RAMESH PRATAPJI PUROHIT, MUMBAI V. ITO , WD 1 (3), KALYAN

ITA 5397/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6283 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K JOTHILAKSHMI NAYAKLD
• Assessee Lawyers: SANJIV G BRAHMELD ARS
• Keywords: Bogus purchase; Tangible material; Reassessment proceedings
• Section: 143(3); 142(1); 143(1); 143(2); 148

Judgement Text

1 ITA NO.5397/MUM/2018 RAMESH PRATAPJI PUROHIT ASSESSMENT YEAR-2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5397/MUM/2018 ( / ASSESSMENT YEAR:2009-10) SHRI R AMESH PRATAPJI PUROHIT GALA NO.8, GROUND FLOOR KASTURI COMPLEX, ANJUR PHATA BHIWANDI-421 302. / VS. I TO - WARD 1(3), KALYAN 1ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA KALYAN (WEST). !'# ./ ./PAN/GIR NO. AJEPP-6522-F ( !' /APPELLANT ) : ( #$!' / RESPONDENT ) !'% / APPELLANT BY : S/SHRI JAYANT BHATT & SANJIV G. BRAHME-LD. ARS #$!'% / RESPONDENT BY : MS.K.JOTHILAKSHMI NAYAK- LD. SR. DR / DATE OF HEARING : 09/10/2019 / DATE OF PRONOUNCEMENT : 09/10/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEA R [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME-TAX (APPEALS)-2, PUNE, [IN SHORT REFERRED TO AS CIT(A) ], APPEAL 2 ITA NO.5397/MUM/2018 RAMESH PRATAPJI PUROHIT ASSESSMENT YEAR-2009-10 NO.(NEW):PN/CIT(A)-2/ITO WD-1(3)/KYN/169/2017-18 DATED 11/05/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, PUNE, HAD ERRED IN CONFIRMING THE REOPENING OF THE ASSESSMENT U/S 148 AND REJECTING T HE LEGAL POINT RAISED BY THE APPELLANT WITH REGARD TO ISSUANCE OF NOTICE U/S 148 AND REASONS FOR THE SAME. 2. WITHOUT PREJUDICE TO THE ABOVE THE COMMISSION ER OF INCOME TAX (APPEALS) - 2, PUNE, HAS IN CONFIRMING THE ORDER OF INCOME TAX OFFICER, WARD 1(3), KALYAN ON ACCOUNT OF ADDITION TOWARDS ALLEGED BOGUS PURCHASES OF RS 7,53 ,941/- FOR A.Y. 2009-10 DISREGARDING THE VARIOUS JUDGMENTS OF JURISDICTIONA L TRIBUNAL AND OTHER HIGH COURTS JUDGMENTS. (B) RELIEF CLAIMED 1. THE REOPENING U/S 148 BEING BAD IN LAW BE DEC LARED VOID AB INITIO. 2. WITHOUT PREJUDICE TO THE ABOVE THE ADDITION O F RS 7,53,941/- TOWARDS ALLEGED HAWALA PURCHASE IS DELETED. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF PACKI NG MATERIAL UNDER PROPRIETORSHIP CONCERN NAMELY M/S KHETESHWAR PACK P LAST, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 03/01/201 4 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.9.24 LACS, AFT ER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.7.53 LACS AS AGAINST RETURNED INCOME OF RS.1.70 LACS FILED BY THE ASSESSEE ON 24/09/2009 WH ICH WAS PROCESSED U/S.143(1). THE ASSESSEE REFLECTED GP / NP RATE OF 5.05% / 2.48% ON TURNOVER OF RS.79.47 LACS. 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESS EE OBTAINED BOGUS PURCHASES BILLS AMOUNTING TO RS.7.53 LACS FROM 3 SU SPICIOUS ENTITIES, THE 3 ITA NO.5397/MUM/2018 RAMESH PRATAPJI PUROHIT ASSESSMENT YEAR-2009-10 DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED AT PAR A 2.1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENE D AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 21/03/201 3 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. THE REAS ONS RECORDED FOR REOPENING WERE DULY SUPPLIED IN DUE COURSE OF PROCE EDINGS. 2.3 THE ASSESSEE DEFENDED THE PURCHASES BY FURNISHI NG DETAILS OF SUPPLIERS ALONG WITH TIN NOS. AND STATED THAT THE P AYMENTS WERE MADE THROUGH BANKING CHANNELS AGAINST PURCHASE INVOICES. IT WAS ALSO SUBMITTED THAT BOOKS WERE MAINTAINED IN COMPUTERIZED SYSTEM W HEREIN QUANTITATIVE DATA WAS BEING MAINTAINED. IN THE ALTERNATIVE, THE ASSESSEE, WITH A VIEW TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE OF MIN D, OFFERED TO PAY TAX ON THE STATED PURCHASES. ACCORDINGLY, THE STATED PURCH ASES WERE CONSIDERED AS NON-GENUINE AND ADDED TO THE INCOME OF THE ASSES SEE. 3.1 HOWEVER, SUBSEQUENTLY, THE ASSESSEE AGITATED TH E STATED ADDITIONS BEFORE LEARNED FIRST APPELLATE AUTHORITY BY SUBMITT ING THAT THE WHOLE AMOUNT COULD NOT BE ADDED BACK TO THE INCOME OF THE ASSESS EE RATHER THE ADDITIONS SHOULD BE RESTRICTED TO SOME REASONABLE ESTIMATIONS AS HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS. 3.2 THE LD. CIT(A), CONSIDERING THE FACTUAL MATRIX IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS UPHELD THE STAND OF LD. AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4.1 AFTER CAREFUL CONSIDERATION OF ORDERS OF LOWER AUTHORITIES AND AFTER APPRECIATING THE ARGUMENTS ADVANCED BY RESPECTIVE R EPRESENTATIVES, WE ARE 4 ITA NO.5397/MUM/2018 RAMESH PRATAPJI PUROHIT ASSESSMENT YEAR-2009-10 OF THE CONSIDERED OPINION THERE COULD BE NO SALE WI THOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF B USINESS I.E. TRADING. UNDISPUTEDLY THE ASSESSEE WAS IN POSSESSION OF PRIM ARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIERS WERE TH ROUGH BANKING CHANNELS. HOWEVER, AT THE SAME TIME, THE ASSESSEE M ISERABLY FAILED TO SUBSTANTIATE THE DELIVERY OF MATERIAL DURING ASSESS MENT AS WELL AS APPELLATE PROCEEDINGS. THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS AND THE ONUS CASTED UPON ASSESSEE, IN THIS REGARD, REMAINED UNDISCHARGED. 4.2 THE MATERIAL PLACED BEFORE US WOULD ESTABLISH T HAT ASSESSEES BOOKS OF ACCOUNTS WERE SUBJECTED TO TAX AUDIT U/S 44AB AN D NO ADVERSE COMMENTS HAVE BEEN MADE BY THE AUDITOR AS TO MAINTE NANCE OF BOOKS OF ACCOUNTS. THE STOCK SUMMARY HAS BEEN PLACED ON RECO RD. THE ASSESSEE HAS MADE PURCHASES OF RS.67.45 LACS OUT OF WHICH PU RCHASES OF RS.7.53 LACS ARE UNDER DISPUTE. THE GROSS PROFIT RATE REFLE CTED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS 5.05%. IF TH E DISPUTED PURCHASES ARE DISALLOWED IN ITS ENTIRETY AND ADDED BACK, THE GROS S PROFIT RATE WOULD JUMP TO APPROX. 14.5% IN SHARP CONTRAST TO GP RATE OF 5.13% IN AY 2007-08, 9.8% IN AY 2008-09, 5.68% IN AY 2010-11 & 9.10% IN AY 20 11-12. 4.3 THEREFORE, ON THE FACTS AND CIRCUMSTANCES, DISA LLOWANCE OF ENTIRE PURCHASES, IN OUR OPINION, WOULD NOT BE JUSTIFIED R ATHER THE ADDITIONS WHICH COULD BE SUSTAINED, WOULD BE 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 M ARKET AND UNDUE BENEFIT 5 ITA NO.5397/MUM/2018 RAMESH PRATAPJI PUROHIT ASSESSMENT YEAR-2009-10 OF VAT AGAINST SUCH BOGUS PURCHASES. KEEPING IN VIE W THE ASSESSEES FINANCIAL INDICES, WE ESTIMATE THE ADDITIONS @25% O F ALLEGED BOGUS PURCHASES OF RS.7,53,941/- WHICH WOULD TRANSLATE IN TO AN ADDITION OF RS.1,88,485/- IN THE HANDS OF THE ASSESSEE. THE BAL ANCE ADDITIONS WOULD STAND DELETED. THE GROUNDS, ON MERITS, STANDS PARTL Y ALLOWED. 4.4 THE LD. AR HAS ALSO CONTESTED THE VALIDITY OF R EASSESSMENT PROCEEDING. HOWEVER, WE DO NOT FIND ANY SUBSTANCE I N THE SAME SINCE THE ORIGINAL RETURN WAS PROCESSED U/S 143(1) AND THE RE OPENING WAS SOUGHT WITHIN A PERIOD OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. THE LEARNED AO WAS CLINCHED WITH TANGIBLE MATERIAL IN T HE SHAPE OF SPECIFIC INFORMATION FROM SALES TAX DEPARTMENT WHICH SUGGEST ED POSSIBLE ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE. NOTHING MORE WAS REQUIRED AT THIS STAGE TO REOPEN THE CASE. NOTHING ON RECORD WOULD SUGGEST ANY INFIRMITY IN THE REASSESSMENT PROCEEDINGS. THUS , LEGAL GROUNDS RAISED BY THE ASSESSEE STANDS DISMISSED. 5. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH OCTOBER, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 09/10/2019 SR.PS:-JAISY VARGHESE '( )( / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 6 ITA NO.5397/MUM/2018 RAMESH PRATAPJI PUROHIT ASSESSMENT YEAR-2009-10 2. #$!' / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + ,# - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.