ITO 27(1)(2), MUMBAI V. ATUL V. LOTIA, MUMBAI

ITA 5731/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2230 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MICHAEL JERALDLD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 148

Judgement Text

1 ITA NO.5731/MUM/2018 ATUL V. LOTIA ASSESSMENT YEAR-2010-11 - IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5731/MUM/2018 ( / ASSESSMENT YEAR:2010-11) I.T.O . WARD 27(1)(2) TOWER NO. 06, 4 TH FLOOR R.NO. 407, VASHI RLY STATION COMPLEX, VASHI, NAVI MUMBAI-400 703. / VS. ATUL V. LOTIA PROP: ATUL STEELS 5/13, NANDLAL POPAT CHAWL GANDHI NAGAR, LBS MARG, GHATKOPAR (W), MUMBAI-400 086. !'# ./ ./PAN/GIR NO. AAAPL-5329-B ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) ! / APPELLANT BY : SHRI S. MICHAEL JERALD-LD. DR ' ! / RESPONDENT BY : NONE / DATE OF HEARING : 14/11/2019 / DATE OF PRONOUNCEMENT : 20/11/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-25, MUMBAI [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO.CIT(A)- 2 ITA NO.5731/MUM/2018 ATUL V. LOTIA ASSESSMENT YEAR-2010-11 25/IT-807/2015-16/195 DATED 05/07/2018 QUA DELETION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJO URNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE P ROCEED TO DISPOSE-OFF THE APPEAL AFTER HEARING LEARNED DEPARTMENTAL REPRESENT ATIVE WHO SUPPORTED THE ADDITIONS MADE BY LD.AO. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN BUSINESS UNDER P ROPRIETORSHIP CONCERN NAMELY M/S ATUL STEELS WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3) R.W.S. 147 ON 12/02/2016 WHEREIN THE RETURNE D LOSS OF RS.33.42 LACS FILED BY THE ASSESSEE ON 11/10/2010 WAS REDUCED TO RS.24.39 LACS ON ACCOUNT OF ADDITION OF RS.9.01 LACS ON ACCOUNT OF A LLEGED BOGUS PURCHASES. 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM THE DGIT (INV.) WING, MUMBAI/SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ACCOMMODATION PURCHAS ES BILLS AGGREGATING TO RS.9.01 LACS STATED TO BE OBTAINED FROM THREE EN TITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED IN PARA-2 OF QUAN TUM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENED AS PER DUE PROCE SS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 30/01/2015 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 142(1) WHEREIN THE ASSESSEE WAS DIRECTE D TO SUBSTANTIATE THE STATED PURCHASE TRANSACTIONS BY FILING REQUISITE DE TAILS. ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, HOWEVER, NOTICES I SSUED U/S 133(6) TO CONFIRM THE TRANSACTIONS REMAINED UNSERVED AND THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSAC TIONS. RESULTANTLY, THE 3 ITA NO.5731/MUM/2018 ATUL V. LOTIA ASSESSMENT YEAR-2010-11 STATED PURCHASES WERE DISALLOWED AND ADDED TO THE I NCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CONTESTED THE STAND OF T HE LD. ASSESSING OFFICER BEFORE LEARNED FIRST APPELLATE AUTHORITY VI DE IMPUGNED ORDER DATED 05/07/2018 ON LEGAL GROUNDS AS WELL AS ON MERITS. T HE LEGAL GROUND RAISED BY THE ASSESSEE DID NOT FIND FAVOR WITH LD. CIT(A). HOWEVER, ON MERITS, LD. CIT(A) HELD THAT THE CORRECT APPROACH WOULD BE TO E STIMATE THE ADDITIONAL BENEFIT OR PROFIT EARNED ON THOSE PURCHASES AND NOT TO DISALLOW THE ENTIRE PURCHASES. THEREFORE, INTER-ALIA, RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN CIT V/S BHOLANATH POLY FAB PVT LTD. 355 ITR 290 AND CIT V/S SIMIT P. SHETH 356 ITR 451, THE IMPUGNED ADDITIONS WERE RESTRICTED TO 12.5% OF ALLEGED BOGUS PURCHASES . AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT PREFERRED ANY FURTHER APPEAL. 5. AFTER CAREFUL CONSIDERATION, WE ARE OF THE CONSI DERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIA L KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. UNDISPUTEDLY THE ASS ESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCHASES AND COULD NOT PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRA NSACTIONS AND THEREFORE, THE ONUS CASTED UPON ASSESSEE, IN THIS REGARD, REMA INED UNDISCHARGED. THEREFORE, ON THE GIVEN FACTS AND CIRCUMSTANCES, DI SALLOWANCE OF ENTIRE 4 ITA NO.5731/MUM/2018 ATUL V. LOTIA ASSESSMENT YEAR-2010-11 PURCHASES, IN OUR OPINION, WOULD NOT BE JUSTIFIED R ATHER THE ADDITIONS WHICH COULD BE SUSTAINED, WOULD BE TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY M ARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. THEREFORE, FINDING T HE ESTIMATION OF 12.5% TO BE QUITE FAIR AND REASONABLE, WE DISMISS THE APPEAL . 6. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2019 SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20/11/2019 SR.PS:-**PP,SPS '( )( / 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 5 ITA NO.5731/MUM/2018 ATUL V. LOTIA ASSESSMENT YEAR-2010-11 SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTACHED/PART DICTATIO N COPY ENCL./ORDER FINAL BY HON.AM P.P SR.PS/PS 2 DRAFT DICTATED ON NOT APPLICABLE SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR P.P SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.PS/PS 20-11-19 P.P SR.PS/PS 7 ORDER PRONOUNCEMENT ON 20-11-19 P.P SR.PS/PS 8 FILE SENT TO THE BENCH CLERK 20-11-19 P.P SR.PS/ PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER