ITO 19 (2)(3), MUMBAI V. MAFARAM J. CHOUDHARY, MUMBAI

ITA 5715/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6128 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSHMI NAYAKLD
• Keywords: Bogus purchase; Set aside
• Section: 133(6); 48; 148

Judgement Text

ITA NO.5715-16/MUM/2018 MAFARAM J. CHOUDHARY ASSESSMENT YEARS:2009-10 & 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5715/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.5716/MUM/2018 ( / ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER - 19(2 )( 3 ) ROOM NO.218, MATRU MANDIR, TARDEO ROAD, GRANT ROAD, MUMBAI-400 007. / VS. MR. MAFARAM J. CHOUDHARY M/S. GURU STEEL ENGG. CO. GROUND FLOOR, 24/28 ABBAS MANSION 4 TH KUMBHARWADA MUMBAI-400 004. ! ./ ./PAN/GIR NO. AEEPC-8323-A ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : MS. JYOTI LAKSHMI NAYAK-LD.DR / DATE OF HEARING : 11/02/2020 / DATE OF PRONOUNCEMENT : 11/02/2020 / O R D E R PER BENCH 1.1 AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEA RS [IN SHORT REFERRED TO AS AY] 2009-10 & 2012-13 CONTEST COMM ON ORDER OF LD. ITA NO.5715-16/MUM/2018 MAFARAM J. CHOUDHARY ASSESSMENT YEARS:2009-10 & 2012-13 2 COMMISSIONER OF INCOME-TAX (APPEALS)-30, MUMBAI, [I N SHORT REFERRED TO AS CIT(A)], ORDER DATED 16/07/2018. THE GROUNDS R AISED FOR AY 2009-10 READ AS UNDER: - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE NET ADDITIO N ON ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF 12.5% OF THE ADDITION MADE BY AO ON A CCOUNT OF BOGUS PURCHASES? 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT CONSIDERING THE ORDER OF HON BLE SUPREME COURT IN THE CASE OF N.K.PROTEIN LTD. DATED 16-01-2017, WHICH IS ON T HE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF THE LAND WHEN THE LD.CIT(A) HAS PRONOUNCED ITS ORDER ON 09-07-2018?' 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.C IT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 1.2 NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJ OURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, THE APPEALS WERE PROCEEDED WITH EX-PARTE QUA THE ASSESSEE IN VIEW OF THE FACT THAT THE SOLE SUBJECT MATTER OF APPEAL WAS ESTIMATED ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 1.3 WE HAVE CAREFULLY HEARD ARGUMENTS ADVANCED BY L D. DR WHO PLEADED FOR CONFIRMATION OF FULL ADDITIONS AS MADE BY LD. AO. AFTER CONSIDERING THE SAME, OUR ADJUDICATION TO THE APPEA LS WOULD BE AS GIVEN IN THE SUCCEEDING PARAGRAPHS. 2.1 FACTS AS EMANATING FROM CASE RECORDS FOR AY 200 9-10 ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENG AGED IN TRADING OF METALS UNDER PROPRIETORSHIP CONCERN NAMELY M/S GURU STEEL ENGG. CO. WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3 ) R.W.S. 147 ON 24/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.79.28 LACS AFTER SOLE ADDITION OF RS.74.80 LACS ON ACCOUNT OF ALLEGED ITA NO.5715-16/MUM/2018 MAFARAM J. CHOUDHARY ASSESSMENT YEARS:2009-10 & 2012-13 3 BOGUS PURCHASES AS AGAINST ASSESSED INCOME OF RS.4. 48 LACS U/S 143(3). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INV.) / SALES TAX DEPARTMENT, MAHARASHTRA, IT TRANSPIRED THAT THE ASSESSEE AVAILED ACCOMMODATION BILLS AGGREGATING TO RS.74.80 LACS FR OM 7 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED IN PAR A-2 OF QUANTUM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENE D AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 1 3/03/2014 WHICH WAS FOLLOWED BY STATUTORY NOTICES WHEREIN THE ASSESSEE WAS DIRECTED TO FILE REQUISITE DETAILS AND SUBSTANTIATE PURCHASE TRANSAC TIONS. 2.3 TO VERIFY THE TRANSACTIONS, NOTICES U/S 133(6) WERE ISSUED TO THESE SUPPLIERS, HOWEVER, IN MOST OF THE CASES, THE NOTIC ES WERE RETURNED BACK UNDELIVERED BY POSTAL AUTHORITIES. THE ASSESSEE FAI LED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS. HOWEVER, IN DEFENSE, THE ASSESSEE PRODUCED LEDGER EXTRACTS, COPIES OF PURCHA SE BILLS AND BANK STATEMENTS EVIDENCING PAYMENT THROUGH BANKING CHANN ELS. THEREFORE, FINDING THAT THE ASSESSEE FAILED TO DISCHARGE THE P RIMARY ONUS OF PROVING THE PURCHASE TRANSACTIONS, LD. AO DISALLOWED THE SA ID PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. BEFORE LD. CIT(A), THE ASSESSEE, INTER-ALIA, SUBMITTED THAT THE PURCHASES WERE GENUINE SINCE CORRESPONDING SALES WE RE ACCEPTED. IT WAS ALSO SUBMITTED THAT GROSS PROFIT RATE ON DISPUT ED PURCHASES WAS MUCH HIGHER THAN OVERALL GROSS PROFIT RATE REFLECTE D BY THE ASSESSEE. THE LD. CIT(A), AFTER CONSIDERING FACTUAL MATRIX AS WEL L ASSESSEES SUBMISSIONS IN THE LIGHT OF VARIOUS JUDICIAL PRONOU NCEMENTS, ESTIMATED THE ADDITION OF 12.5% AGAINST THESE PURCHASES. RELI ANCE WAS PLACED ON ITA NO.5715-16/MUM/2018 MAFARAM J. CHOUDHARY ASSESSMENT YEARS:2009-10 & 2012-13 4 THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT V/S SIMIT P.SHETH (356 ITR 451) WHILE MAKING SUCH ADDITION. AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 4. UPON DUE CONSIDERATION, WE ARE OF THE OPINION TH AT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL PARTICU LARLY WHEN THE ASSESSEE WAS INTO TRADING ACTIVITIES. THE SALES TUR NOVER HAS NOT BEEN DISPUTED / DISTURBED BY THE REVENUE. THE ASSESSEE W AS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. HOWEVER, AT THE SAME TIME , THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM T HE TRANSACTIONS. NOTICES ISSUED U/S 133(6) DID NOT ELICIT SATISFACTORY RESPO NSE AND THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS OF SUBSTANTIAT ING THE PURCHASE TRANSACTIONS. THE STATED FACTUAL MATRIX, IN OUR CON SIDERED OPINION, WOULD MAKE IT A FIT CASE TO MAKE ESTIMATED ADDITIONS TO A CCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY / UNORGANIZED MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LOWER AUTHORITIES HAVE RIGHTLY DON E SO. THEREFORE, FINDING THE ESTIMATION OF 12.5% TO BE QUITE FAIR AN D REASONABLE, WE DECLINE TO INTERFERE IN THE IMPUGNED ORDER. THE APP EAL STANDS DISMISSED. ITA NO. 5716/MUM/2018, AY 2012-13 5. FACTS ARE PARI-MATERIA THE SAME IN THIS YEAR. TH E ASSESSEE WAS SIMILARLY SADDLED WITH ADDITIONS OF NON-GENUINE PUR CHASES AGGREGATING TO RS.179.74 LACS. THE LD. CIT(A), FOLLOWING ITS DECIS ION IN AY 2009-10, ESTIMATED THE ADDITIONS @12.5%. THE IMPUGNED ORDER IS COMMON ORDER ITA NO.5715-16/MUM/2018 MAFARAM J. CHOUDHARY ASSESSMENT YEARS:2009-10 & 2012-13 5 FOR BOTH THE YEARS. AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 6. SINCE FACTS ARE PARI-MATERIA THE SAME, OUR DECIS ION FOR AY 2009-10 SHALL MUTATIS-MUTANDIS APPLY TO THIS YEAR ALSO. RESULTANTLY, THE GROUNDS RAISED BY REVENUE, IN THIS REGARD, STAND DISMISSED. CONCLUSION 7. BOTH THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2020. SD/- SD/- (AMARJIT SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/02/2020 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,-$. , . , / DR, ITAT, MUMBAI 6. -/0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.