DCIT CIR 3, THANE V. RAMNIK SUSHIL CHAUDHARY, THANE

ITA 5384/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8911 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 143(3); 142(1); 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO . 53 84 /MUM/201 6 ( / ASSESSMENT YEA R : 20 11 - 12 ) DY. COMMISSIONER OF INCOME TAX CIRCLE - 3, ROOM NO.2, B WING, 6 TH FLOOR,, ASHAR IT PARK, WAGLE ESTATE, THANE(W) - 400604 / VS. SHRI RAMNIK SUSHIL CHAUDHARY, FLAT NO.101, BUILDING NO.7, TULSIVIHAR CHS LTD TULSI DHAM, THANE (W) 400607 ( / APPELLANT ) ( / RESPONDENT ) ./ I.T.A. NO .5596/MUM/2016 ( / ASSESSMENT YEA R : 2011 - 12 ) SHRI RAMNIK SUSHIL CHAUDHARY, FLAT NO.101, BUILDING NO.7, TULSIVIHAR CHS LTD TU LSI DHAM, THANE (W) 400607 / VS. DY. COMMISSIONER OF INCOME TAX CIRCLE - 3, ROOM NO.2, B WING, 6 TH FLOOR,, ASHAR IT PARK, WAGLE ESTATE, THANE(W) - 400604 ( / APPELLANT ) ( / RESPONDENT ) PAN: A CIPCO146K / REVENUE BY : SHRI V VIDHYADHAR / ASSESSEE BY : SHRI NONE / DATE OF HEARING : 13.9 .2017 / DATE OF PRONOUNCEMENT : 27. 1 0. 2017 2 I.T.A. NO. 5384 / MUM/ 201 6 AND 5596/M/2016 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED ARE CROSS - APPEALS B Y THE REVENUE AND THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2011 - 12. THESE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 2, THANE, DATED 30.6.2016 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 19.3.2015 UNDER SECTI ON 143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961. THESE APPEALS, FOR THE SAKE OF CONVENIENCE, WERE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEAL WAS CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD. THEREFORE, W E PROCEED TO DISPOSE OF THE APPEALS OF THE ASSESSEE EX - PARTE AFTER HEARING THE LD.DR. I.T.A. NO.53 84 /MUM/2016 3 . THE SOLE ISSUE RAISED BY THE REVENUE IN VARIOUS GROUNDS OF APPEAL IS THAT THE LD.CIT(A) HAS ERRED IN NOT CONFIRMING THE 100% DISALLOWANCE OF BOGUS PURCHASES A S MADE BY THE AO. 3 I.T.A. NO. 5384 / MUM/ 201 6 AND 5596/M/2016 4 . FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 19.9.2011 DECLARING TOTAL INCOME OF RS. 16,17,750/ - . LATER ON T HE AO RECEIVED THE INFORMATION FROM THE DGIT(INV), MUMBAI WHO IN TURN RECEIVED INFORMATION TO TH IS EFFECT FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS TAKEN BOGUS BILLS FOR PURCHASES OF GOODS FROM HAWALA DEALERS WITHOUT TAKING ACTUAL DELIVERY OF GOODS . A CCORDINGLY, THE AO HAS REASON ED THAT THE INCOME OF THE ASSESSE E HAS ESCAPED ASSESSMENT AND REOPENED THE ASSESSMENT U/S 147 READ WITH SECTION 148 VIDE NOTICE DATED 14.7.2013 . THEREAFTER, STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS AVAILED BOGUS PURCHASES BILLS FROM TWO PARTIES AS PER THE DETAILS MENTIONED IN PARA 5 OF THE ASSESSMENT ORDER I.E. M/S SIDDHIVINAYAK DTEEL RS.69,65,182/ - AND M/S SURAT TUBE CORPORATION RS.67,10,069/ - TOTALING TO RS.1,36,75, 257/ - . ACCORDINGLY, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF PURCHASES AND PROVE THE GENUINENESS OF THE PURCHASES WITH SUPPORTING BANK STATEMENT, PURCHASES BILLS, STOCK REGISTER, QUANTITATIVE DETAILS, DELIVERY CHA LLANS, LORRY AND OCTROI RECEIPTS, M ODE OF TRANSPORT ETC. FAILING WHICH THE SAME WOULD BE TREATED AS UNEXPLAINED EXPENDITURE, WHICH WAS REPLIED VIDE LETTER DATED 17.3.2015, BUT DID NOT FURNISH THE REQUISITE DETAILS AND INFORMATION AS SOUGHT FOR BY THE AO TO PROVE THE GENUINENESS OF THE PURC HASES . U LTIMATELY, THE AO TREATED THE SAID 4 I.T.A. NO. 5384 / MUM/ 201 6 AND 5596/M/2016 PURCHASES AS NON - GENUINE PURCHASES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BY FRAMING ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,52,9 3,010/ - . 5 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION OF RS. 55,01,723/ - BY OBSERVING AND HOLDING AS UNDER : AY 2011 - 12 BY B OOKING ALLEGED BOGUS PURCHASES, AS COMPARED TO THE A.Y. 10 - 11 THE APPELLANT HAS SUPPRESSED ITS PROFIT BY RS.55,01,723/ - (20,68,31,682 X 5.73/100 LESS GP DECLARED RS.63,55,840). IN COMPLIANCE, THE LD. AR COULD NOT OFFER ANY VALID REASONS FOR FALL IN THE GP RATE. CONSIDERING THE FACTS IN ENTIRETY AND RELYING ON DECISIONS IN THE CASE OF M/S. KANCHWALA GEMS PVT. LD. VIS JCIT 288 ITR 10 (SC), ETC, AS QUOTED ABOVE, IN MY CONSIDERED OPINION, THE ESTIMATION OF GP @5.73% WILL BE REASONABLE, THEREFORE, THE DISALLOWA NCE TO THE EXTENT OF RS 55,01,723/ - OUT OF HAWALA PURCHASES OF RS 1,36,75,254/ - , IS SUSTAINED AS REQUESTED BY THE LD.AR AND BALANCE AMOUNT OF RS 81,73,530/ - (RS.1,36,75,254/ - LESS RS.55.01.723/ - ). IS HEREBY DELETED. ACCORDINGLY. THIS GROUND OF APPEAL IS PA RTLY ALLOWED. 6 . THE LD. DR VEHEMENTLY SUBMITTED BEFORE THE BENCH THAT THE ASSESSEE UNDISPUTEDLY IS A BENEFICIARY OF HAWALA ENTRIES TO THE TUNE OF RS . 1,36,75,254/ - , FROM THE TWO PARTIES MENTIONED ABOVE AND FAILED TO PRODUCE EVIDENCE TO PROVE THE GENU INENESS OF THE PURCHASES. THEREFORE, THE AO HAS RIGHTLY DISALLOWED THE ENTIRE PURCHASES . THE LD. D R SUBMITTED THAT THE LD.CIT(A) HAS GROSSLY ERRED IN ALLOWING THE RELIEF TO THE EXTENT OF RS.81,73,530/ - TO THE ASSESSEE BY TAKING GP AT THE RATE OF 5.73% AND 5 I.T.A. NO. 5384 / MUM/ 201 6 AND 5596/M/2016 REDUCING THE GP RS.63,55,840/ - . THE ASSESSEE HAS SUPPRESSED THE INCOME BY AN AMOUNT OF RS . RS 1,36,75,254/ - , THEREFORE, THE ORDER PASSED BY THE LD.CIT(A) IS WRONG AND SHOULD BE REVERSED AND THAT OF AO BE RESTORED. 7 . AFTER HEARING THE LD. DR, AND CON SIDERING THE MATERIAL AVAILABLE BEFORE US WE FIND THAT THE ASSESSEE UNDOUBTEDLY AVAILED BILLS OF BOGUS PURCHASES FROM TWO HAWALA DEALERS TO THE TUNE OF RS 1,36,75,254/ - GENUINENESS OF THE SAME COULD NOT BE PROVED BEFORE THE AO AND ACCORDINGLY THE ENTIRE A DDITION WAS MADE IN THE ASSESSMENT ORDER BY FRAMING ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT . T HE LD.CIT(A) REDUCED THE ADDITION BY RS.81,73,530/ - AND SUSTAINED THE ADDITION TO THE TUNE OF RS.55,01,723/ - BY APPLYING THE GP OF 5 .73 % ON THE ENTIRE PURCH ASES AND DEDUCTED THERE FROM GP DECLARED BY THE ASSESSEE OF RS.63,55,840/ - . THE ASSESSEE ALSO CHALLENGED THE SUSTENANCE OF THIS ADDITION BY WAY OF SEPARATE APPEAL CHALLENGING THE APPLICATION OF GP OF 5.75% ON THE TOTAL DISALLOWANCE IN RESPECT OF BOGUS PURCHASE S . AFTER EXAMINING THE RECORD AND SUBMISSIONS OF THE LD.DR WE ARE OF THE VIEWS THAT THE LD.CIT(A) HAS TAKEN A VERY REASONED VIEW IN THE MATTER AND NOTHING HAS BEEN BROUGHT BEFORE TO CONTROVERT THE FINDING OF THE FAA . W E , THEREFORE , ARE INCLINED T O UPHOLD THE ORDER PASSED BY T HE LD.CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6 I.T.A. NO. 5384 / MUM/ 201 6 AND 5596/M/2016 I.T.A. NO.5596/MUM/2016 8. SINCE WE HAVE DECIDED THE MAIN ISSUE OF ADDITION OF BOGUS PURCHASES BY CONFIRMING THE ACTION OF THE LD. CIT(A) IN THE REVENUES A PPEAL, THE ISSUE RAISED BY THE ASSESSEE BECOMES INFRUTUOUS, THEREFORE DISMISSED. 9 . IN THE RESULT, BOTH THE APPEALS ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27TH OCT , 2017 SD SD ( SAKTIJIT DEY ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 27TH OCT 2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CI T CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI