DCIT- 19 (1), MUMBAI V. DIAMOUR, MUMBAI

ITA 5656/MUM/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1231 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAJIT V NAIR
• Keywords: Bogus purchase
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ) , D BENCH MUMBAI BEFORE SHRI RAJESH KUMAR , AM & SHRI PAVAN KUMAR GADALE , JM ITA NO. 5656 /MUM/ 20 18 ( ASSESSMENT YEAR : 2010 - 11 ) DEPUTY COMMISSIONER OF INCOME TAX - 19(1) ROOM NO.203, 2 ND FLOOR MAT RU MANDIR TARDEO ROAD MUMBAI 400 007 VS. M/S. DIAMOUR 214, PANCHRATNA M.P. MARG MUMBAI 400 002 PAN/GIR NO. AADFD2155J (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI SAJIT V NAIR ASSESSEE BY NONE DATE OF HEARING 18 / 01 /202 1 DATE OF PRONOUNCEM ENT 22 / 01 /202 1 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 13/07/2018, PASSED BY THE CIT(A) - 30 , MUMBAI, FOR THE ASSESSMENT YEAR 2010 - 11. . ITA NO . 5656/MUM/2018 M/S. DIAMOUR 2 2. THE ONLY ISSUE RAISED BY THE REVENUE IS QUA THE DELETION OF ADDITION BY LD.CIT(A) TO THE EXTENT OF 97% OF THE BOGUS PURCHASE AS AGAINST THE 100% MADE BY THE AO. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 10/07/2010 DECLA RING A TOTAL INCOME OF RS.19,65,540/ - . THE CASE OF THE ASSESSEE WAS REOPENED U/S.147 OF THE ACT BY ISSUING NOTICE U/S.148 OF THE ACT DATED 30/03/2017 A FTER AO RECEIVED INFORMATION FROM DGIT (INV.) MUMBAI FOLLOWING A SEARCH OPERATION ON SHRI BHAVARLAL JAI N AND HIS RELATED ENTITIES. DURING SEARCH IT WAS FOUND THAT ASSESSEE WAS BENEFICIARY OF HAWALA PURCHASE ENTRIES TO THE TUNE OF RS. 2,47,57,412/ - FROM TWO PARTIES NAMELY MOULI GEMS AND SURYA DIAM. ACCORDINGLY , DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES BY FURNISHING THE NECESSARY EVIDENCES WHICH W ERE FILED BY THE ASSESSEE BEFORE THE AO IN THE FORM OF PURCHASE BILLS AND PAYMENT THROUGH BANKING CHANNELS ETC . THE ASSESSEE ALSO PRODUC ED THE BOOKS OF ACCOUNTS, SALES AND PURCHASE REGISTER ALONGWITH SALE AND PURCHASE INVOICES TO PROVE THE GENUINENESS OF THE TRANSACTION S , HOWEVER, THE AO WAS NOT SATISFIED THE BASIC DETAILS ON THE GROUND THAT CAROT, SIZE AND COLOUR ARE NOT MENTIONED IN T HE PURCHASE AND SALE BILLS AND ACCORDINGLY, ADDED THE ENTIRE AMOUNT OF BOGUS PURCHASES TO THE INCOME OF THE ASSESSEE BY FRAMING ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 29/12/2017. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION TO THE EXTENT OF 97% THEREBY SUSTAIN ING ONLY 3% BY RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 38 ITA NO . 5656/MUM/2018 M/S. DIAMOUR 3 TAXMANN. 385 (GUJ) WHEREIN IT HAS BEEN HE LD THAT ONLY THE PROFIT ELEMENT IN THE BOGUS PURCHASES IS TO BE BROUGHT TO TAX AND THUS, REJECTED THE CONTENTION S OF THE AO FOR 100% ADDITION . THE LD. CIT(A) WHILE PARTLY ALLOWING THE APPEAL CONSIDER ED THE MARGIN IN THE CASE OF ASSESSEE ON IMPORTS AND EXP ORTS AND THE LOCAL TAXES THEREON AND CAME TO CONCLUSION THAT 3% IS REASONABLE TO ASSESS THE PROGFI T ON BOGUS PURCHASES. 5. AFTER HEARING THE LD. DR AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY, THE ASSESSEE IS BENEFICIARY OF HAWALA PURC HASE ENTRIES TO THE TUNE OF RS. 2,47,57,412/ - FROM TWO PARTIES. WE FIND THAT THE AO ADDED 100% OF THE AMOUNT ON THE GROUND THAT THE PURCHASES WERE NOT GENUINE, HOWEVER, THE LD. CIT(A) SUSTAINED ADDITION TO 3% BY FOLLOWING THE DECISION OF HONBLE GUJARAT HI GH COURT IN THE CASE OF PCIT VS. SMT. P. SHETH (SUPRA) AND THUS, DIRECTED THE AO TO APPLY 3% CONSIDERING THE FACTS , CIRCUMSTANCES AND NATURE OF BUSINESS OF THE PRESENT CASE. WE FIND THAT T HE LD. CIT(A) HAS PASSED VERY REASONED ORDER BY DIRECTING THE AO T O MAKE AN ADDITION @3% AND WE DO NOT FIND ANY INFIRMITY IN THE SAID ORDER OF LD. CIT(A) WARRANTING OUR INTERFERENCE . ACCORDINGLY WE ARE INCLINED TO UPHELD THE SAME BY DISMISSING THE APPEAL OF THE REVENUE . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 22 / 01 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( PAVAN KUMAR GADALE ) SD/ - ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 22 / 01 / 2021 KARUNA , SR.PS ITA NO . 5656/MUM/2018 M/S. DIAMOUR 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//