DCIT - 4(3)(1), MUMBAI V. TRIBHOVANDAS BHIMJI ZAVERI BOMBY LTD., MUMBAI

ITA 5598/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3420 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 03-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: PRADEEP BHATIA
• Keywords: Bogus purchase
• Section: 142(1); 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 5598/MUM/2018(ASSESSMENT YEAR : 2011-12) DCIT-4(3)(1), MUMBAI VS M/S TRIBHOVANDAS BHIMJI ZAVERI BOMBAY LTD, 241-243, ZAVERI BAZAR, MUMBAI-400 002 PAN : AAACT4893P APPELLANT RESPONDEDNT APPELLANT BY SHRI AKHTAR H ANSARI SR DR RESPONDENT BY SHRI PRADEEP BHATIA AR DATE OF HEARING 20-11-2019 DATE OF PRONOUNCEMENT 25-11-2019 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)-9, MUMBAI DATED 24-07-2018 FOR THE ASSESSMENT YEAR 201 1-12. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ' 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISA LLOWANCE MADE ON BOGUS PURCHASE OF RS.1,68,820/- AS THE DISALLOWANCE WAS M ADE ON THE BASIS OF INFORMATION FORWARDED BY MAHARASHTRA SALES TAX DEPA RTMENT AND FURTHER ENQUIRY.' 2. 'THE INFORMATION WAS GENERATED BY MAHARASHTRA S ALES TAX DEPARTMENT AND RECEIVED THROUGH THE INVESTIGATION WING OF THE INCO ME TAX DEPARTMENT. AS SUCH, THE CASE SQUARELY FALLS UNDER THE EXCEPTION 1 0(E) OF CIRCULAR NO.3/2018 DT.11.07.2018 AND AMENDMENT THERETO DATED 20.08.201 8.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING JEWELLERY ON JOB WORK BASIS, FILED ITS RETURN OF INCOME ON 29-09-2011 DECLARING TOTAL INCO ME AT RS.30,54,270/-. 2 ITA NO. 5598/MUM/2018 TRIBHOVANDASS BHIMJI ZAVARI THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) & 142(1) WERE ISSUED. DURING THE COURSE OF ASSESSMEN T, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF PURCHASES ALONG WIT H PARTIES NAME, ADDRESS, ETC. IN THE MEANTIME SALE TAX DEPARTMENT, GOVERNME NT OF MAHARASHTRA HAS SENT THE LIST OF SUSPICIOUS DEALERS, WHO HAVE ISSUE D ACCOMMODATION BILLS WITHOUT DELIVERY OF GOODS. ON VERIFICATION OF THE LIST, THE AO NOTICED THAT M/S UNIQUE ENTERPRISES IS ONE OF SUCH HAWALA DEALER S. THE ASSESSEE HAS SHOWN PURCHASES AMOUNTING TO RS.1,68,820/-, FROM M /S UNIQUE ENTERPRISES. THE ASSESSEE COMPANY WAS ASKED TO FILED BILLS, LEDG ER ACCOUNT OF M/S UNIQUE ENTERPRISES. THE AO SPECIFICALLY ASKED THE AO TO EXPLAIN WHETHER THE STORES, SPARES AND CONSUMABLES PURCHASED FROM T HE PARTY HAVE BEEN USED FOR THE BUSINESS DURING THE YEAR. HOWEVER, THE ASS ESSEE FILED ONLY THE COPIES OF BILL. THE AO FURTHER OBSERVED THAT THROUGHOUT T HE SUBMISSION THE ASSESSEE COULD NOT PROVE THAT THE GOODS PURCHASED W ERE ACTUALLY RECEIVED BY IT AND THAT THE GOODS PURCHASED WERE USED FOR BUSIN ESS PURPOSE. ON THE STRENGTH OF THIS, THE ASSESSING OFFICER MADE ADDITI ON OF RS.1,68,820/- BEING 100% OF SUCH ALLEGED BOGUS PURCHASES. ON APPEAL, T HE LD.CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% OF SUCH ALLEGED BOGUS PUR CHASES BY FOLLOWING THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH (2013) 356 ITR 451 (GUJ). AGGRIEVED, THE REV ENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3 ITA NO. 5598/MUM/2018 TRIBHOVANDASS BHIMJI ZAVARI 3. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED AUTHOR ISED REPRESENTATIVE (LD.AR) FOR THE ASSESSEE AND THE LD. DR OF THE REVE NUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE (LD. DR) FOR THE REVENU E SUBMITS THAT DURING THE ASSESSMENT ASSESSEE FAILED TO FURNISH NECESSARY EVIDENCE TO PROVE THAT THE PURCHASED MATERIAL FROM M/S UNIQUE ENTERPRISES WAS ACTUALLY RECEIVED BY THE ASSESSEE . THE ASSESSEE WAS ONE OF THE BENEFICIARIES FROM T HE PARTIES SHOWN IN THE LIST OF HAWALA DEALERS, COPY O F WHICH WAS FORWARDED TO THE AO. 4. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND SUBMI TTED THAT THE ASSESSEE HAS PROVED THAT GOODS PURCHASED WERE RECEIVED BY AS SESSEE. LEDGER COPY OF ACCOUNT OF M/S UNIQUE ENTERPRISES WAS SUBMITTED; COPIES OF DEL IVERY CHALLANS OF EACH BILL WHICH WAS PROPERLY VERIFIED A ND STAMPED BY SECURITY DEPARTMENT WAS ALSO SUBMITTED; COPIES OF BANK STATE MENT SHOWING THE PAYMENT WAS SUBMITTED; COPY OF STOCK REGISTER SHOWI NG THE QUANTITY OF GOODS PURCHASED FROM M/S UNIQUE ENTERPRISES. FINAL LY, HE SUBMITTED THAT THE ADDITION CANNOT STAND WITHOUT CONFRONTING THE T HIRD PARTY EVIDENCE TO THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR FO R THE REVENUE AND LD AR FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILA BLE ON RECORD. WE HAVE NOTED THAT DURING THE ASSESSMENT THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCE RELATING TO THE ALLEGED HAWALA PURCHAS ES. THE AO RECORDED 4 ITA NO. 5598/MUM/2018 TRIBHOVANDASS BHIMJI ZAVARI THAT THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE AB OUT THE ACTUAL DELIVERY OF THE MATERIAL PURCHASES FROM M/S UNIQUE ENTERPRISES . THE AO ADDED THE ENTIRE AMOUNT OF ALLEGED HAWALA PURCHASES, TO THE T OTAL INCOME DECLARED BY THE ASSESSEE. ON APPEAL, THE LD.CIT(A), BY RELYI NG UPON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH( 356 ITR 451 GUJ HC) SUSTAINED THE ADDITION TO THE EXTENT OF 12.5% ON SUCH HAWALA PURCHASES. 6. THE HON BLE BOMBAY HIGH COURT IN CIT VS HARI RAM B AMBANI IN ITA NO.313 OF 2013 DECIDED ON 04-02-2015 HELD THAT REVE NUE IS NOT ENTITLED TO BRING THE ENTIRE SALE CONSIDERATION TO TAX BUT ONLY THE PROFIT ATTRIBUTABLE ON SUCH UNRECORDED SALE CONSIDERATION. THEREFORE, WE FIND THAT THE ADDITION RETAINED BY THE LD. CIT(A) IS IN CONFORMITY WITH TH E JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD .CIT(A). WE UPHOLD TH E SAME. THE GROUND OF THE REVENUE FAILS. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 25-11-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 25 TH NOVEMBER, 2019 5 ITA NO. 5598/MUM/2018 TRIBHOVANDASS BHIMJI ZAVARI PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI