ITO 21 (3)(5), MUMBAI V. VINIT PRAVIN SAKARIA, MUMBAI

ITA 5934/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0944 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase; Unexplained expenditure; Set aside
• Section: 142(1); 143(1); 143(2); 147; 131; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAYA (AM) & SHRI PAWAN SINGH ( JM) ITA NO. 5934/MUM/2018 (ASSESSMENT YEAR : 2010-11) ITO-21(3)(5 ), ROOM NO. 117, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012. V/S SHRI VINIT PRAVIN SAKARIA, MAHALAXMI METAL INDUSTRIES, 5/27, D WING, AMBEDKAR NAGAR CHS, OP. WORLI POLICE STATION, WORLI, MUMBAI-400 025 PAN : BESPS6796E APPELLANT RESPONDEDNT APPELLANT BY SHRI AKHTAR H ANSARI (SR. DR) RESPONDENT BY NONE DATE OF HEARING 27-11-2019 DATE OF PRONOUNCEMENT 04-12-2019 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)- 48, MUMBAI DATED 30-07-2018 FOR THE ASSESSMENT YEAR 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING ONLY 12.5% ADDITION OF RS .15,25,661/- ON THE BOGUS PURCHASES AS AGAINST THE AOS STAND OF DISALLOWING 1 00% OF THE BOGUS PURCHASES, IGNORING THE FACT THAT THE ACTION OF THE ASSESSING OFFICER WAS ONLY BASED ON CREDIBLE INFORMATION RECEIVED FROM THE MAH ARASHTRA SALES TAX DEPARTMENT, THE ASSESSEE, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, FAILED TO PROVE THE GENUINENESS OF THE PURCHASE TRANSACTIO NS. 2. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL AND IS TRADER ENGAGED IN THE BUSINESS DEALING IN BEARINGS, HARDWARE, ELECTRIC ITEMS ETC., FILED HIS RETURN OF INCOME ON 10-10-201 0 DECLARING INCOME OF 2 ITA 5934 MUM 2018-SHRI VINIT P RAVIN SAKARIA RS.2,31,728/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE ASSESSMENT WAS RE-OPENED UNDER SECTION 1 47 ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTMENT, GOVE RNMENT OF MAHARASHTRA THAT CERTAIN HAWALA OPERATORS ARE INDUL GING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOOD S. THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA REFERRED THE LIST OF SUCH HAWALA DEALERS AND THE BENEFICIARY TO THE DGIT (INV ESTIGATION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST O F BENEFICIARIES. THE ASSESSEE ALLEGEDLY MADE THE PURCHASES OF RS.15,25,6 61/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE AS SESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED AS SESSMENT, THEREFORE, RE-OPENED THE ASSESSMENT UNDER SECTION 147. NOTICE UNDER SECTION 148 DATED 11-02-2015 WAS ISSUED TO THE ASSESSEE. NO CO MPLIANCE WAS MADE BY ASSESSEE NOR ANY RETURN IN RESPONSE OF NOTICE UN DER SECTION 148 WAS FILED. THE ASSESSING OFFICER THEREAFTER ISSUED A NO TICES U/S 143(2) AND 142(1) ALONG WITH A QUESTIONNAIRE. BUT HERE ALSO TH ERE WAS NO COMPLIANCE FROM THE ASSESSEE. THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(B) ON 07.12.2015. THE ASSESSEE CONTESTED THE PROCEEDING THROUGH HIS COUNSEL ON 08.01.2012. ON FU RTHER SHOW-CAUSE NOTICE, THE ASSESSEE FILED ACKNOWLEDGEMENT OF RETUR N OF INCOME FILED IN COMPLIANCE OF NOTICE UNDER SECTION 148. THE ASSESSI NG OFFICER NOTED 3 ITA 5934 MUM 2018-SHRI VINIT P RAVIN SAKARIA THAT DESPITE REPEATED SHOW-CAUSE NOTICE AND NOTICES UNDER SECTION 142(1) AND 143(2), THE ASSESSEE NEITHER MADE COMPLI ANCE NOR FURNISHED ANY DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE PURCH ASES. THE ASSESSING OFFICER MADE ASSESSMENT UNDER SECTION 144 OF THE AC T. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS SHOWN PURCHASES FROM THE FOLLOWING PARTIES, WHICH WAS DEC LARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF M AHARASHTRA: NAME OF THE PARTIES BILL AMOUNT (RS.) 1 LAXMI TRADING CO. 25,480 2 SHREEJI ENTERPRISES 1,81,511 3 NIMESH TRADING CO. 2,45,626 4 H.R. CORPORATION 2,77,219 5 A.G. CORPORATION 7,95,825 TOTAL 15,25,661 4. THE ASSESSEE WAS ASKED TO PRODUCE THE PARTIES, ALTE RNATIVELY ALSO SHOW CAUSE AS TO WHY THE PURCHASES MADE FROM THE ABOVE P ARTY SHOULD NOT BE DISALLOWED AS UNEXPLAINED EXPENDITURE. THE ASSESSI NG OFFICER RECORDED THAT THE ASSESSEE FAILED TO FURNISH THE EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES, THE ASSESSING OFFICER TREATED THE ENT IRE ALLEGED PURCHASES FROM THE AFORESAID HAWALA PARTIES. THE ASSESSING OF FICER TREATED THE ENTIRE PURCHASES FROM THE SAID HAWALA PARTIES AS BO GUS AND MADE 4 ITA 5934 MUM 2018-SHRI VINIT P RAVIN SAKARIA ADDITION OF RS. 15,25,661/-, WHILE PASSING THE ASSE SSMENT ORDER ON 18.03.2016 UNDER SECTION 144 R.W.S. 147. 5. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION WAS R ESTRICTED TO THE EXTENT OF 12.5% OF SUCH PURCHASES BEING THE PROFIT ON SUCH BOGUS PURCHASES. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL BEFORE US. 6. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE THE SER VICE OF NOTICE OF HEARING FIXED ON 27.11.2019. THUS, WE LEFT NO OPTIO N EXCEPT TO HEAR THE SUBMISSION OF LD. DR FOR THE REVENUE AND TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE LD. DR S UBMITS THAT LD. CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 12. 5% ONLY, BY IGNORING THE FACT THAT THERE IS NO EVIDENCE ON RECORD TO PRO VE THE GENUINENESS OF PURCHASES. THE ASSESSEE HAS SHOWN BOGUS PURCHASES T HROUGH HAWALA DEALERS. NO EVIDENCE WAS FURNISHED BY ASSESSEE TO S UBSTANTIATE THE PURCHASES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOW ED THE ENTIRE/ 100% OF THE ALLEGED/IMPUGNED/BOGUS PURCHASES ON THE BASI S OF INFORMATION RECEIVED FROM INVESTIGATION WING. THE ASSESSING OFF ICER MADE BEST JUDGMENT ASSESSMENT UNDER SECTION 144 OF THE ACT. N O INDEPENDENT ENQUIRY WAS CONDUCTED. NO NOTICE UNDER SECTION 133( 6) OR SUMMONS 5 ITA 5934 MUM 2018-SHRI VINIT P RAVIN SAKARIA UNDER SECTION 131 WAS ISSUED BY ASSESSING OFFICER T O THE ALLEGED HAWALA DEALERS. THE FINDING OF ASSESSING OFFICER IS SOLELY BASED ON THE REPORT OF SALE TAX DEPARTMENT AND DGIT (INVESTIGATION), MUMBA I. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED THAT HE HAS SUBMITTE D BILLS OF PURCHASE AND PROOF OF PAYMENT THROUGH BANKING CHANNELS. THE ASSESSEE IS NOT MAINTAINING STOCK REGISTER. THERE IS NO WAREHOUSE/S TORE/GODOWN. IT WAS FURTHER EXPLAINED THE ASSESSEE FORWARDED THE GO ODS/SALE DIRECTLY FROM THE SELLER TO ULTIMATE BUYER. THE GOODS PURCHA SED BY ASSESSEE NOT CAME IN POSSESSION OF ASSESSEE. THE LD. CIT(A) AFTE R CONSIDERING THE SUBMISSION OF ASSESSEE AND THE MATERIAL PLACED BEFO RE HER, RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF ALLEGED BOGUS PU RCHASE BY CONSIDERING THE FACT THAT THE TRIBUNAL IN A NUMBER OF CASES HELD THAT ONLY PROFIT ON BOGUS PURCHASES OF THE GOODS IS TO BE TAX ED. WE ARE ALSO OF THE VIEW THAT EVEN IF THE PURCHASES ARE NOT FULLY VERIF IABLE, THE REVENUE IS ENTITLED TO TAX THE INCOME COMPONENT ONLY AND NOT T HE ENTIRE TRANSACTION. THE LD. DR FAILED TO CONVINCE US AS TO WHY THE DISA LLOWANCE RESTRICTED TO 12.5% OF THE ALLEGED BOGUS PURCHASES IS NOT JUST IFIED. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE BUS INESS ACTIVITY AND THE FACTS EXPLAINED BEFORE THE LD. CIT(A) AS RECORDED I N PARA-5.1.1. THUS, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL R AISED BY THE REVENUE. NO CONTRARY FACT OR LAW IS BROUGHT TO OUR NOTICE TO TAKE A DIFFERENT VIEW. 6 ITA 5934 MUM 2018-SHRI VINIT P RAVIN SAKARIA 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04- 12-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 4 TH DECEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI