MAHESH R. KADAKIA, MUMBAI V. ITO 19 (2)(3), MUMBAI

ITA 5479/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9495 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: MAHESH R KADAKIA
• Keywords: Bogus purchase
• Section: 142(1); 201; 143(2); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI S. RIFAUR RAHMAN (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 5479 /MUM/2018 ASSESSMENT Y EAR: 2009 - 10 SHRI MAHESH R. KADAKIA, 244, F - WING, SIDESH JYOTI TOWER, BALARAM TOWER, GRANT R OAD (E), MUMBAI - 400004 PAN: AAEPK4491R VS. THE ITO 19(2)(3), 2 ND FLOOR, MATRU MANDIR, OPP. BHATIA HOSPITAL, (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHESH R. KADAKIA (A R) REVENUE BY : SHRI AKHTAR H. ANSARI (DR) DATE OF HEARING: 11/11 /201 9 DATE OF PRONOUNCEMENT: 29 / 11 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18.05.2018 PASSED BY THE COMMISSIONER OF INCOME TAX (A PPEALS) - 6 (FOR SHORT THE CIT(A) , MUMBAI , WHICH PERTAINS TO THE ASSESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. THE ASSESSEE PROPRIETOR OF M/S S.V. ENTERPRISES, ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 6,88,130/ - . SUBSEQUENTLY, IT CAME TO TH E NOTICE OF THE AO THAT THE ASSESSEE HAD SHOWN PURCHASES AMOUNTING TO RS. 22,90,786/ - FROM THREE BOGUS ENTITIES DECLARED BY THE SALES TAX DEPARTMENT, MAHARASHTRA WHO USED TO PROVIDE ACCOMMODATION BILLS WITHOUT SUPPLYING ANY GOODS. ACCORDINGLY, THE AO ISSUE D NOTICE U/S 148 OF THE ACT. THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FILED BE TREATED AS THE 2 ITA NO. 5479 / MUM/2018 ASSESSMENT YEAR: 2009 - 1 0 RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. THEREAFTER THE AO ISSUED NOTICES U/S 143(2) AND 142(1) OF THE ACT. IN RESPONSE THEREOF, THE AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED THE DETAILS. THE ASSESSEE CONTENDED THAT THE PURCHASES WERE GENUINELY MADE FROM THE AFORESAID PARTIES, HOWEVER THE AO REJECTING THE CONTENTION OF THE ASSESSEE TREATED THE QUESTIONED PURCHASES AS BOGU S TRANSACTION AND MADE ADDITION OF 12.5% OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 9,74,480/ - THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING T HE ASSESSEE CONFIRMED THE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES. AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFF ECTIVE GROUND : - 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS. 2,86,346/ - BY DISALLOWING PURCHASES ON THE SUSPICION THAT THE SAID PURCHASES ARE NON - GENUINE . THE LEARNED CIT (A) - 6 HAS ERRED IN DISMISSING THE APPEAL WITHOUT CONSIDERIN G THE FACTS AND SUBMISSIONS OF THE CASE. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS OF ESTABLISHING GENUINENESS OF THE PURCHASES BY SUBMITTING THE DOCUMENTARY EVIDENCE, THE LD. CIT(A) OU GHT TO HAVE DELETED THE ADDITION OF 12.5% OF THE ALLEGED BOGUS PURCHASES DETERMINED BY THE AO. PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NIKUNJ EXIMP ENTERPRISES PVT. LTD , THE LD. COUNSEL SUBMITTED THAT MEREL Y BECAUSE THE ASSESSEE COULD NOT PRODUCE THE PARTIES BEFORE THE AUTHORITIES BELOW, IT COULD NOT BE CONCLUDED THAT THE GOODS WERE NOT PURCHASED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION OF PURCHASE BY ADDUCING COGENT AND CONVINCING EVIDENCE, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES IN THE LIGH T OF THE 3 ITA NO. 5479 / MUM/2018 ASSESSMENT YEAR: 2009 - 1 0 RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH IN THE CASE OF SIMIT P . SHETH , 356 ITR 451(GUJ) . 6. WE HAVE CAREFULLY GONE THROUGH THE RELEVANT RECORD INCLUDING THE CASES RELIED UPON BY THE AUTHORITIES BELOW. WE ARE CONVINCED FROM THE MATERIAL ON REC ORD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES IN QUESTION BY ADDUCING COGENT AND CONVINCING EVIDENCE. THE NOTICES ISSUED BY THE AO TO THE HAWALA PARTIES WERE RECEIVED BACK UN - SERVED. THE ASSESSEE ALSO FAILED TO PRODUCE THEM BEFORE THE AO FOR VERIFICATION. HENCE, IN OUR CONSIDERED VIEW, THE AO HAS RIGHTLY CONCLUDED THAT THE ASSESSEE HAS NOT MADE THE QUESTIONED PURCHASES FROM THE PARTIES MENTIONED IN THE BOOKS OF ACCOUNT. WE FURTHER NOTICE THAT, THE AO HAS NOT REJECTED THE SAL E OF THE GOODS SO PURCHASED. THE ABOVE - MENTIONED FACTS GIVE RISE TO THE CONCLUSION THAT THE ASSESSEE HAD PURCHASED THE GOODS IN QUESTION FROM GREY MARKET AND EVADED THE TAX APPLICABLE DURING THE RELEVANT PERIOD. UNDER THESE CIRCUMSTANCES, THE AO HAD NO OPT ION BUT TO MAKE AN ADDITION ON ESTIMATION BASIS CONSIDERING THE APPLICABLE RATE OF VAT OR OTHER TAXES AND THE ELEMENT OF PROFIT EMBEDDED IN THE SAID TRANSACTION. THE LD. CIT(A) HAS SUSTAINED THE ADDITION OF 12.5%, HOLDING THAT THE ESTIMATE REACHED AT BY TH E AO IS JUST AND REASONABLE. 7. THE LD CIT(A) HAS SUSTAINED ADDITION TO 12.5%, BY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SETH 356 ITR 451(GUJ) , IN WHICH THE HONBLE HIGH COURT HAS UPHELD THE DECISI ON OF THE TRIBUNAL AND SUSTAINED THE ADDITION 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES DETERMINED BY THE TRIBUNAL, HOLDING THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO INCOME OF THE ASSESSEE. HENCE, IN OUR CONSIDERED VIEW, THE OR DER PASSED BY THE LD. CIT(A) IS BASED ON THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE SAID CASE. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) TO INTERFERE WITH. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT (A) AND DISMISS THE ASSESSEES APPEAL AND DIRECT THE AO TO MAKE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF QUESTIONED PURCHASES. 4 ITA NO. 5479 / MUM/2018 ASSESSMENT YEAR: 2009 - 1 0 IN THE RESULT, APPEAL FILED BY THE A SSESSEE FOR ASSESSMENT YEAR 2009 - 2010 IS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 29 TH NOVEMBER , 2019 . SD/ - SD/ - ( S. RIFAUR RAHMAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBA I ; DATED: 29 / 11 / 201 9 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