VIJAY BALKRISHNA NAIK, AMBERNATH V. DCIT CEN CIR 2, KALYAN

ITA 5362/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9515 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6); 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH F MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ITA NO. 5362 AND 5363 / MUM/ 20 1 5 ( / ASSESSMENT YEAR: 2 0 09 - 10 AND 2010 - 11 ) SHRI VJAY BALKRISHNA NAIK, B - 20, ADDITIONAL AMBERNATH MIDC, ANAND NAGAR,AMBERNATH (E) - 421501 / VS. DY.COMMISSIONER OF INCOME TAX, CC - 2, KALYAN. ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : ABNPN6215C ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI BHUPENDRA SHAH / REVENUE BY : SHRI T A KHAN / DATE OF HEARING : 22 .8. 2 017 / DATE OF PRONOUNCEMENT : 15 . 9 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED ARE APPEAL S BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR S 20 09 - 10 AND 2010 - 11 . THE APPEAL S ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 3 , MUMBAI, DATED 21.9.2015 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 7.10.2013 UNDER SECTION 143(3) R.W.S.147 OF THE ACT. SINCE THE ISSUE RAISED IN THESE TWO APPEALS 2 ITA NO. 5362 AND 5363 /MUM/201 5 ARE SAME, FOR THE SAKE OF CONVENIENCE, THESE WERE CLU BBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO.5362/MUM/2015 2 . THE GROUND NO.1 IS WITH RESPECT TO THE RE - OPENING OF THE ASSESSMENT U/S 148 OF THE ACT . AT THE TIME OF HEARING THE LD.AR DID NOT PRESS THIS ISSUE A ND HENCE DISMISSED AS NOT PRESSED. 3. THE ISSUE IN GROUND NO.2 IS IN RESPECT OF MAKING ASSESSMENT U/S 144 OF THE ACT, THE SAME IS ALSO NOT PRESSED AT THE TIME OF HEARING, HENCE DISMISSED AS NOT PRESSED. 4. THE ISSUE RAISED IN GROUNDS OF APPEAL NO.3 TO 9 I S AGAINST THE CONFIRMATION BY CIT(A) OF ADDITION TO THE EXTENT OF RS.17,12,023/ - BEING 25% OF THE TOTAL BOGUS PURCHASE S AS AGAINST THE TOTAL ADDITION OF RS.68,48,091/ - BY THE AO. 5 . FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 22.9.2009 DECLARING TOTAL INCOME OF RS. 19,83,790/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE AO , AFTER RECEIV ING THE I NFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS INDULGED IN AVAILING ENTRIES OF BOGUS PU RCHASES FROM VARIOUS HAWALA DEALERS/OPERATORS, REOPENED THE CASE OF THE ASSESSEE BY ISSUING NOTICE U/S 148 OF THE ACT WHICH WAS COMPLIED WITH BY THE ASSESSEE BY 3 ITA NO. 5362 AND 5363 /MUM/201 5 LETTER DATED 13.5.2013 REQUESTING THE AO TO TREAT RETURN FILED ON 22.9.2009 AS THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. THE ASSESSEE ALSO FILED OBJECTIONS TO THE RE - ASSESSMENT PROCEEDINGS . ACCORDING TO THE AO THE ASSESSEE HAD MADE BOGUS PURCHASES FROM 11 PARTIES TO THE EXTENT OF RS.68,48,091/ - AS PER DETAILS AT PAGE 2 OF THE ASSESSMENT ORDER . A CCORDINGLY THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE SAID PURCHASES BY FILING THE PROOF OF PURCHASES, RECEIPT OF MATERIALS, PAYMENTS AND CONFIRMATIONS ETC . BESIDES, THE AO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THE 9 PARTIES WHICH WERE RETURNED UNSERVED . THEREAFTER , THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE CALLING UPON HIM TO SHOW CAUSE AS TO WHY THESE BOGUS PURCHASES SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF BEING N ON GENUINE . THE ASSESSEE VIDE LETTER DATED 25.9.2011 FILED REPLY WITHOUT ANY SUPPORTING DOCUMENTS AS CALLED FOR BY THE AO. THE AO DISPOSED OF THE OBJECTIONS OF THE ASSESSEE FILED THROUGH THE LETTER DATED 13.5.2013 AND THEREAFTER DISALLOWED THE AMOUNT OF B OGUS PURCHASES ON THE GROUND THAT THE EVIDENCE FILED BY THE ASSESSEE WERE NOT RELIABLE AS THEY WERE NOT BEARING LORRY NUMBERS, MOTOR NUMBER, DELIVERY CHALLAN AND PARTIES WERE NOT TRACEABLE BY FRAMING THE ASSESSMENT U/S 144 R.W.S.147 OF THE ACT. AGGRIE VED BY THE ORDER OF AO , THE ASSESSEE PREFERRED AN APPEAL 4 ITA NO. 5362 AND 5363 /MUM/201 5 BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE PARTLY ALLOWED THE APPEAL BY SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS.17,12,013/ - BEING 25% OF TOTAL DISALLOWANCE RS.68,48,091/ - BY OBSERVING THAT THE ASSESSEE WAS NOT MAINTAINING ANY STOCK REGISTER OR STOCK TALLY AND NO EVIDENCE S OF TRANSPORTATION OF MATERIAL WERE AVAILABLE GIVING DETAILED FI NDING IN PARA 7 OF THE APPELLATE ORDER. 6 . WE HAVE CAREFULLY CONSIDERED TH E CONTENTIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT IN THIS CASE, THE ASSESSEE HAS AVAILED HAWALA ACCOMMODATION ENTRIES OF BOGUS PURCHASES FROM 11 PARTIES TO THE TUNE OF RS .68,48,091/ - . IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASES BEFORE THE AO WHO MADE TOTAL DISALLOWANCE/ ADDITION OF THE ALLEGED BOGUS PURCHASES . THE NOTICES ISSUED U/S 133(6) OF THE ACT TO THE HAWALA PARTIES WE RE RETURNED UNSERVED FROM THE 9 PARTIES AND IN RESPECT OF REMAINING TWO PARTIES THE NOTICES WERE SERVED BUT NO REPL IES WERE RECEIVED . A CCORDINGLY THE AO DISALLOWED THE ENTIRE AMOUNT OF HAWALA PURCHASES OF RS. 68,48,091/ - . THE LD. CIT(A) PARTLY SUSTAINE D THE ADDITION TO THE EXTENT OF RS. 17,12,013/ - BEING 25% OF THE SAID HAWALA PURCHASES BY OBSERVING THAT THE ASSESSEE MIGHT HAVE MADE SAVINGS BY PURCHAS ING OF MATERIALS FROM GRAY MARKETS 5 ITA NO. 5362 AND 5363 /MUM/201 5 THEREBY MAKING SAV INGS OF VAT AND OTHER INCIDENTAL TAXES . DURING TH E COURSE OF HEARING BEFORE US, THE LD.AR ALSO SUBMITTED THAT THE ASSESSEE EVEN PAID VAT AND OTHER CHARGES ON THE SAID PURCHASES TO THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA WHEN THE HAWALA OPERATORS COULD NOT BE TRACED . THEREFORE, THE LD.AR PR AYED THAT THE RATE OF ADDITION MADE BY THE LD.CIT(A) TO THE TUNE OF 25% OF PURCHASE WAS VERY HIGH AND UNREASONABLE. IN THE PRESENT CASE, WE FIND THAT THE SALES WERE NOT DOUBTED BY THE AO AND THE FACTS THAT THE VAT WAS PAID BY THE PURCHASER WHICH WAS TO BE PAID BY THE SUPPLIERS , THE GP ADOPTED BY THE LD.CIT(A) IS VERY MUCH ON THE HIGH ER SIDE . IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND PROPER IF THE ADDITION OF BOGUS PURCHASES WOULD BE RESTRICTED TO 8 % INSTEAD OF 25% AS MADE BY THE FA A. ACCORDINGLY, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 8% OF THE TOTAL BOGUS PURCHASE S. IN T HE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. ITA NO.5363/MUM/2015 7 . THE FACTS OF THIS CASE ARE IDENTICALLY SAME AS DECIDED BY US FOR THE ASSESSMENT YEAR 2009 - 10 WHEREIN WE HAVE DIRECTED THE AO TO MAKE ADDITION TO THE EXTENT OF 8% OF THE BOGUS PURCHASES. BY APPLYING THE SAME ANALOGY TO THIS APPEAL AS WELL, DIRECT THE AO TO FOLLOW THE DECISION AS HAS 6 ITA NO. 5362 AND 5363 /MUM/201 5 BEEN TAKEN BY US IN ABOVE AP PEAL FOR T HE ASSESSMENT Y E AR 2009 - 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPT , 2017. S D SD ( / MAHAVIR SINGH ) ( / RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 15TH SEPT .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI