RAMESH AUTO STORES, MUMBAI V. ITO 19 (3)(1), MUMBAI

ITA 5519/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9660 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R KAVITHA
• Section: 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 5519 / MUM . /201 8 ( ASSESSMENT YEAR : 20 10 11 ) SHRI RAMESH AUTO STORES 10, SONI CHAMBERS AVANTIKABAI GOKHALE STREET MUMBAI 400 004 PAN AAEFR9083H . APPELLANT V/S INCOME TAX OFFICER WARD 19(3)(1), MUMBAI . RESPONDENT ASS ESSEE BY : MS. DINKLE HARIYA REVENUE BY : MS. R. KA V ITHA DATE OF HEARING 19 .0 2 .2020 DATE OF ORDER 13.03.2020 O R D E R T HIS APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 27 TH JULY 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 6, MUMBAI, FOR THE ASSESSMENT YEAR 2010 11. 2. IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2 SHRI RAMESH AUTO STORES 3. IN THE COURSE OF HEARING, LEARNED AUTHORISED REPRESENTATIVE HAS NOT ADVANCED ANY ARGUMENTS ON THIS GR OUND. ACCORDINGLY, THIS GROUND IS TREATED AS NOT PRESSED, HENCE, DISMISSED. 4. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION MADE OF ` 3,86,715, ON ACCOUNT OF NON GENUINE PURCHASES. 5. BRIEF FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , IS ENGAGED IN THE BUSINESS OF TRADING IN AUTOMOBILE AND SPARE PARTS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 15 TH OCTOBER 2010, DECLARING TOTAL INCOME OF ` 20,913. INITIALLY, THE RETURN OF INCOME FI LED BY THE ASSESSEE WAS PROCE SSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERN MENT OF MAHARASHTRA, THROUGH THE OFFICE OF THE DGIT (INV.), MUMBAI, THAT PURCHASES WORTH ` 3 ,86,715, CLAIMED TO HAVE BEEN M ADE BY THE ASSESSEE DURING THE YEAR FROM MEHTA AUTO ENTERPRISES IS NON GENUINE AS THE CONCERNED PARTY HAS BEEN IDENTIFIED AS A HAWALA OPERATOR, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE TO PRO VE THE GENUINENESS OF PURCHASES. NOT BEING SATISFIED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER ULTIMATELY CONCLUDED THAT THE PURCHASES MADE BY THE ASSESSEE ARE NON GENUINE. FURTHER, HE 3 SHRI RAMESH AUTO STORES OBSERVED , SINCE THE ASSESSEE DID NOT PRODUCE THE STOCK REGISTER AS WELL AS THE SALE INVOICE TO CO RELATE THE PURCHASES WITH CORRESPONDING SALES, THERE IS NO REASON TO RESTRICT THE ADDITION ONLY TO THE PROFIT ELEMENT E MBEDDED IN SUCH PURCHASES. ACCORDINGLY, HE ADDED BACK THE ENTIRE PURCHASE OF ` 3,86,715. THOUGH, THE ASSES SEE CONTESTED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER, IT FAILED IN ITS ATTEMPT. 6. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE HAS ALREADY DECLARED GROSS PROFIT @ 15%. SHE SUBMITTED , IN RESPECT OF SIMILAR PURCHASES BY THE ASSESSEE FROM THE VERY SAME PARTY IN ASSESSMENT YEAR S 2009 10 AND 2011 12, THE ASSESSING OFFICER HAS RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. FURTHER, SHE SUBMITTED , WHILE CONSIDERING IDENTICAL NATURE OF DISPUTE IN ASSESSMENT YEAR 2009 10, IN ITA NO.473 AND 35/MUM./ 2018, DATED 26 TH NOVEMBER 2019, THE TRIBUNAL RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHAS ES LESS THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE. THUS, S HE SUBMITTED , FACTS BEING MORE OR LESS IDENTICAL, THE ADDITION SHOULD BE RESTRICTED TO A REASONABLE PERCENTAGE. 7. T HE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS) SUBMITTED , SINCE THE ASSESSEE HAS NOT MAINTAINED ANY STOCK REGISTER AND ALSO COULD NOT ESTABLISH CO RELATION BETWEEN THE PURCHASE 4 SHRI RAMESH AUTO STORES AND SALES , THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE SU STAINED. 8. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS A FACT THAT THE ASSESSING OFFICER IS IN POSSESSION OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT PURCHASES MADE FROM MEHTA AUTO ENTERPRISES IS NON GENUINE. IT IS ALSO EVIDENT , IN C OURSE OF ASSESSMENT PROCEEDINGS AND EVEN THEREAFTER THE ASSESSEE WAS UNABLE TO FURNISH ANY CLINCHING EVIDENCE TO ESTABLISH THE GENUINENESS OF THE PURCHASES FROM THE DECLARED SOURCE. HOWEVER, THE SALES TU RNOVER OF THE ASSESSEE HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. ONLY THING THE ASSESSING OFFICER HAS OBSERV E D IS, THE ASSESSEE FAILED TO FURNISH SALES INVOICE AND STOCK REGISTER TO ESTABLISH CO RELATION BETWEEN THE PURCHASES AND SALES. WE HAVE FURTH ER NOTICED THAT IN ASSESSMENT YEAR 2009 10 AND 2011 12, THE ASSESSEE HAD ALSO EFFECTED PURCHASE S FROM THE VERY SAME PARTY AND ON IDENTICAL FACTS AND CIRCUMSTANCE, THE ASSESSING OFFICER HAD RESTRICTED THE ADDITION TO 12.5% OF THE PURCHASES . IN FACT, IN THE ASSESSMENT YEAR 2009 10, THOUGH THE PURCHASES WERE MADE FROM SOME OTHER PARTIES, THE TRIBUNAL IN THE ORDER REFERRED TO ABOVE HAS RESTRICTED THE ADDITION TO 12.5% LESS THE GROSS PROFIT DECLARED. IN THE FACTS OF THE PRESENT CASE, THE LEARNED AUTHORISED REPRE SENTATIVE HAS STATED BEFORE US THAT THE ASSESSEE HAS DECLARED GROSS PROFIT OF 5 SHRI RAMESH AUTO STORES 15%. AFTER TAKING NOTE OF ALL THE RELEVANT FACTORS INCLUDING THE ALL EGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO ESTABLISH THE CO RELATION BETWEEN THE PURCHASE AN D SALES AS WELL AS THE ASSESSMENT ORDERS PASSED FOR THE ASSESSMENT YEAR 2009 10 AN D 2011 12 ON IDENTICAL ISSUE, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASE. TH E GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALL OWED. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 13.03.2020 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DAT ED: 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