ITO 33 (2)(5), MUMBAI V. PRANAV MADHUSUDAN SHAH, MUMBAI

ITA 5891/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1979 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 16 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: 12-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHERA RAM
• Section: 133(6); 143(1); 201; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO . 5891 / MUM . /2018 ( ASSESSMENT YEAR : 201 0 1 1 ) INCOME TAX OFFICER WARD 33(2)(5), MUMBAI . APPELLANT V/S SHRI PRANAV MADHUSUDAN SHAH 602, MODIPARK, BUILDING NO.2 IRANWADI ROAD NO.3 KANDIVALI (W), MUMBAI 400 067 PAN AAKPS6634A . RESPONDENT REVENUE BY : SHRI BHERA RAM ASSESSEE BY : NONE DATE OF HEARING 2 1.11 .2019 DATE OF ORDER 28.11.2019 O R D E R PER SAKTIJIT DEY. J.M. T HE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 2 9 TH JUNE 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 10 11 . 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DECISION O F THE LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF NON GENUINE PURCHASES TO 12.5%. 2 SHRI PRANAV MADHUSUDAN SHAH 2. BRIEF FACTS ARE, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF MANUFACTURING, SUPPLY, TRADING OF SPARE PARTS, COMPONENTS, MACHINE PARTS, AS PER ORDER RECEIVED. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 11 TH SEPTEMBER 2010 DECLARING TOTAL INCOME OF ` 4,31,538. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT AND INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, THE ASSESSI NG OFFICER FOUND THAT THE PURCHASES WORTH ` 12,07,153, CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM JINDUTT CORPORATION, TO BE NON GENUINE AS THE CONCERNED PARTY IS ONLY AN ACCOMMODATION ENTRY PROVIDER. ACCORDINGLY, THE ASSESSING OFFICER RE OPENED THE AS SESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES. FURTHER, TO ASCERTAIN THE GENUINENESS OF PURCHA SES, THE ASSESSING OFFICER CONDUCTED INDEPENDENT ENQUIRY BY ISSUING NOTICE UNDER SECTION 133(6) OF THE ACT. HOWEVER, NO INFORMATION WAS RECEIVED IN RESPONSE TO SUCH NOTICE. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD ONLY FURNISH LEDGER ACCOUNT, COPY OF PURCHASE INVOICE, SALE INVOICE, DETAILS OF PAYMENTS MADE THROUGH CHEQUE. HOWEVER, NEITHER THE ASSESSEE COULD FURNISH 3 SHRI PRANAV MADHUSUDAN SHAH DELIVERY CHALLAN, LORRY RECEIPT, ETC., NOR COULD PRODUCE THE PARTIES. THUS, THE ASSESSING OFFICER CONCLUDED THAT THE GENU INENESS OF PURCHASES COULD NOT BE ESTABLISHED BY THE ASSESSEE. AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT, THE ASSESSING OFFICER PROCEEDED TO DISALLOW 25% OF THE NON GENUINE PURCHASES AND ADDED BACK AN AMOUNT OF ` 3,01,788. THE AS SESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 3. IN AN EX PARTE ORDER PASSED WHILE DISPOSING OFF THE APPEAL, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. 4. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE APPEARED ON BEHALF OF THE ASSESSEE. AS SEEN FROM RECORD, NOTICE OF HEARING ISSUED PER REGISTERED POST HAS ALSO RETURNED BACK UN SERVED. IN THE AFORESAID VIEW OF THE MATTER, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA TH E ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, THE ASSESSEE BEING A MANUFACTURER, DISALLOWANCE @ 25% OF THE NON GENUINE PURCHASES IS REASONABLE. 4 SHRI PRANAV MADHUSUDAN SHAH 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. NO DOUBT, THE ASSESSEE HAS FAILED TO CONCLUSIVELY PROVE THE GENUINENESS OF PURCHASES MADE. HOWEVER, CONSUMPTION OF RAW MATERIAL OR SALES EFFECTED BY THE ASSESSEE HAVE NOT BEEN DOUBTED OR DISPUTED. IN SUCH CIRCUMSTANCES, THE PROFIT ELEMENT EMBEDDED IN SUCH NON GENUINE PURCHASES CAN BE CONSIDERED FOR ADDITION. IN FACT, THE ASSESSING OFFICER HAS ADOPTED THE VERY SAME APPROACH BY ESTIMATING THE PROFIT ELEMENT ON NON GENUIN E PURCHASES @ 25%. WHILE DECIDING ASSESSEES APPEAL ON THE ISSUE, LEARNED COMMISSIONER (APPEALS) HAS RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT DISALLOWANCE @ 12.5 %, AS HAS BEEN MADE BY THE LEARNED COMMISSIONER (APPEALS), IS REASONABLE, HENCE, REQUIRES NO INTERFERENCE. GROUNDS ARE DISMISSED. 7. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28. 1 1.2019 5 SHRI PRANAV MADHUSUDAN SHAH 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