ITO WD 13(1)(3), MUMBAI V. GOOLAMALLY HASANJEE, MUMBAI

ITA 5574/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88522 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 04-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Keywords: Bogus purchase; Retraction
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BE NCH, MUMBAI , ! '# $ $ $ $ , '# % BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I .T.A. NO.5574/MUM/2013 ( & & & & / ASSESSMENT YEAR : 2009-10 THE ITO, WARD 13(1)(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. GOOLAMALLY HASANJEE, 76/78 SHERIFF DEVJI STREET, MUMBAI-400 003 ./I .T.A. NO.5533/MUM/2013 ( & & & & / ASSESSMENT YEAR : 2009-10 M/S. GOOLAMALLY HASANJEE, 76/78 SHERIFF DEVJI STREET, MUMBAI-400 003 / VS. THE ITO, WARD 13(1)(3), AAYAKAR BHAVAN, MUMBAI-400 020 #' ! ./ ( ./ PAN/GIR NO. : AAAFG 5062A ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , / ASSESSEE BY: SHRI DEEPAK TRALSHAWALA *+') - , / DEPARTMENT BY: SHRI SUBACHAN RAM - ./! / DATE OF HEARING :04.03.2015 01& - ./! / DATE OF PRONOUNCEMENT :04.03.2015 '2 / O R D E R PER N.K. BILLAIYA, AM: THESE ARE CROSS APPEALS BY THE REVENUE AND THE ASS ESSEE AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-24, MUMBAI DT . 17.6.2013 ITA NOS. 5574 & 5532/MUM/2013 2 PERTAINING TO A.Y. 2009-10. BOTH THESE APPEALS WER E HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE AND BREVITY. 2. THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT (A) ERRED IN RESTRICTING THE ADDITION TO RS. 1,85,770/- IN PLACE OF THE ADDITION OF RS. 14,86,165/- MADE BY THE AO AND THE GRIEVANCE OF THE ASSESSEE IS IN RELATION TO THE ADDITION OF RS. 1,85,770/- SUSTAINE D BY THE LD. CIT(A). IT CAN BE SEEN THAT GRIEVANCE OF THE REVENUE AND THE A SSESSEE REVOLVE AROUND THE SAME SET OF FACTS. 3. THE ASSESSEE IS A TRADER IN COTTON AND MAN-MADE FABRICS ON RETAIL AS WELL AS SEMI WHOLESALE AND WHOLESALE BASIS AND MAIN LY DEALS IN SUITING AND SHIRTING MATERIALS. ON A TURNOVER OF RS. 4.41 CRORES FOR THE YEAR, THE ASSESSEE HAS SHOWN GROSS PROFIT AT 17.5% AND NET PR OFIT AT 1.72%. THE PURCHASES HAVE BEEN SHOWN AT RS. 2.95%. 4. THERE WAS A SURVEY ACTION U/S 133A CONDUCTED ON THE PREMISES OF SHRI RAKESHKUMAR M. GUPTA, PROPRIETOR OF M/S. MANOJ MILLS, SHRI MOHIT R. GUPTA, PROP. OF M/S. ASTHA SILK INDUSTRIES (SON OF SHRI RAKESHKUMAR M. GUPTA, AND SMT. HEMA R. GUPTA, PROP. OF M/S. SHR EE RAM SALES & SYNTHETICS (WIFE OF SHRI RAKESHKUMAR M. GUPTA ). T HE SURVEY PARTY FOUND THAT THE ENTIRE FAMILY WAS ENGAGED EXCLUSIVEL Y IN THE ACTIVITY OF ISSUING ACCOMMODATION BILLS AND RECEIVING CHEQUE PA YMENT AND RETURNING THE BALANCE AMOUNT IN CASH TO THE PARTIES AFTER DEDUCTING COMMISSION @ 1%. THIS FAMILY SUPPLIED THE LIST OF PARTIES TO WHOM THEY HAVE ISSUED BOGUS SALE BILLS AND IT WAS FOUND THAT THE ASSESSEE IN THE PRESENT CASE HAPPENS TO BE ONE OF THE BENEFICIARIES OF THE BOGUS BILLS. ON THE BASIS OF THIS INFORMATION, THE AO PROCEEDED BY TREATING RS. ITA NOS. 5574 & 5532/MUM/2013 3 14,86,163/- AS BOGUS PURCHASES FROM SHRI RAKESHKUMA R M. GUPTA AND FAMILY. 5. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THE Q UANTITY OF PURCHASES DEBITED BY THE ASSESSEE WAS ONLY RS. 4,91,402/- WHI CH WERE MADE FROM THE IMPUGNED PARTIES AND NOT RS. 14,86,163/- AS TAK EN BY THE AO. THE LD. CIT(A) WAS NOT CONVINCED WITH THIS SUBMISSION O F THE ASSESSEE AND CONFIRMED THE IMPUGNED PURCHASES AT RS. 14,86,163/- . HOWEVER, THE LD. CIT(A) WAS OF THE OPINION THAT THE ADDITION OF RS. 12.5% OF THE PURCHASES IN QUESTION WOULD COVER UP THE POSSIBLE LEAKAGES IN THE PURCHASES AND ACCORDINGLY SUSTAINED THE ADDITION OF RS. 1,85,770/ -. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE BROU GHT TO OUR NOTICE THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 AND 2008-09 AND POINTED OUT THAT ON IDENTICAL SET OF FA CTS, THE AO HAS MADE DISALLOWANCES ON ACCOUNT OF BOGUS PURCHASES ON WHIC H THE LD. CIT(A) HAS DIRECTED TO RESTRICT THE ADDITION TO 12.5% OF T HE PURCHASES. IT IS THE SAY OF THE LD. COUNSEL THAT THE TRIBUNAL WAS PLEASED TO SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DELETED THE ENTIRE ADDITIONS MADE BY THE AO. 7. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE FINDINGS OF THE AO BUT COULD NOT BRING ANY DISTINGU ISHING DECISION IN FAVOUR OF THE REVENUE. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. WE HAVE ALSO GONE THROUGH THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 3740 AND 3741/M/2012. WE FIND FOR CE IN THE CONTENTION OF THE LD. COUNSEL. THE FACTS OF THE CA SE IN HAND ARE IDENTICAL TO THE FACTS IN THE DECISION OF THE TRIBUNAL FOR A. YRS. 2006-07 AND 2008- 09 (SUPRA), ON SIMILAR SET OF FACTS, THE TRIBUNAL H AS HELD AS UNDER: ITA NOS. 5574 & 5532/MUM/2013 4 WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE ENTIRE ADDITION HAS BEEN MADE ON THE STATEMENT OF ONE SHRI RAKESHKUMAR M. GUPTA AND HIS FAMILY MEMBERS. IT IS THE ALLEGATION OF THE REVENUE THAT THE SAID FAMILY MEMBERS WERE ISSUING ACCOMMODATION BILLS TO THE ASS ESSEE. THE AO ACCORDINGLY WENT ON TO TREAT THE ENTIRE PURCHASE S AS BOGUS PURCHASES. HOWEVER, WE FIND THAT THE SALES MADE BY THE ASSESSEE HAVE BEEN ACCEPTED. IT IS AN ELEMENTARY RULE OF AC COUNTANCY AS WELL AS TAXATION LAWS THAT PROFIT FROM BUSINESS CAN NOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PURCHASE FROM SALES, OTHERWISE IT COULD AMOUNT TO LEVY OF INCOME-TAX ON GROSS RECEIPTS OR ON SALES. WE FURTHER FIND THAT THE AO HAS NOT C OMMENTED UPON THE RETRACTION MADE BY SHRI RAKESHKUMAR M. GUPTA AN D HIS FAMILY MEMBERS. WE NOTICED THAT THE SAID RETRACTION WAS M ADE BY FILING AN AFFIDAVIT. NOTHING HAS BEEN BROUGHT ON RECORD E XCEPT FOR THE STATEMENT OF SHRI RAKESHKUMAR M. GUPTA WHICH COULD SUGGEST THAT THE PURCHASES MADE BY THE ASSESSEE ARE BOGUS. 9. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT ON RECORD, RESPECTFULLY FOLLOWING THE FINDING/DECISION OF THE +CO ORDINATE BENCH, WE DO NOT FIND ANY REASON FOR MAKING ANY DISALLOWANCE ON THIS ACCOUNT. THE ADHOC ADDITION SUSTAINED BY THE LD. CIT(A) IS ALSO WITHOUT ANY BASIS AND THE SAME IS DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 4 TH MARCH, 2014. SD/- SD/- (VIVEK VARMA ) (N.K. BILLAIYA) '# /JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 3' DATED : 4 TH MARCH, 2014 . . ./ RJ , SR. PS ITA NOS. 5574 & 5532/MUM/2013 5 '2 '2 '2 '2 - -- - *. *. *. *. 4&. 4&. 4&. 4&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 67 *. , , / DR, ITAT, MUMBAI 6. 78 9 / GUARD FILE. '2 '2 '2 '2 / BY ORDER, +. *. //TRUE COPY// : :: : / ; ; ; ; (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI