MEHTA TRADING CORPORATION, MUMBAI V. ACIT - 24 (2), MUMBAI

ITA 5438/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5934 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKTAR H ANSARI
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Bogus purchase; Revised return; Reason to believe; Set aside
• Section: 143(3); 142(1); 133(6); 250; 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 5438/MUM/2018 ( ASSESSMENT YEARS: 2010-11 ) MEHTA TRADING CORPORATION R 141F, GRD P 139/7, VINDAWAN CHAWL, LAKADI BUNDER ROAD, DARUKHANA, MAZGAION - 400010 / VS. ACIT 24(2) MUMBAI ./ ./ PAN/GIR NO. : AAAFM2829F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MAHESH O. RAJORA, CA / RESPONDENT BY : SHRI AKTAR H. ANSARI, SR. DR / DATE OF HEARING 17/09/2020 !'# / DATE OF PRONOUNCEMENT 29/09/2020 / O R D E R PER PAVAN KUMAR GADALE - JM: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF CIT(A)-36, MUMBAI PASSED U/S 143(3) R.W.S 147 AND 250 OF THE ACT FOR THE A.Y 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : ITA NO . 5438/MUM/2018 M/S. MEHTA TRADING CORPORATION, MUMBAI. - 2 - 1. CIT(A) -36, MUMBAI ERRED IN CONFIRMING THE ADDITION OF RS. 2,39,090/- BEING 12.5% OF ALLEGED BOGUS PURCHAS ES OF RS. 19,12,716/- MADE BY THE APPELLANT. THE APPELLANT SUBMITS THAT (I) IT HAS ACTUALLY BOUG HT THE MATERIALS (II) MADE THE PAYMENT TOWARDS MATERIA LS BOUGHT THROUGH BANKING CHANNEL (III) MATERIAL BOUGH T HAS BEEN SOLD AND ACCOUNTED IN THE BOOKS OF THE APPELLANT WHICH HAS BEEN ACCEPTED BY THE A.O. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT THE ADDITION MADE BY THE A.O AND CONFIRMED BY THE CIT(A) SHALL BE DELETED. 2. IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO THE ABO VE, THE CIT(A) ERRED IN CONFIRMING THE ADDITION RS. 2,39,090/- BEING 12.5% OF ALLEGED BOGUS PURCHASES MADE BY THE APPELLANT WITHOUT APPRECIATING THE FACT S THAT THE APPELLANT ITSELF HAS DECLARED GROSS PROFIT @ 7.58% ON THE ALLEGED BOGUS PURCHASES. THE APPELLANT PRAYS THAT THE CREDIT OF GROSS PROFIT @ 7.58% DECLARED BY IT SHALL BE GIVEN AGAINST THE ADD ITION @ 12.5% ALLEGED BOGUS PURCHASES MADE BY THE AO AND CONFIRMED BY THE CIT(A). 2.THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRADING IN ITA NO . 5438/MUM/2018 M/S. MEHTA TRADING CORPORATION, MUMBAI. - 3 - FERROUS AND NON-FERROUS METALS AND SCRAP. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 14.09.20 10 WITH A TOTAL INCOME OF RS.1,39,42,130/-.SUBSEQUENTL Y FILED REVISED RETURN OF INCOME ON 30.09.2010 WITH TOTAL INCOME OF RS. 1,41,12,100/- AND THE ASSESSMEN T WAS COMPLETED ACCEPTING THE REVISED RETURN OF INCOM E. WHEREAS, THE A.O HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT BECAUSE, THE ASSESSEE HAS OBTAINED THE BOGUS PURCHASES BILLS FROM THE PARTIES AS PER THE INFORMATION IN THE WEBSITE OF SA LES TAX DEPARTMENT GOVT OF MAHARASHTRA. THE DGIT(INV) WING, MUMBAI HAD FORWARDED THE LIST OF BENEFICIARIE S INFORMATION WHO OBTAINED THE BOGUS PURCHASES BILLS. HENCE, THE A.O HAS ISSUED NOTICE U/S 148 OF THE ACT . THE LD. AR OF THE ASSESSEE FILED A LETTER DATED 16.03.2015 TO TREAT THE REVISED RETURN OF INCOME AS COMPLIANCE. SUBSEQUENTLY, NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. THE A.O FOUND THAT T HE ASSESSEE HAS OBTAINED THE BOGUS PURCHASE BILLS FROM SHRI DURGA STEELS OF RS. 19,12,716/-.THE LD. AR APPEARED FROM TIME TO TIME AND FILED THE DETAILS OF BANK STATEMENTS, LEDGER COPY OF PARTY AND OTHER INFORMATION. THE A.O WAS NOT SATISFIED WITH THE DET AILS ITA NO . 5438/MUM/2018 M/S. MEHTA TRADING CORPORATION, MUMBAI. - 4 - FILED AND TO VERIFY GENUINENESS OF PURCHASES ISSUED NOTICE U/S 133(6) OF THE ACT. BUT THE NOTICE ISSUED WAS RETURNED UN-SERVED BY THE POSTAL AUTHORITIES AND AL SO THE ASSESSEE HAS FAILED TO PRODUCE THE PARTIES. HEN CE, THE A.O HAS ESTIMATED THE INCOME ON BOGUS PURCHASES OF RS. 2,39,090/- AND DETERMINED TOTAL INCOME OF RS. 1,43,51,190/- AND PASSED ORDER U/S 143(3) R.W.S 147 DATED 15.03.2011. AGGRIEVED BY TH E ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A). WHEREAS, THE CIT(A) DEALT ON THE GROUNDS OF APPEAL, ASSESSEE SUBMISSIONS AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 3.AT THE TIME OF HEARING, THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE A.O ESTIMATING THE INCOME @12.50% OF THE BOGUS PURCHASES, IRRESPECTIVE OF THE FACT THAT THE ASSESS EE HAS ACTUALLY BROUGHT THE MATERIAL AND THE PAYMENTS HAVE BEEN MADE THROUGH THE BANKING CHANNEL. THE GROSS PROFIT RATIO (GP) DECLARED BY THE ASSESSEE IS 7.58% AND THE SAME RATIO SHOULD BE APPLIED TO THE BOGUS PURCHASES. FURTHER, IN THE ASSESSEES OWN CA SE ITA NO . 5438/MUM/2018 M/S. MEHTA TRADING CORPORATION, MUMBAI. - 5 - FOR THE A.Y 2011-12, THE HONBLE ITAT HAS CONSIDERE D THE COORDINATE BENCH DECISIONS AND HONBLE BOMBAY HIGH COURT DECISION OF PR.CIT VS. MD. HAJI ADAM & C O. IN ITANO.1004 OF 2016 AND THE REMANDED THE MATTER TO THE FILE OF ASSESSING OFFICER. FURTHER THE LDAR PRAYED FOR ALLOWING THE ASSESSEE APPEAL. CONTRA, TH E LD. DR SUPPORTED THE CIT(A) ORDER. 4.WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. AR SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE A. O IRRESPECTIVE OF THE FACT AND SUBMISSIONS THAT, THE ASSESSEE HAS MAINTAINED GP RATIO OF 7.58% IN THE FINANCIAL YEAR AND THE SAME HAS TO BE APPLIED FOR T HE BOGUS PURCHASES. THE LD. AR EMPHASIZED THAT FOR THE ASSESSMENT YEAR 2011-12, THE HONBLE ITAT HAS RELIE D ON THE DECISION OF PR.CIT VS. MD. HAJI ADAM & CO(SUPRA) AND RESTORED THE MATTER TO THE FILE OF T HE ASSESSING OFFICER WITH DIRECTIONS. WE FALLOW THE JUDICIAL PRECEDENCE AND JURISDICTIONAL BOMBAY HIGH COURT DECISION OF PR.CIT VS. MD. HAJI ADAM & CO. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) A ND RESTORE THE DISPUTED TO THE FILE OF THE A.O TO VERI FY AND ITA NO . 5438/MUM/2018 M/S. MEHTA TRADING CORPORATION, MUMBAI. - 6 - EXAMINE THE FACTS AND APPLY THE RATIO OF THE DECISI ONS. FURTHER A.O. SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.09.2020 SD/- SD/- (SHAMIM YAHYA) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 29/09/2020 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) !' #, / ITAT, MUMBAI ITA NO . 5438/MUM/2018 M/S. MEHTA TRADING CORPORATION, MUMBAI. - 7 - DATE INITIAL 1. DRAFT DICTATED ON 17.09.2020 PS 2. DRAFT PLACED BEFORE AUTHOR 28.09.2020 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER PS 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. PS 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 11. DICTATION PAD IS ENCLOSED 2. OTHER MEMBER ON WHICH THE