MUKESH G. SHAH, MUMBAI V. ITO WD 15(2)(2), MUMBAI

ITA 5415/MUM/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2881 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 23-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: PRAKASH PANDIT LD
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

ITA.NO.5415/MUM/15 & 61/MUM/16 MUKESH G. SHAH ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRIMANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5415/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) MUKESH G. SHAH ROOM NO.23, 2 ND FLOOR PIPWALA BUILDING,78/80 KIKA STREET, CHARNI ROAD(E) MUMBAI-400 004 / VS. INCOME TAX OFFICER, WARD - 15 ( 2 )( 2 ) [NOW 19(2)(3)] MATRU MANDIR MUMBAI ./ ./PAN/GIR NO. AAYPS-3971-N ( ! /APPELLANT ) : ( '#! / RESPONDENT ) & ./I.T.A. NO.61/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER, WARD - 19(2)(3) ROOM NO.221 MATRU MANDIR MUMBAI / VS. MUKESH G. SHAH ROOM NO.23, 2 ND FLOOR PIPWALA BUILDING,78/80 KIKA STREET, CHARNI ROAD(E) MUMBAI-400 004 ./ ./PAN/GIR NO. AAYPS-3971-N ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ASSESSEE BY : PRAKASH PANDIT, LD. AR REVENUE BY : D.G.PANSARI, LD. DR / DATE OF HEARING : 17/10/2018 / DATE OF PRONOUNCEMENT : 02/11/2018 ITA.NO.5415/MUM/15 & 61/MUM/16 MUKESH G. SHAH ASSESSMENT YEAR 2010-11 2 / O R D E R PER BENCH 1. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR [AY] 2010-11 WHICH CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-30 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-30/ITO19(2)(2)/436/2014-15 DATED 19/10/2015 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND COMMISSION PAID BY THE ASSESSEE DURING IMPUGNED AY. THE ADDITION OF RS.3.36 LACS AS MADE B Y LD. AO IN QUANTUM ASSESSMENT ORDER HAS NOT BEEN PRESSED BY TH E ASSESSEE DURING HEARING BEFORE US AND THEREFORE, THE GROUNDS RAISED IN THAT RESPECT STAND DISMISSED IN LIMINE. 2.1 THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER-15(2)(2), MUMBAI [AO] U/S 143(3) ON 28/03/2013 WHEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.121.71 AS AGAINST RETURNED INCOME OF RS.8.77 LACS FILED BY THE ASSESSEE ON 15/ 10/2010. 2.2 DURING IMPUGNED AY, THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ENGAGED IN THE BUSINESS OF FERROUS AND NON-FERROUS METAL. THE ASSESSEE REFLECTED NET PROFIT OF RS.10.20 LACS AGAINST TURNOVER OF RS.14.26 CROR ES. THE AGGREGATE PURCHASES WERE REFLECTED AS RS.14.18 CRORES. TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICES U/S 133(6) WERE ISSUED TO VARIOUS SUPPLIERS. HOWEVER, NOTICES WITH RESPECT TO 4 SUCH SUPPLIERS WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE RE MARKS NOT KNOWN. THE QUANTUM OF PURCHASES MADE FROM THESE PARTIES AMOUNT ED TO RS.88.58 LACS. ALL THESE PARTIES WERE LISTED AS HAWALA DEALERS BY SALES TAX AUTHORITIES. THE ASSESSEE DEFENDED THE SAME WITH DOCUMENTARY ITA.NO.5415/MUM/15 & 61/MUM/16 MUKESH G. SHAH ASSESSMENT YEAR 2010-11 3 EVIDENCES VIZ PURCHASE BILLS, DELIVERY CHALLANS AND EXTRACT OF B ANK ACCOUNTS REFLECTING PAYMENT MADE TO THESE PARTIES. HOWEVER, THE ASSESSEE COULD NOT SUBSTANTIATE THE DELIVERY OF THE MATERIAL AS WELL AS PAYMENT OF TRANSPORTATION CHARGES ETC. FURTHER, THE ASSESSEE EXPRESSED INABILITY TO PRODUCE ANY OF THE SUPPLIERS TO CONFIR M THE TRANSACTIONS WHICH LED THE LD. AO TO DOUBT THE GENUINENESS OF THESE PU RCHASES. FINALLY, THESE PURCHASES AGGREGATING TO RS.88.58 LACS WERE D ISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 2.3 THE ASSESSEE WAS SADDLED WITH ANOTHER ADDITION OF RS.20.99 LACS ON ACCOUNT OF COMMISSION PAYMENT SINCE THE ASSESSEE FAILED TO SUBSTANTIATE THE SAME. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 19/10/2 015 WHEREIN LD. CIT(A), RELYING UPON VARIOUS JUDICIAL PRONOUNCEMENT S, ESTIMATED THE ADDITIONS @17.5% AGAINST ALLEGED BOGUS PURCHASES . THE ADDITION AGAINST COMMISSION PAYMENT WAS CONFIRMED SINCE THE ASSESSEE FAILED TO PROVIDE THE COMPLETE DETAILS THEREOF. AGGRIEVED, TH E ASSESSEE AS WELL AS THE REVENUE IS IN FURTHER APPEAL BEFORE US. THE ASS ESSEE IS AGGRIEVED BY CONFIRMATION OF ADDITIONS WHEREAS THE REVENUE IS AG GRIEVED BY RELIEF PROVIDED BY LD. CIT(A) TO THE ASSESSEE. 4. RIVAL SUBMISSIONS HAVE BEEN HEARD AND PERUSED. U PON CAREFUL CONSIDERATION, WE FIND THAT THE ASSESSEE WAS IN POS SESSION OF PRIMARY PURCHASES DOCUMENTS. THE TURNOVER ACHIEVED BY THE A SSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. AT THE SAME TIME, THE ASSESSEE COULD NOT SUBSTANTIATE THE DELIVERY OF MATERIAL AND FAILED TO PRODUCE ANY OF T HE PARTY FOR ITA.NO.5415/MUM/15 & 61/MUM/16 MUKESH G. SHAH ASSESSMENT YEAR 2010-11 4 CONFIRMATION OF ACCOUNTS. THE ASSESSEE FAILED TO PR OVIDE THE DETAILS OF TRANSPORTATION CHARGES DESPITE BEING DEALING IN HEA VY ITEMS LIKE METAL. ALL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEE S CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE , WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTI ONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH B OGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER, KEEPING IN VIEW THE OVERALL FACTUAL MATRIX, THE ESTIMATION OF 17.5%, IN OUR OPI NION, IS ON THE HIGHER SIDE AND THEREFORE, WE RESTRICT THE SAME TO 5% OF ALLEGED BOGUS PURCHASES WHICH COMES TO RS.4,42,912/-. THE IMPUGNED ORDER S TAND MODIFIED TO THAT EXTENT. THE ASSESSEES GROUNDS STA NDS PARTLY ALLOWED WHEREAS REVENUES APPEAL STANDS DISMISSED. 5. SO FAR AS THE DISALLOWANCE OF COMMISSION PAYMENT IS CONCERNED, WE FIND THAT THE ASSESSEE COULD NOT FILE COMPLETE D ETAILS THEREOF INCLUDING DETAILS OF TDS BEFORE LOWER AUTHORITIES AND ALSO CO ULD NOT DEMONSTRATE THE RECEIPT OF SERVICES AGAINST THESE PAYMENTS. HOW EVER, AS PER LD. ARS SUBMISSIONS, WE DEEM IT FIT TO RESTORE THE MAT TER BACK TO THE FILE OF LD. AO FOR RE-ADJUDICATION WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE THE PAYMENT AS WELL AS JUSTIFY THEIR A LLOWABILITY U/S 37(1). AT THE SAME TIME, THE ADDITION OF COMMISSION PAID BY T HE ASSESSEE AGAINST ALLEGED BOGUS PURCHASES MADE FROM 4 SUPPLIERS STANDS CONFIRMED. THIS GROUND STAND PARTLY ALLOWED FOR STATISTICAL PURPOSE S. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED WHEREAS THE ASSESSEES APPEAL STAND PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOVEMBER, 2018. ITA.NO.5415/MUM/15 & 61/MUM/16 MUKESH G. SHAH ASSESSMENT YEAR 2010-11 5 SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02/11/2018 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. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.