN BE OBSERVED THAT THE APPROPRI ATE GP PERCENTAGE FOR COMPUTING THE UNACCOUNTED PROFITS FROM THE PURCHASES FROM THE ALLEGED HAWALA/BOGUS SUPPLIERS SHOULD FACTOR THE SAVINGS OF TAXES ETC DU E TO THE UNACCOUNTED SALES AND THE 3 ITA NO.5330 & 5331/MUM/2019 SHRI DHANPAT C.MUNOT GP ALREADY SHOWN IN THE REGULAR BOOKS. IT IS OBSERV ED THAT THE RATIO OF THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHETH (SUPRA) CANNOT BE SQUARELY APPLIED TO THE FACTS OF THE CASE OF OUR ASSESSEE SI NCE THE SALES TAX RATE PREVALENT IN GUJARAT WAS 10% AS AGAINST ONLY 4% APPLICABLE IN MA HARASHTRA FOR THE RELEVANT PERIOD. HOWEVER, THE FACTS OF THE CASE OF THE ASSES SEE ARE SOME-WHAT SIMILAR TO THAT OF RATNAGIRI STEELS (SUPRA). IN THE CASE OF RATNAGI RI STEELS(SUPRA), THE HON'BLE ITAT MUMBAI DIRECTED THE AO TO ALLOW SET OFF OF THE BOOK GP AGAINST THE SAID RATE OF 12.5% WHILE COMPUTING THE ADDITIONAL PROFITS FROM T HE PURCHASES FROM THE ALLEGED HAWALA/BOGUS SUPPLIERS. IT WILL THEREFORE BE APPROP RIATE IF RATE OF 12.5% IS APPLIED FOR COMPUTING THE UNACCOUNTED PROFITS RELATED TO PU RCHASES FROM THE HAWALA/BOGUS SUPPLIERS AND AGAINST THIS SET OFF OF THE GP SHOWN IN THE REGULAR BOOKS IN RESPECT OF THE PURCHASES FROM THE HAWALA/BOGUS SUPPLIERS IS AL LOWED. ACCORDINGLY, THE AO IS DIRECTED TO COMPUTE THE ADDITIONAL PROFITS IN RESPE CT OF THE PURCHASES FROM THE ALLEGED HAWALA/BOGUS SUPPLIERS BY ADOPTING RATE OF 12.5%. HOWEVER, THE AO WILL ALLOW A SET OFF OF THE GP ALREADY SHOWN BY THE ASSE SSEE IN THE REGULAR BOOKS IN RESPECT OF THE PURCHASES FROM .THE SAID ALLEGED HAW ALA/BOGUS SUPPLIERS. 4. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSE D BY THE AO. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LD.CIT(A) RIGHT LY OBSERVED THAT THE CASE OF SIMITH P.SHETH (SUPRA) CANNOT BE SQUARELY APPLIED FOR THE REASON THAT THE SALE TAX RATE PREVALENT IN GUJARAT WAS 10% AS AGAINST 4% APPLICABLE IN MAHARASHTRA FOR THE RELEVANT PERIOD. FURTHER, WE FI ND THAT THE LD.CIT(A) HAS RIGHTLY FOLLOWED THE ORDER OF THE TRIBUNAL IN THE C ASE OF RATNAGIRI STEELS (SUPRA) AND DIRECTED THE AO TO ALLOW SET-OFF OF THE BOOK GP AGAINST THE SAID RATE OF 12.5% WHILE COMPUTING THE ADDITIONAL PROFIT FROM THE PURCHASES MADE FROM THE ALLEGED HAWALA/BOGUS SUPPLIERS. HIS DIRECT ION TO THE AO TO COMPUTE THE ADDITIONAL PROFIT IN RESPECT OF THE PURCHASES F ROM THE ALLEGED HAWALA/BOGUS SUPPLIERS BY ADOPTING 12.5% AND TO ALL OW A SET-OFF OF THE GP ALREADY SHOWN BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNTS IN RESPECT OF THE PURCHASES FROM THE SAID ALLEGED HAWALA/BOGUS SU PPLIERS, IS A REASONABLE ONE. WE AFFIRM, THE ORDER OF THE LD.CIT(A). 4 ITA NO.5330 & 5331/MUM/2019 SHRI DHANPAT C.MUNOT FACTS BEING IDENTICAL, OUR DECISION FOR THE AY 200 9-10 APPLIES MUTATIS MUTANDIS TO AY 2010-11. 5. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/03/2021 SD/- SD/- (VIKAS AWASTHY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 12/03/2021 THIRUMALESH SR. P.S. 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// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI