ITO 20(1)(4), MUMBAI V. FARIDA H ARSIWALA ( PROP H.F. STEEL CO.), MUMBAI

ITA 5475/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6787 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR SINGH
• Assessee Lawyers: S S PHADKAR; KALPESH TURALKARAR
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 5475 /MUM/2016 ASSESSMENT YEAR: 2009 - 10 THE INCOME TAX OFFICER - 20(1) - 4 , ROOM NO. 112 , PIRAMAL CHAMBERS, 1 ST FLOOR, PAREL, M UMBAI - 4000012 VS. SMT. FARIDA H ARSIWALA (PROP. OF H.F. STEEL COMP.) HUSENA MANSION, FALT NO. A, 4 TH FLOOR, ST. MARYS ROAD, TADWADI MAZGAON, MUMBAI - 400010 PAN: AAD PA1255G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ARUN KUMAR SINGH (DR) ASSESSEE BY : SHRI S.S. PHADKAR & SHRI KALPESH TURALKAR(AR) DATE OF HEARING: 02/11 /201 8 DATE OF PRONOUNCEMENT: 19 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY TH E REVENUE AGAINST THE ORDER DATED 10/06/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 32 , MUMBAI , FOR THE A S S ESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL CARRYING ON THE BUSINESS OF TRADING IN IRON AND STEEL, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERA TION DECLARING THE TOTAL INCOME OF RS. 2 ITA NO. 547 5 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 5,62,517/ - . SUBSEQUENTLY, THE CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THROUGH DGIT (INV.), MUMBAI TO THE EFFECT THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FOR AN AMOUNT OF RS. 1,04,93,691/ - FROM TWO BOGUS ENTITIES I.E. MEHTA ENTERPRISES AND OM TRADERS WITHOUT ACTUALLY PURCHASING ANY GOODS . ACCORDINGLY, THE AO CALLED FOR THE DETAILS WHICH WERE SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE AO ISSUED NOTICE U/S 133 (6) OF THE ACT TO BOTH THE PARTIES , H O W EVER, NO RESPONSE WAS RECEIVED FROM THE SAID PARTIES. THE ASSESSEE WAS THEN ASKED SECURE T HE PRESENCE OF THE PARTIES FOR VERIFICATION, BUT THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTION OF THE AO. AC CORDINGLY, THE AO COMPLETED THE ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND MADE THE ENTIRE AMOUNT OF BOGUS PURCHASES TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE RESTRICTED THE ADDITION TO 8.7% OF THE TOTAL AMOUNT OF BOGUS PURCHASES. AGGRIEVED BY THE SAID ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3 . T HE REVENUE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) BY RAISING THE FOLLOWING EFFECTIVE GROUND S : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN GRANTING RELIEF OF RS. 95,80,986/ - BY RESTRICTING THE ADDITION TO 8.7% OF TOTAL BOGUS PURCHASES FROM HAWALA PARTIES. 2. ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT ONUS IS ONE THE ASSESSEE TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS AND TRUE NATURE OF THE PURCHASES TRANSACTION. 3. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT THE HAWALA DEALERS HAVE ADMITTED ON OATH BEFORE THE SALES TAX AUTHORITIES THAT THEY HAVE NOT SOLD ANY MATERIAL TO ANYBODY. 3 ITA NO. 547 5 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. PR. CIT (A) HAS ERRED IN FINDING THAT CORRESPONDING SALES SHOWN OUT OF MATERIAL INVOLVED IN BOGUS PURCHASES WITHOUT MENTIONING HOW THIS AND WITH WHAT EVIDENCE BEFORE HIM SUCH FINDING WAS ARRIVED AT. IF SUCH EVIDENCE WAS GIVEN (AS CORR ESPONDING SALES) THE SAME SHOULD HAVE BEEN REMANDED TO THE A.O. FOR HIS EXAMINATION AND COMMENTS. 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ASSESSMENT ORDER PASSED BY THE AO SUBMITTED BY THE LD. CIT (A) HAS WRONGLY RESTRICTED THE ADDITION TO 8.7% WITHOUT APPRECIATING THE FACT THAT THE ASSESSE E HAS FAILED TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS OF THE PURCHASES IN QUESTION. MOREOVER, THE ASSESSEE HAS FAILED TO PRODUCE THE PARTIES BEFORE THE AO FOR VERIFICATION DURING THE ASS ESSMENT PROCEEDINGS. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE F BENCH OF THE MUMBAI TRIBUNAL HAS DEALT WITH THE IDENTICAL ISSUE IN ASSESSE E S OWN CASE ITA NO. 5188/MUM/2016 FOR THE A.Y. 2009 - 10. IN THE SAID CASE, THE LD . CIT (A) HAD RESTRICTED THE ADDITION TO 8.7% OF THE TOTAL AMOUNT OF BOGUS PURCHASES AS AGAINST THE 100% ADDITION MADE BY THE AO AND THE ITAT UPHELD THE FINDINGS OF THE LD. CIT (A). SINCE, THE FINDINGS OF THE LD. CIT(A) IN THE PRESENT CASE ARE IN ACCORDAN CE WITH THE DECISION OF THE COORDINATE BENCH, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT THE LD. CIT (A) HAS RESTRICTED THE ADDITION TO 8.7% OF THE TOTAL AMOUNT OF BOGUS PURCHASES HOLDING AS UNDER: - 5.9 IN THE INSTANT CASE, THE APPELLANT IS NOT IN A POSITION TO PROVE THE EXISTENCE OF THE SUPPLIERS. THE AVERMENT OF THE APPELLANT BEFORE THE AO THAT NO OTHER RECORDS EXCEPT PURCHASE BILLS AND PAYMENT DETAILS ARE MAINTAINED COUPLED WITH THE RESULT OF THE ENQUIRIES MADE BY THE AO, IS ENOUGH CIRCUMSTANTIAL EVIDENCE 4 ITA NO. 547 5 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 CASTING A STRONG DOUBT ON THE NATURE OF THE TRANSACTION. I AM OF THE FIRM BELIEF THAT THE APPELLANT HAD MADE CASH PURCHASES FROM OTHER PARTIES WHICH WERE NOT RECORDED IN THE BOOKS. THE APPELLANT TOOK ONLY BILLS FROM THE PURPORTED SUPPLIERS AS ACCOMMODATION TO EXPLAIN THE PURCHASES. HOWEVER, THE ENTIRE PURCHASE FROM THE SUPPLIER CANNOT BE ADDED AS BOGUS AND WHAT NEEDS TO BE TAXED IS THE PROFIT ELEMENT E MBEDDED IN SUCH TRANSACTION. THE AO HAS DISALLOWED 100% OF THESE BOGUS PURCHASES. I AM INCLINED TO AGREE WITH THE STATEMENT OF THE APPELLANT DURING APPEAL THAT THE DISALLOWANCE SHOULD BE RESTRICTED TO THE GP RECORDED IN HIS BOOKS WHICH IS 8.7%. I AM OF THE OPINION THAT THE DISALLOWANCE MADE BY THE AO SHOULD BE REASONABLY RESTRICTED TO 8.7% OF THE BOGUS PURCHASES. I THEREFORE DIRECT THE AO TO ESTIMATE OF THE DISALLOWANCE BY ADOPTING 8.7% OF RS. 1,04,93,961/ - . THE DISALLOWANCE MADE BY THE AO IS RESTRICTED TO A SUM OF RS. 9,12,975/ - . 7. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, T HE COORDINATE BENCH OF THE TRIBUNAL HAS UPHELD THE DECISION OF THE LD. CIT (A) RESTRICTING THE ADDITION TO 8.7% IN THE ASSESSEEES CASE FOR THE A.Y. 2009 - 10 , AS AGAINST 100% ADDITION MADE BY THE AO . T HE COORDINATE BENCH HAS UPHELD THE FINDINGS OF THE LD. CIT (A) IN ASSESSEES CASE PERTAINING TO THE ASSESSMENT YEAR 2009 - 10 (SUPRA) HOLDING AS UNDER: - AFTER ANALYZING THE AFOREMENTIONED ORDER, WE FIND THAT NO NEW FACTS OR CONTRAR Y JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT (A). SINCE, THE LD. CIT (A) WHILE DECIDING THESE GROUNDS HAVE RELIED UPON THE ORDERS PASSED BY THE DIFFERENT HONBLE HIGH COURTS AND THE O RDERS PASSED BY HONBLE ITAT IN IDENTICAL CIRCUMSTANCES. THEREFORE, THERE ARE NO REASONS FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A ) ARE JUDICIOUS AND ARE WELL REASONED. RESULTANTLY, THESE GROUNDS RAISED BY THE ASSESSEE STANDS DISMISSED. 8. SINCE, THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS AND THE ISSUE INVOLVED IN THE ASSESSEES APPEAL FOR THE A.Y. 2009 - 10 5 ITA NO. 547 5 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 AND SINCE THE COORDINATE BENCH HAS UPHELD THE FINDINGS OF THE LD. CIT (A ) RESTRICTING THE ADDITION TO 8.7% IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2009 - 10, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) TO INTERFERE WITH . WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE SOLE GROUND OF THE REVENUE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A SSESSMENT YEAR 2009 - 20 10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER , 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 19 / 12 / 2018 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI