ITO - WD- 3(5), KALYAN V. JAISUKHRAI RAMNIKLAL SHETH, THANE

ITA 5424/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7396 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 69C; 133(6); 143(1); 201; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO .5424, 5425 & 5426 / MUM . /2018 ( A . Y : 2009 10, 2010 11 & 2012 12 ) INCOME TAX OFFICER WARD 3(5), KALYAN . APPELLANT V/S JAISUKHRAI RAMNIKLAL SHETH UDAYWADI NO.1, 2 ND FLOOR PANDURANG WADI, MANPADA ROAD DOMBIVALI (E), THANE 421 201 PAN AAIPS9012L . RESPONDENT REVENUE BY : S MT. JOTHI LAKSHMI NAYAK ASSESSEE BY : NONE DATE OF HEARING 10.10.2019 DATE OF ORDER 25.10.2019 O R D E R PER SAKTIJIT DEY, J.M. CAPTIONED APPEALS BY THE REVENUE ARE AGAINST THE COMMON ORDER DATED 4 TH JULY 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3, NASHIK (CAMP OFFICE THANE), PERTAINING TO THE ASSESSMENT YEAR S 2009 10, 2010 11 AND 2011 12. 2 JAISUKHRAI RAMNIKLAL SHETH 2. THE ONLY COMMON ISSUE IN DISPUTE IN THESE APPEALS IS IN RELATION TO PARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDI TION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 3. BRIEF FACTS, WHICH ARE MORE OR LESS COMMON IN ALL THESE APPEALS, EXCEPT , THE QUANTUM OF NON GENUINE PURCHASES A ND ADDITION MADE IN THIS REGARD ARE AS UNDER: 4. THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE B USINESS OF TRADING IN IRON AND STEEL. FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSEE FILED HIS RETURN OF INCOME IN REGULAR COURSE AND THE RETURN S OF INCOME FILED BY THE ASSESSEE WERE INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX AC T, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.), PUNE, AS WELL AS SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THE ASSESSING OFFICER HAVING FOUND THAT THE ASSESSEE IS A BENEFICI ARY OF ACCOMMODATION BILLS ISSUED BY CERTAIN PARTIES IDENTIFIED HAS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT , RE OPENED THE ASSESSMENT S UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO ESTABLISH THE G ENUINENESS OF THE PURCHASES THROUGH SUPPORTING EVIDENCE. FURTHER, TO ASCERTAIN THE GENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER CONDUCTED INDEPENDENT ENQUIRY BY ISSUING NOTICES 3 JAISUKHRAI RAMNIKLAL SHETH UNDER SECTION 133(6) OF THE ACT. AS ALLEGED BY THE ASSESSING OFFICER, N EITHER THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES CONCLUSIVELY NOR THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT COULD E LICIT ANY INFORMATION AS THEY RETURNED BACK UN SERVED BY THE POSTAL AUTHORITY. THUS, ULTIMATELY, THE ASSESSING O FFICER REJECTED THE BOOKS OF ACCOUNT UNDER SECTI ON 145(3) OF THE ACT AND TREATING THE PURCHASES MADE TO BE NON GENUINE HELD THEM AS UN EXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE IN RESPECTIVE ASSESSMENT YEARS. THE ADDITIONS MADE IN DIFFERENT ASSESSMENT YEARS ARE AS UNDER: A.Y. 2009 10 ` 15,90,401 A.Y. 2010 11 ` 1,64,970 A.Y. 2011 12 ` 96,751 5. CHALLENGING THE AFORESAID ADDITIONS, THE ASSESSEE PREFERRED APPEALS BEFORE THE FIRST APPELLATE AUTHORITY. 6. A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD AS WELL AS CASE LAWS CITED BEFORE HIM, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES IN EACH ASSESSMENT YEAR. 7. WH EN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. EVEN , THE ASSESSEE HAS 4 JAISUKHRAI RAMNIKLAL SHETH NOT FILED ANY APPLICATION SEEKING ADJOURNMENT. IN VIEW OF THE AFORESAID, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE ASSESSEE WAS UNABLE TO PROVE EITHER THE DEL IVERY OF GOODS AT ITS PREMISES OR DAY TO DA Y MOVEMENT OF STOCK IN THE ABSENCE OF ANY STOCK REGISTER MAINTAINED BY HIM. FURTHER, SHE SUBMITTED , THE NOTICE S ISSUED UNDER SECTION 133(6) OF THE ACT W ERE RETURNED BACK UN SERVED WHICH PREVENTED THE ASSESSING OFFICER FROM ASCERTAINING THE GENUINENESS OF PURCHASES. SHE SUBMITTED , LEARNED COMMISSIONER (APPEALS) HAS ALSO AGREED WITH THE ASSESSING OFFICER THAT THE PURCHASES ARE NOT GENUINE. THAT BEING THE CASE, LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUT E TO THE FACT THAT THE ASSESSEE WAS UNABLE TO PROVE WITH CONCLUSIVE EVIDENCE, THE SOURCE OF THE DISPUTED PURCHASES MADE FROM CERTAIN PARTIES. HOWEVER, IT IS EVIDENT FROM THE ORDER OF LEARNED COMMISSIONER (APPEALS) , DURING THE APPEAL PROCEEDINGS THE ASSESSE E 5 JAISUKHRAI RAMNIKLAL SHETH HAD FURNISHED QUANTITATIVE DETAILS OF PURCHASES AND SALES WITH SAMPLE COPIES OF BILLS TO ESTABLISH THE NEXUS BETWEEN THE PURCHASES AND CORRESPONDING SALES. THE AFORESAID FACTS ESTABLISH THAT THE ASSESSEE CERTAINLY HAD PURCHASED THE GOODS , THOUGH , MAY NOT BE FROM THE DECLARED SOURCE. THIS LEAD S TO THE LOGICAL CONCLUSION THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM SOME OTHER SOURCES TO AVOID PAYMENT OF SALES TAX / VAT , THEREBY , GENERATING EXTRA PROFIT NOT DISCLOSED TO THE DEPARTMENT AND TO REGULAR IZE SUCH PURCHASES HAS OBTAINED THE ACCOMMODATION BILLS. THUS, IN SUCH CIRCUMSTANCES, THE ENTIRE PURCHASE CANNOT BE TREATED AS INCOME OF THE ASSESSEE , BUT , THE PROFIT ELEMENT EMBEDDED THEREIN CAN BE CONSIDERED FOR ADDITION. CONSIDERING THE OVERALL FACTS AN D CIRCUMSTANCES OF THE PRESENT CASE AND THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE, IN OUR VIEW, THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES IS GOOD ENOUGH TO TAKE CARE OF LEAKAGE OF REVENUE ON ACCOUNT OF SUPPRESSION OF PROFIT. FURTHER, THE AFORESAID DECISION OF LEARNED COMMISSIONER (APPEALS) IS ALSO IN CONSONANCE WITH THE VIEW EXPRESSED BY THE HIGHER JUDICIAL AUTHORITIES INCLUDING THE TRIBUNAL IN SIMILAR NATURE OF CASES. INSOFAR AS THE DECISION OF THE HON'BLE SUPREME COURT IN N.K. PROTEINS V/S DCIT, IN SPECIAL LEAVE TO APPEAL C.C. NO. 769/2017, WE FULLY AGREE WITH THE LEARNED COMMISSIONER (APPEALS) THAT THE FACTUAL CONTEXT IN WHICH THE 6 JAISUKHRAI RAMNIKLAL SHETH SAID DECISION WAS RENDERED IS COMPLETE LY DIFFERE NT FROM THE FACTS OF THE PRESENT CASE, HENCE, IS NOT APPLICABLE. ACCORDINGLY, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE BY DISMISSING THE GROUND RAISED. 10. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 25.10.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.10.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI