ITO 19 (1)(2), MUMBAI V. BIPIN MANAKCHAND JAIN, MUMBAI

ITA 5728/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1980 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHERA RAM
• Keywords: Bogus purchase; Corroborative evidences
• Section: 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBERAND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 5728 / MUM . /2018 ( ASSESSMENT YEAR : 2010 11 ) INCOME TAX OFFICER WARD 19(1)(2), MUMBAI . APPELLANT V/S SHRI BIPIN MANAKCHAND JAIN 48, GROUND FLOOR, 1 ST CARPENTER STREET NEAR C.P. TANK, MUMBAI 400 007 PAN ADOPJ2631H . RESPONDENT REVENUE BY : SHRI BHERA RAM ASSESSEE BY : NONE DATE OF HEARING 21.11.2019 DATE OF ORDER O R D E R PER SAKTIJIT DEY. J.M. T HE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 3 RD JULY 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 30, MUMBAI, FOR THE ASSESSMENT YEAR 2010 11. 2. THE SOLITARY DISPUTE IN THE PRESENT APPEAL IS ON THE ISSUE OF PART DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON GENUINE PURCHASES. 2 SHRI BIPIN MANAKCHAND JAIN 3. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE. IT IS SEEN FR OM RECORD, THE HEARING NOTICE ISSUED P ER REGISTERED POST WITH A/D, HAS RETURNED BACK UNSERVED. CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON TH E BASIS OF MATERIAL ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN TRADING IN FERROUS AND NON FERROUS METAL THROUGH HIS PROPRIETARY CONCERN M/S. ROMEX TUBES AND FITTINGS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED HIS RETURN OF INCOME ON 26 TH SEPTEMBER 2010, DECLARING TOTAL INCOME OF ` 4,05,320. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UN DER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.), MUMBAI, AS WELL AS THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THE ASSESSING OFFICER FOUND THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE IN DIFFERENT ASSESSMENT YEARS ARE NON GENUINE AS THEY HAVE BEEN PURCHASED FROM ENTITIES WHO HAVE BEEN IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODATION BILLS. ON THE BASIS OF SUCH INFORMATION, THE AS SESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES. AS ALLEG ED BY THE 3 SHRI BIPIN MANAKCHAND JAIN ASSESSING OFFICER, ASSESSEE FAILED TO PRODUCE THE SELLING DEALERS AS WELL AS THE BANK DETAILS. THE ASSESSEE ALSO COULD ONLY FURNISH THE COPIES OF THE PURCHASE BILLS AND AUDIT REPORT. THEREFORE, HOLDING THAT THE GENUINENESS OF PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE WERE NOT PROVED THROUGH SUPPORTING EVIDENCE , THE ASSESSING OFFICER TREATED THEM AS NON GENUINE AND DISALLOWED 15% OUT OF PURCHASES WORTH ` 2,75,48,854, WHICH WORKED OUT TO ` 41, 32,328. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BY FILLING APPEAL BEFORE THE FIRST APPELLATE AUTHORITY . 5. A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) AGREED WITH THE ASSESSING OFFICER THAT TH E ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES MADE DURING THE ASSESSMENT YEAR. HOWEVER, HE RESTRICTED THE ADDITION TO 6.5% OF THE NON GENUINE PURCHASES. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF THE AS SESSING OFFICER SUBMITTED , THE DISALLOWANCE @ 15% OF THE NON GENUINE PURCHASES IS REASONABLE, HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE RESTORED. 7. WE HAVE C ONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE M ATERIAL ON RECORD. IT IS EVIDENT , THE ASSESSING OFFICER COMPLETED THE ASSESSMENT EX PARTE TO THE BEST OF 4 SHRI BIPIN MANAKCHAND JAIN HIS JUDGMENT , SINCE , THE ASSESSEE DID NOT APPEAR AND FURNISH ANY EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. HOWEVER, ULTIMATELY, THE ASSESSING OFF ICER HA S MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASE @ 15% ON SUCH PURCHASES. AS COULD BE SEEN, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) HAS NOTED THAT THE APPLICABLE VAT RATE ON SUCH TRANSACTION IS 4%. FURTHER, HE OBSERVED , IN CASE OF CIT V/S SIMIT P. SHETH, [2013] 356 ITR 451 (GUJ.), THE HONBLE GUJARAT HIGH COURT HAS UPHELD THE DECISION OF THE TRIBUNAL IN RESTRICTING THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES ON THE BASIS O F PROFIT PERCENTAGE AND VAT. A PPLYING THE SAME LOGIC, HE HAS RESTRICTED THE ADDITION TO 6.5% (4% VAT + 2.5% PROFIT MARGIN). IN OUR VIEW, THE AFORESAID DECISION OF THE LEARNED COMMISSIONER (APPEALS) IS NOT ONLY REASONABLE BUT THE CORRECT APPROACH TO QUANTIFY THE ADDITION. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. THE GROUND RAISED IS DISMISSED. 8. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 28.11 . 20 1 9 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.11.2019 5 SHRI BIPIN MANAKCHAND JAIN COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI