SHRI RAJENDRA NARSINGHMAL SANGHVI HUF, MUMBAI V. INCOME TAX OFFICER 19(3)(1), MUMBIA

ITA 5406/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7981 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! ,'# '$ BEFORE VIKAS AWASTHY, JUDICIAL MEMBER & SHRI N.K.PRADHAN, ACCOUNTANT MEMBER . 5406/ / 2019 (. . 2011-12 ) ITA NO.5406/MUM/2019(A.Y.2011-12) SHRI RAJENDRA NARSINGHMAL SANGHVI HUF, ROOM NO.5, 144/46, PURSHOTTAM MULLJI BLDG., DR.M.G.MAHIMTURA MARG, MUMBAI 400 004. PAN: AAJHR9849D ...... ) / APPELLANT VS. INCOME TAX OFFICER -19(3)91), MATRU MANDIR, NANA CHOWK, MUMBAI 400 007 ..... !*/ RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. SMITA VERMA +* / DATE OF HEARING : 11/03/2021 ,-. +* / DATE OF PRONOUNCEMENT : 16/03/2021 '/ ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-7, MUMBAI ( IN SHORT THE CIT( A)) DATED 13/06/2019 FOR THE ASSESSMENT YEAR 2011-12. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E RECORDS ARE: THE ASSESSEE IS ENGAGED IN TRADING OF FERROUS AND NON-FERROUS METAL S. ON THE BASIS OF INFORMATION RECEIVED BY DGIT(INV), MUMBAI FROM SALES TAX DEPART MENT, GOVERNMENT OF MAHARASHTRA, ASSESSMENT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2009-10 WAS 2 . 5406/ / 2019 (. . 2011-12 ) ITA NO.5406/MUM/2019(A.Y.2011-12) REOPENED. AS PER THE INFORMATION RECEIVED THE ASS ESSEE HAD OBTAINED ACCOMMODATION ENTRIES TO THE TUNE OF RS.77,42,185/- FROM VARIOUS ( FOUR) DEALERS DECLARED AS HAWALA OPERATORS BY THE SALES TAX DEPAR TMENT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO SUBSTANTIATE GEN UINENESS OF PURCHASES MADE FROM SUSPICIOUS DEALERS. THE ASSESSING OFFICER CONSI DERING THE FACTS AND THE CONTENTIONS OF THE ASSESSEE ESTIMATED G.P @ 12.5% ON BOGUS PURC HASES AND MADE ADDITION OF RS.6,97,773/-. AGGRIEVED BY THE ASSESSMENT ORDER D ATED 10/11/2016, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) ASSAILING REOPENING OF ASSESSMENT AS WELL AS ADDITION ON MERITS. THE CIT(A) UPHELD THE FINDINGS OF ASSES SING OFFICER AND DISMISSED THE APPEAL OF ASSESSEE. 3. MS. SMITA VERMA REPRESENTING THE DEPARTMENT VEHE MENTLY SUPPORTING THE IMPUGNED ORDER SUBMITTED THAT THE ASSESSEE HAS FAIL ED TO DISCHARGE HIS ONUS IN PROVING GENUINENESS OF PURCHASES AND THE SUPPLIERS. NO DOCUMENTS WERE FURNISHED BY THE ASSESSEE TO PROVE TRAIL OF GOODS. NO CONFIR MATIONS WERE FILED BY THE ASSESSEE FROM THE SUPPLIERS, EVEN THE NOTICES ISSUED TO THE SUPPLIERS BY THE ASSESSING OFFICER UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT ON THE ADDRESSES PROVIDED BY THE ASSESSEE WERE RETURNED BACK UNSERVE D WITH POSTAL REMARKS NOT KNOWN. THE LD.DEPARTMENTAL REPRESENTATIVE CONTEND ED THAT THE ASSESSING OFFICER AND THE CIT(A) HAVE MADE REASONABLE ESTIMATION OF G .P AT 12.5% FOLLOWING THE ORDER OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH, 356 ITR 451. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY LD.DEPARTM ENTAL REPRESENTATIVE AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. UND ISPUTEDLY, THE ASSESSEE HASFAILED TO PROVE AUTHENTICITY OF THE TRANSACTIONS WITH DECL ARED HAWALA OPERATORS. NO DOCUMENTS WERE FURNISHED BY THE ASSESSEE TO SUBSTAN TIATE THAT THE GOODS WERE IN FACT DELIVERED TO THE ASSESSEE OR DELIVERED AT TH E ADDRESS ON THE INSTRUCTIONS OF THE ASSESSEE. NO CONFIRMATIONS WERE EITHER FILED BY TH E ASSESSEE FROM SUSPICIOUS DEALERS. IN SUCH BOGUS TRANSACTIONS WHERE THE SALE S ARE NOT DISPUTED, IT IS THE PROFIT 3 . 5406/ / 2019 (. . 2011-12 ) ITA NO.5406/MUM/2019(A.Y.2011-12) ELEMENT EMBEDDED IN THE PURCHASE TRANSACTION THAT H AS TO BE BROUGHT TO TAX. THE ASSESSING OFFICER AND CIT(A) HAS DETERMINED THE G.P @ 12.5% OF THE BOGUS PURCHASES. THE ESTIMATION OF G.P BY LOWER AUTHOR ITIES IS ON HIGHER SIDE. IN THE TRADE OF FERROUS AND NON-FERROUS METALS THE G.P GEN ERALLY VARIES BETWEEN 5 TO 8%. IN THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS DECL ARED G.P OF 6.11%. TAKING INTO CONSIDERATION ENTIRETY OF FACTS WE HOLD THAT THE EN DS OF JUSTICE WOULD BE MET IF THE G.P IS RESTRICTED TO 6.5% ON BOGUS PURCHASES. THE IMPUGNED ORDER IS MODIFIED ACCORDINGLY. THE GROUND NO.1 OF THE APPEAL IS PART LY ALLOWED IN THE TERMS AFORESAID. 5. IN GROUND NO. 2 TO 4 OF THE APPEAL, THE ASSESSEE HAS ASSAILED REOPENING OF ASSESSMENT. WE HAVE EXAMINED THE FINDINGS OF FIRST APPELLATE AUTHORITY ON THIS ISSUE. WE FIND NO REASON TO INTERFERE WITH THE WELL REASON ED FINDINGS OF THE FIRST APPELLATE AUTHORITY. THE GROUND NO.2 TO 4 OF THE APPEAL ARE DISMISSED. 6. IN GROUND NO.5 OF THE APPEAL, THE ASSESSEE HAS C HALLENGED CHARGING OF INTEREST UNDER SECTION 234A,234B AND 234C OF THE ACT . THE CHARGING OF INTEREST UNDER SECTION 234A,234B AND 234C OF THE ACT ARE CONSEQUEN TIAL AND MANDATORY, HENCE, THIS GROUND IS DISMISSED. 7. THE GROUND NO.6 OF THE APPEAL IS GENERAL IN NATU RE AND HENCE, REQUIRE NO ADJUDICATION. 8. IN THE RESULT, APPEAL BY ASSESSEE IS PARTLY ALLO WED IN THE TERMS AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, THE 16 TH DAY OF MARCH, 2021. SD/- SD/- (N.K.PRADHAN) (VIKAS AWAST HY) '# / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 0/ DATED 16/03/2021 VM , SR. PS (O/S) 4 . 5406/ / 2019 (. . 2011-12 ) ITA NO.5406/MUM/2019(A.Y.2011-12) !*12'.* COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. !* / THE RESPONDENT. 3. 3* ( )/ THE CIT(A)- 4. 3* CIT 5. 45!* , . . . , / DR, ITAT, MUMBAI 6. 56789 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI