ITO-17(1)(1), Mumbai V. MR. AKSHAY RAMPRASAD AGRAWAL , Mumbai

ITA 558/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5747 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOURABH DESHPANDE
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.558/MUM/2019 ( ASSESSMENT YEARS: 2009-10 ) ITO 17(1 )( 1 ) R.NO. 115, 1 ST FLOOR, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI. / VS. MR. AKSHAY RAMPRASAD AGARWAL, 41, SANTAM APARTMENT, 93, CUFEE PARADE, MUMBAI. PIN - 400 005. ./ ./ PAN/GIR NO. : AEVPA1819G ( / // / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SOURABH DESHPANDE , DR / RESPONDENT BY : NONE / / / / DATE OF HEARING 03 /02 /20 20 / DATE OF PRONOUNCEMENT 14 /02 /20 20 / O R D E R PER SHRI G. MANJUNATHA- AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE LD. CIT(A)-55, MUMBAI, DATED 19/11/2018 AND IT PERT AINS TO THE A.Y 2009-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING TH E ADDITION 558/MUM/2019. AKSHAY RAMPRASAD AGARWAL. - 2 - MADE BY THE AO 8% OF RS. 6.39,917/- AGAINST THE ADD ITION MADE AT 12.5% OF THE BOGUS PURCHASES, IGNORING THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF THE PURCHASES EITHER BY PRODUCING THE SUPPLIERS FOR EXA MINATION OR BY FURNISHING OTHER SUBSTANTIATING DOCUMENTS BY WAY OF DELIVERY CHALLANS, LORRY RECEIPTS, OCTROI PAYMENT, QUANTIFY TALLY, CONFIRMATION FROM TRANSPORT OPERATION, GODOW N RENT AND RECORDS MAINTAINED BY GODOWN KEEPER, BANK ACCOUNTS CLEARANCE CERTIFICATE, RATE COMPARISON, THIRD PARTY ASSESSMENT ORDER ETC, WHICH WERE REQUIRED BY THE A.O. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN OVERLOOKING THE FACT T HAT THE ADDITION MADE BY THE AO WAS BASED ON THE DETAILS OF THE SCAM UNEARTHED BY THE SALES TAX DEPARTMENT, WHEREIN IT WAS ESTABLISHED THAT THE ASSESSEE HAS TAKEN MERE ACCOMM ODATION ENTRIES / BOGUS BILLS FROM THE SUPPLIERS WITHOUT AC TUALLY MAKING PURCHASES FROM THEM. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FLAMEPROOF ELECTRI CAL EQUIPMENTS, FILED,HIS RETURN OF INCOME FOR AY 2009-10 ON 30/09/ 2009, DECLARING THE TOTAL INCOME AT RS. 6,07,566/- AND SAID RETURN WAS PROCESSED U/S 143(1) OF THE I.T.ACT, 1961. THE CASE HAS BEEN SUBS EQUENTLY REOPENED U/S 147 OF THE ACT, ON THE BASIS OF INFORMATION REC EIVED FROM DGIT, INVESTIGATION, MUMBAI, AS PER WHICH, SALES TAX AUTH ORITIES OF GOVERNMENT OF MAHARASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS, WHO HAD ISSUED BOGUS PURCHASE BILLS TO VARIOUS PARTIES IN MUMBAI AND OTHER PLACES. AS PER LIST OF BENEFICIARIES, THE ASSESSEE IS ONE OF THE BENEFICIARY, WHO HAD TAKEN A CCOMMODATION BILLS 558/MUM/2019. AKSHAY RAMPRASAD AGARWAL. - 3 - OF BOGUS PURCHASES FROM VARIOUS PARTIES AS LISTED B Y THE AO IN PARA 2 OF HIS ASSESSMENT ORDER AMOUNTING TO RS. 6,39,917/- . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN C OMPLETED U/S. 143(3).R.W.S. 147 OF THE I.T.ACT, 1961 ON 09/02/201 5 AND DETERMINED TOTAL INCOME OF RS. 6,87,560/-, AFTER 12.50% PROFIT ADDITIONS TOWARDS ALLEGED BOGUS PURCHASE FROM THOSE PARTIES AND MADE ADDITIONS OF RS. 79,990/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSE HAS REITRATED HIS SUBMISSIONS MADE BEFORE THE AO. THE S UM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE L D.CIT(A) ARE THAT PURCHASE FROM THE ABOVE PARTY IS GENUINE, WHICH IS SUPPORTED BY NECESSARY EVIDENCES. THEREFORE, NO ADDITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM THIRD PARTY. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO, BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS. SIMITH P. SHETH (356 ITR 451) SCALED DOWN ADDITION MADE BY THE AO TOWARDS ALLEGED BOGUS PURCHASES TO 8% GROSS PROFIT ON TOTAL PURCHASES FROM THOSE PARTIES. 5. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD TH E LD. DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE T HROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. AO HAS MADE ADDITIONS OF 12.50% PROFIT ON ALLEGED BOGUS PURCHASES ON THE GRO UND THAT THE 558/MUM/2019. AKSHAY RAMPRASAD AGARWAL. - 4 - ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS ISSUED BY HAWALA DEALERS. ACCORDING TO THE LD. AO, ALTHOUGH ASSESEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FILE FURTHER EVIDENCE IN THE BACKDROP OF CLEAR FINDING B Y THE SALES TAX DEPARTMENT, MAHARASHTRA THAT THOSE PARTIES ARE INVO LVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GO ODS. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE INVESTIGATION CONDU CTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS PER WHICH NOTI CE ISSUED U/S 133(6) TO THE PARTIES WERE RETURNED UN-SERVED BY TH E POSTAL AUTHORITIES. THEREFORE, HE CAME TO THE CONCLUSION T HAT PURCHASES FROM THE SAID PARTIES ARE BOGUS IN NATURE. IT IS THE CON TENTIONS OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT PURCHASE S FROM THE ABOVE PARTY ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNISHED ALL POSSIBLE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS; ST OCK DETAILS AND BANK STATEMENT TO PROVE THAT PAYMENT AGAINST SAID P URCHASES HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. 6 HAVING CONSIDERED ARGUMENTS OF THE LD. DR AND ALS O, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES HA VE FAILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECESSARY EVIDENCES. ALTHOUGH, ASSESSEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FI LE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHASES TO THE SATISFACTIONS O F THE LD.AO. FURTHER, MERE PAYMENT BY CHEQUE DOES NOT PROVE THE GENUINENESS OF PURCHASE, MORE PARTICULARLY WHEN OTHER CIRCUMSTANTI AL EVIDENCE SAYS OTHERWISE. AT THE SAME TIME, THE LD. AO HAD ALSO FA ILED TO TAKE THE INVESTIGATION TO A LOGICAL CONCLUSION BY CARRYING O UT NECESSARY 558/MUM/2019. AKSHAY RAMPRASAD AGARWAL. - 5 - ENQUIRES, BUT HE SOLELY RELIED UPON INFORMATION RE CEIVED FROM INVESTIGATION WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. THE AO NEITHER POINTED OUT ANY DESCREPANICES IN BOOKS OF ACCOUNTS NOR MADE OUT A CASE OF SALES OUTSIDE BOOKS OF ACCOUNTS. IN FACT, T HE AO DID NOT DISPUTED SALES DECLARED FOR THE YEAR. UNDER THESE C IRCUMSTANCES, IT IS DIFFICULT TO ACCEPT ARGUMENTS OF BOTH THE SIDES. FU RTHER, IN A CASE WHERE PURCHASES ARE CONSIDERED TO BE PURCHASED FROM SUSPICIOUS/HAWALA DEALERS, VARIOUS HIGH COURTS AND TRIBUNALS HAD CONSIDERED AN IDENTICAL ISSUE IN LIGHT OF INVESTIGA TION CARRIED OUT BY THE SALES TAX DEPARTMENT AND HELD THAT IN CASE OF P URCHASES CLAIMS TO HAVE MADE FROM ALLEGED HAWALA DEALERS, ONLY PROF IT ELEMENT EMBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES. THE HONBLE GUJARAT HI GH COURT, IN THE CASE OF CIT VS SIMITH P.SHETH 356 ITR 451 HAD CONSI DERED A SIMILAR ISSUE AND HELD THAT AT THE TIME OF ESTIMATION OF PR OFIT FROM ALLEGED BOGUS PURCHASES NO UNIFORM YARDSTICKS COULD BE ADOP TED, BUT IT DEPENDS UPON FACTS OF EACH CASE. THE ITAT, MUMBAI, IN NUMBER OF CASES HAD CONSIDERED AN IDENTICAL ISSUE AND DEPENDI NG UPON FACTS OF EACH CASE, DIRECTED THE LD.AO TO ESTIMATE GROSS PRO FIT OF 10% TO 15% ON TOTAL ALLEGED BOGUS PURCHASES. IN THIS CASE, CON SIDERING THE NATURE OF BUSINESS OF THE ASSESSEE THE LD. AO HAS MADE 12. 50% PROFIT ADDITIONS, WHEREAS THE LD.CIT(A) HAS SCALED DOWN AD DITION TO 8% GROSS PROFIT ON TOTAL ALLEGED BOGUS PURCHASE. ALTHO UGH, BOTH AUTHORITIES HAVE TAKEN DIFFERENT RATE OF PROFIT FOR ESTIMATION OF INCOME FROM ALLEGED BOGUS PURCHASE, BUT NO ONE COULD SUPPO RT SAID RATE OF 558/MUM/2019. AKSHAY RAMPRASAD AGARWAL. - 6 - GROSS PROFIT WITH NECESSARY EVIDENCES OR ANY COMPAR ABLE CASES. THEREFORE, CONSIDERING FACTS AND CIRCUMSTANCES OF T HIS CASE AND CONSISTENT WITH VIEW TAKEN BY THE CO-ORDINATE BENCH IN NUMBER OF CASES, WE ARE OF THE CONSIDERED OPINION THAT THE LD . CIT(A) HAS TAKEN A FAIR VIEW AND ESTIMATED 8% GROSS PROFIT ON ALLEGED BOGUS PURCHASES TO SETTLE DISPUTE BETWEEN THE PARTIES AND HENCE, WE ARE INCLINED TO UPHOLD ORDER OF THE LD. CIT(A) AND DISMISS APPEAL F ILED BY THE REVENUE. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 14/02/202 0 SD/- SD/- (SAKTIJIT DEY) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 /02/2020 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !!' / THE CIT(A) 4. !!' ( ) / CONCERNED CIT 5. #$ , , / DR, ITAT, MUMBAI 6. $%&' / GUARD FILE. 558/MUM/2019. AKSHAY RAMPRASAD AGARWAL. - 7 - / BY ORDER, //TRUE COPY// 1. / // / ( ASST. REGISTRAR) , , , , / ITAT, MUMBAI