SHRI RAMESH MANSHANKAR JOSHI, MUMBAI V. INCOME TAX OFFICER WARD 30(3)(1), MUMBAI

ITA 5368/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9802 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: RAMESH M JOSHI INPERSON
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.5368/MUM/2017 RAMESH MANSHANKAR JOSHI ASSESSMENT YEAR: 2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5368/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) RAMESH MANSHANKAR JOSHI 202,VASUPUJYA DARSHAN MAMLATDAR WADI ROAD NO.3,MALAD(WEST) MUMBAI-400 064 / VS. INCOME TAX OFFICER WARD - 30 ( 3 )( 1 ) PRATYAKSHKAR BHAVAN BANDRA-KURLA COMPLEX BANDRA(E) MUMBAI-400 051 ./ ./ PAN/GIR NO. ABAPJ-2445-B ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) REVENUE BY : N.HEMALATHA, LD. DR ASSESSEE BY : RAMESH M JOSHI, ASSESSEEIN-PERSON / DATE OF HEARING : 21/03/2018 / DATE OF PRONOUNCEMENT : 23/03/2018 /ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-41 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-41/IT-30/15-16 DATED 01/06/2017 QUA 2 ITA NO.5368/MUM/2017 RAMESH MANSHANKAR JOSHI ASSESSMENT YEAR: 2009-10 CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER WARD 30(3)(1), MUMBAI [AO] U/S 143(3) READ WITH SEC TION 147 OF THE INCOME TAX ACT,1961 ON 27/02/2015 WHEREIN THE INCOME OF THE ASSESSEE HA S BEEN DETERMINED AT RS.10.55 LACS AFTER CERTAIN ADDITIONS AS AGAINST RETURNED INCOME OF RS.1.99 LACS E-FILED BY THE ASSESSEE ON 16/09/2009. THE SUBJECT MATTER OF THIS APPEAL IS ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND ADHOC EXPENDITURE DISALLOWANCE. THE ORIGINAL RETURN FILE D BY THE ASSESSEE WAS PROCESSED U/S 143(1). 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN TRADING OF STEEL SHOTS AND GIRTH AND SCRAPS UNDER PROPRIETORSHIP CONCERN NAMELY GAYATRI STEEL CORPORATION WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR IMPUGNED AY.THE REASSE SSMENT PROCEEDINGS WERE INITIATED PURSUANT TO RECEIPT OF C ERTAIN INFORMATION FROM SALES TAX DEPARTMENT AND DGIT (INVESTIGATION) REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS WITHOUT DOING ANY ACTUAL BUSINESS AN D IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.55,26,126/- FROM SIX SUCH PARTIES. CONSEQUENT LY, STATUTORY NOTICE U/S 148 DATED 21/02/2014 WAS ISSUED TO THE ASSESSEE WHI CH WAS FOLLOWED BY NOTICES U/S 143(2) AND 142(1). 2.2 THE ASSESSEE IN SUPPORT OF THE TRANSACTIONS, SU BMITTED PURCHASE DETAILS AS PER HIS OWN BOOKS OF ACCOUNTS. HOWEVER, NOTICES U/S 133(6) ISSUED BY LD. AO TO CONFIRM THE TRANSACTIONS REMAIN ED UN-SERVED AND 3 ITA NO.5368/MUM/2017 RAMESH MANSHANKAR JOSHI ASSESSMENT YEAR: 2009-10 RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE RE MARKS UNCLAIMED / NOT KNOWN. FINALLY, NOT CONVINCED, LD. AO, RELYING UPON CERTAIN JUDICIAL PRONOUNCEMENTS, ESTIMATED THE ADDITIONS @15% OF ALLEGED BOGUS PURCHASES , WHICH CAME TO RS.8.28 LACS. THE LD. AO MADE ANOTH ER ADHOC DISALLOWANCE @10% AGAINST CERTAIN EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT WHICH CAME TO RS. 27,412/-. AGGRIEVED, THE STAND OF LD. AO, UPON CONFIRMATION BY LD. CIT (A), IS BEING CONTESTED BEF ORE US. THE ASSESSEE-IN- PERSON PLEADED FOR REASONABLE ESTIMATION WHEREAS LD . DR POINTED OUT THAT THE IMPUGNED ADDITIONS WERE QUITE REASONABLE. 3. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF ACTUAL MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITY. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. THE ASSESSEE WAS IN P OSSESSION OF PRIMARY PURCHASE DOCUMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY PARTY FOR CONFIRMATION OF THE ACCOUNT AND NOTIC ES SENT U/S 133(6) ELICITED NO RESPONSE. ALL THESE FACTORS CAST SERIOU S DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION , WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LOWER AUTHORITIES HAVE RIGHTLY DON E SO. HOWEVER, KEEPING IN VIEW THE FACTUAL MATRIX, WE FIND THE ESTIMATED R ATE OF 15% TO BE ON THE 4 ITA NO.5368/MUM/2017 RAMESH MANSHANKAR JOSHI ASSESSMENT YEAR: 2009-10 HIGHER SIDE AND THEREFORE WE REDUCE THE SAME TO 10% , WHICH COMES TO RS.5,52,613/-. THE ORDER OF LOWER AUTHORITIES STAND MODIFIED TO THAT EXTENT. THE ADHOC EXPENDITURE DISALLOWANCE IS QUITE REASONABLE AND T HEREFORE, THE SAME DO NOT REQUIRE ANY INTERFERENCE ON OUR PART. 4. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH , 2018. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23. 03.2018 SR.PS:- THIRUMALESH ! / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI