ITO 26 (2)(5), MUMBAI V. RADHESHYAM R. CHOWHAN, MUMBAI

ITA 5475/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4767 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMANTHA MULLAMUDI
• Assessee Lawyers: IN PERSON
• Keywords: Bogus purchase
• Section: 142(1); 143(2); 147; 148; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 5475/MUM/2018 (ASSESSMENT YEAR : 2010-11) ITO- 26(2)(5), ROOM NO. 506, 5 TH FLOOR, C-11, PRATYAKASH KAR BHAVAN, BADRA, KURLA COMPLEX, MUMBAI- 400051 VS SHRI RADHESHYAM R CHOWHAN SHOP NO.25, BURNAD MARKET LINK ROAD, SAKINAKA, MUMBAI-72 PAN : AEBPC8577M APPELLANT RESPONDEDNT APPELLANT BY MS. SAMANTHA MULLAMUDI (SR DR) RESPONDENT BY IN PERSON DATE OF HEARING 15-10-2019 DATE OF PRONOUNCEMENT 23-10-2019 O R D E R PER PAWAN SINGH, JM : THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRE CTED AGAINST THE ORDER OF THE CIT(A)-38, MUMBAI DATED 22-05-2018 FOR THE ASSE SSMENT YEAR 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1) ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION MADE BY THE AO TO THE EXTE NT OF 12.5% OF THE ALLEGED BOGUS PURCHASES TO RS.78,150/- AS AGAINST THE ADDITION 10 0% OF RS.6,25,209/-MADE BY THE AO.' 2) ' ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION MADE BY THE AO TO THE EXTENT OF 12.5% OF THE ALLEGED BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT DETAILED ENQUIRES MADE OUT BY THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA IT WAS E STABLISHED THAT THE CONCERNS ARE INTO PROVIDING BOGUS BILLS, NO ACTUAL GOODS OR SERV ICES ARE DELIVERED BY THESE PARTIES AND ONLY BOGUS BILLS ARE ISSUED AFTER CHARGING AMOU NT OF COMMISSION.' 3) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE MADE BY THE A O OVERLOOKING THE STATEMENT GIVEN BY THE PARTIES AND EXPLICIT FINDING OF THE INVESTIG ATION CARRIED OUT BY THE SALES TAX DEPARTMENT AND CORROBORATED BY THE ENQUIRIES OF THE AO.' 4) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A} HAS ERRED IN NOT CONSIDERING THAT THE ASSESSEE HAS NOT PRODUCED ANY COGENT EVIDENCE TO SUBSTANTIATE THE FACT THAT HE HAD TAKEN ACTUAL D ELIVERY OF GOODS PURCHASED FROM THE PARTIES'. 5) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THAT INSPITE OF SEVERA L OPPORTUNITIES GIVEN THE ASSESSEE ITA 5475/MUM/2018 RADHESHSYAM R CHAWHAN 2 FAILED TO SUBMIT ANY EVIDENCES IN SUPPORT OF THE GE NUINENESS OF THE PURCHASES MADE FROM THE PURCHASE PARTIES' 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S RASHTRIYA STEELS ENGAGED IN TRADI NG OF M.S. SCRAP. THE ASSESSEE FILED ITS RETURN OF INCOME ON 14-10-2010 D ECLARING TOTAL INCOME AT RS.4,95,110/-. THE RETURN OF INCOME WAS PROCESSE D UNDER SECTION 143(1). THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTMENT, GOVE RNMENT OF MAHARASHTRA THAT CERTAIN HAWALA OPERATORS ARE INDUL GING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOOD S. THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA REFERRED THE LIST OF SUCH HAWALA DEALERS AND THE BENEFICIARY TO THE DGIT (INVESTIGAT ION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST OF BENEFICIAR IES. THE ASSESSEE ALLEGEDLY MADE THE PURCHASES OF RS.6,25,209/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT, THEREFOR E, RE-OPENED THE ASSESSMENT UNDER SECTION 147. NOTICE UNDER SECTION 148 DATED 19-03-2015 WAS ISSUED TO THE ASSESSEE. SUBSEQUENTLY, THE ASSE SSING OFFICER ISSUED NOTICE U/S 143(2) ON 02-07-2015 FIXING APPOINTMENT ON 21-07-2015; HOWEVER, THERE WAS NO COMPLIANCE FROM THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER ISSUED A NOTICE U/S 142(1) ALONG WITH A QUESTIONNAIRE DATED 06-07-2015 FIXING APPOINTMENT ON 21-07-2015. BUT HERE ALSO THERE ITA 5475/MUM/2018 RADHESHSYAM R CHAWHAN 3 WAS NO COMPLIANCE FROM THE ASSESSEE. A REMINDER TO NOTICE U/S 142(1) WAS ALSO ISSUED ON 10-11-2015; BUT OF NO AVAIL. LA STLY, THE ASSESSING OFFICER PROVIDED A FINAL OPPORTUNITY ON 16-12-2015 FIXING APPOINTMENT ON 28-12-2015. THE ASSESSEE DID NOT AVAIL THIS OPPORT UNITY ALSO. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS SHOWN PURCHASES FROM THE FOLLOWING PARTIES, WHICH WAS DEC LARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF M AHARASHTRA: NAME OF THE PARTIES BILL AMOUNT (RS.) 1 ASIAN STEEL 6,25,209 TOTAL 6,25,209 2. AS NOTED ABOVE THE ASSESSING OFFICER PROVIDED OPPOR TUNITY TO THE ASSESSEE TO SUBSTANTIATE THE PURCHASES AND ISSUED S HOW-CAUSE NOTICE AS TO WHY THE AFORESAID TRANSACTION SHOULD NOT BE TREA TED AS NON-GENUINE. THE ASSESSEE DID NOT RESPOND TO THE NOTICES ISSUED BY THE ASSESSING OFFICER. AS THERE WAS NO COMPLIANCE FROM THE ASSES SEE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS OBTAINED ACCOMMO DATION ENTRIES IN RESPECT OF THE ABOVE PURCHASES AND MADE ADDITION OF RS.6,25,209/- IN THE ASSESSMENT ORDER PASSED UNDER SECTION 144/147 D ATED 29.01.2016. 3. ON APPEAL, THE LD. CIT(A) RESTRICTED THE ADDITION T O THE EXTENT OF 12.% OF SUCH PURCHASES BEING THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. AGGRIEVED BY THE ORDER OF LD. CIT(A), TH E REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ITA 5475/MUM/2018 RADHESHSYAM R CHAWHAN 4 4. WE HAVE HEARD THE SUBMISSIONS OF THE LD DEPARTMENTA L REPRESENTATIVE (DR) FOR THE REVENUE AND THE ASSESSEE, WHO APPEARED IN PERSON AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR HEAVILY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. THE LD. DR FURTHER SUBMITS THAT THE ASSESSING OFFICER PROVIDED AMPLE O PPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE PUR CHASES, THE ASSESSEE DESPITE GRANTING OPPORTUNITY FAILED TO PROVIDE ANY EVIDENCE. THE ASSESSING OFFICER MADE ASSESSMENT ON THE BASIS OF M ATERIAL AVAILABLE ON RECORD. 5. ON THE OTHER HAND THE ASSESSEE MADE AN APPLICATION FOR SEEKING TIME ON THE GROUND THAT DUE TO FAMILY MATTER HE IS NOT IN TOWN, THOUGH HE WAS PRESENT IN THE COURT. ON OUR SPECIFIC QUARRY, H E LEFT THE DECISION ON THE BENCH TO DECIDE THE ISSUE AS PER LAW. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD DR FO R THE REVENUE AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. T HE ASSESSING OFFICER MADE THE ADDITION OF 100% OF THE PURCHASES SHOWN TH ROUGH THE ALLEGED BOGUS HAWALA DEALER, IN ABSENCE OF ANY EXPL ANATION BY THE ASSESSEE DURING THE ASSESSMENT, AS RECORDED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER SOLELY RELIED ON THE INFORMAT ION OF THE SALES TAX AUTHORITIES OF GOVERNMENT OF MAHARASHTRA. BEFORE, L D CIT(A), THE ASSESSEE MADE ELABORATE SUBMISSIONS AND STATED THAT THE ASSESSEE IS ITA 5475/MUM/2018 RADHESHSYAM R CHAWHAN 5 ENGAGED IN THE BUSINESS OF SCRAPE FROM LAST 15 YEAR S. THE SALE OF THE ASSESSEE WAS NOT DISPUTED AND THAT THE ASSESSING OF FICER IDENTIFIED ONLY LESS THAN 4% OF THE ASSESSEES PURCHASES AS NON-GEN UINE. AFTER CONSIDERING THE SUBMISSIONS AND THE MATERIAL PLACED BEFORE LD CIT(A), THE LD CIT(A) RESTRICTED THE DISALLOWANCE OF ALLEGE D TOP THE EXTENT OF 12.5% OF THE PURCHASES SHOWN FROM ASIAN STEEL. 7. WE FIND THAT THE DECISION ARRIVED AT BY THE LD.CIT (A) IN RESTRICTING THE ADDITION TO THE EXTENT OF PROFIT ELEMENT EMBEDD ED IN SUCH BOGUS PURCHASES IS IN CONFORMITY WITH THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT VS SIMIT P SHETH (2013) 356 ITR 4 51 (GUJ). NO OTHER CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOT ICE BY THE LD. DR SO AS TO ENABLE US TO COME TO A DIFFERENT CONCLUSIO N THAN THE ONE ARRIVED AT BY THE LD. CIT(A). THEREFORE, IN THIS V IEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-10- 2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 23 OCTOBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT ITA 5475/MUM/2018 RADHESHSYAM R CHAWHAN 6 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI