SHANTIDEVI C. JAIN .PROP. OF M/S. ANTRIKSH METAL CORP., MUMBAI V. ITO 17 (3)(3), MUMBAI

ITA 5936/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5179 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5936/MUM/2018(A.Y. 2009-10) ITA NO.5937/MUM/2018(A.Y. 2011-12) SHANTIDEVI C. JAIN PROP OF M/S. ANTRIKSH METAL CORPORATION, 312, 13/12, 3 RD PANJARPOLE LANE, C.P.TANK, PO BOX.3534, MUMBAI 400 004 PAN:AAJPJ 7081K ...... APPELLANT VS. INCOME TAX OFFICER 17(3)(3), ROOM NO.123, 1 ST FLOOR, AAYKAR BHAVAN, M.K.ROAD, . MUMBAI 400 020 ..... RESPONDENT APPELLANT BY : SHRI ASHOK MEHTA RESPONDENT BY : SHRI RAM TIWARI DATE OF HEARING : 18/09/2019 DATE OF PRONOUNCEMENT : 30/10/2019 ORDER PER VIKAS AWASTHY, JM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-28,( IN SHORT THE CIT(A)), MUMBAI DATED 02/07/2018 COMMON FOR THE ASSESSMENT YEAR 20 09-10 AND 2011- 12. SINCE THE FACTS GIVING RISE TO THESE APPEALS A RE SIMILAR AND BOTH THE APPEALS ARE DIRECTED AGAINST THE SINGLE ORDER OF CI T(A) FOR TWO DIFFERENT ASSESSMENT YEARS, THESE APPEALS ARE TAKEN UP TOGETH ER FOR ADJUDICATION AND DISPOSED OF BY THIS COMPOSITE ORDER. 2 ITA NO.5936/MUM/2018(A.Y. 2009-10) ITA NO.5937/MUM/2018(A.Y. 2011-12) 2. THE BRIEF FACTS EMANATING FROM THE RECORDS ARE; THE ASSESSEE IS ENGAGED IN TRADING OF FERROUS AND NON-FERROUS MET ALS. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, MA HARASHTRA, ASSESSMENT FOR ASSESSMENT YEAR 2009-10 AND 2011-12 WERE REOPENED. IN RE-ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HE LD THAT THE ASSESSEE HAS INDULGED IN BOGUS PURCHASES IN ASSESSMENT YEAR 2009-10 FROM FOLLOWING PARTIES:- S.NO. HAWALA OPERATOR AMOUNT (IN RS.) 1. DHRUV SALES CORPORATION 95,832 2. A.P.ENTERPRISES 9,82,248 3. VIDHI AND VRUSHTI TRADE PVT. LTD. 39,1 2,480 4. KANK GURU TUBES AND METALS PVT. LTD. 13,67,688 5. NEW ERA ENTERPRISES 19,01,974 THE ASSESSING OFFICER REJECTED BOOKS OF ACCOUNTS AND THE G.P DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER ESTIMATED G.P AT 12.5% ON ALLEGED BOGUS PURCHASES RESULTING IN ADDITION OF RS.11,33,6 26/-. 3. SIMILARLY, IN ASSESSMENT YEAR 2011-1, THE ASS ESSING OFFICER HELD THAT THE PURCHASES MADE BY THE ASSESSEE FROM FOLLOW ING PARTIES ARE BOGUS AND ESTIMATED G.P @ 12.5% OF SUCH BOGUS PURCHASES A FTER REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE. S.NO. HAWALA OPERATOR AMOUNT (IN RS.) 1. HARSHIL FERROMET PVT. LTD. 45,36,387 2. HANS ENTERPRISES 3,58,188 3. BOSTAM ENTERPRISES 8,42,365 4. STELCO STEEL INDUSTRIES 1,19,012 5. ROLEX TRADING CO. 2,68,372 3 ITA NO.5936/MUM/2018(A.Y. 2009-10) ITA NO.5937/MUM/2018(A.Y. 2011-12) 6. GOLD STAR TRADING CO. 2,45,012 7. PRIYA STEEL CORPN. 7,50,214 8. SAGAR ENTERPRISES 7,74,980 9. MUKTA STEEL & COMPANY 12,32,339 TOTAL 91,26,869 4. AGGRIEVED AGAINST THE ASSESSMENT ORDERS PASSED U NDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 (IN SH ORT THE ACT) FOR THE ASSESSMENT YEARS 2009-10 AND 2011-12, THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ADDITION MADE BY ASSESSING OFFICER. N OW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL, ASSAILING ; (I) THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHA SES; AND (II) REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. 5. SHRI ASHOK MEHTA APPEARING ON BEHALF OF THE ASSE SSEE SUBMITTED THAT THE ASSESSEE HAD DECLARED G.P OF 6.9% IN AS SESSMENT YEAR 2009-10. THE G.P ESTIMATED BY THE ASSESSING OFFICER, AT 12.5 % IS VERY MUCH ON THE HIGHER SIDE. 5.1 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER CONTENDED THAT ASSESSING OFFICER WHILE MAKING ADDIT ION ON ACCOUNT OF BOGUS PURCHASES HAVE INCLUDED THE NAME OF SOME OF T HE PARTIES FROM WHICH ASSESSEE HAD NEVER MADE ANY PURCHASES. THIS FACT WAS BROUGHT TO THE NOTICE OF ASSESSING OFFICER AS WELL AS CIT(A), HOWEVER, THE AUTHORITIES BELOW REJECTED THE CONTENTIONS OF THE ASSESSEE WITH OUT EXAMINING THE FACTS AND DOCUMENTS ON RECORD. THE LD. AUTHORIZED REPRESENTATIVE FOR THE 4 ITA NO.5936/MUM/2018(A.Y. 2009-10) ITA NO.5937/MUM/2018(A.Y. 2011-12) ASSESSEE FURTHER SUBMITTED THAT DURING ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2011-12, THE ASSESSEE HAD FURNISHE D VARIOUS DOCUMENTS VIZ. BALANCE SHEET, PROFIT AND LOSS ACCOUNT, AUDIT REPORT, PURCHASE REGISTERS, BANK REGISTERS, PURCHASE AND SALE INVOIC ES ALONG WITH LRS, ETC. THE ASSESSING OFFICER SIMPLY IGNORED THE SAME AND MADE THE ADDITION BY ESTIMATING G.P AT 12.5%. THE LD. AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE SUBMITTED THAT BOTH THE APPEALS MAY BE RE MITTED BACK TO THE ASSESSING OFFICER TO RE-EXAMINE THE ISSUE OF BOGUS PURCHASES IN THE LIGHT OF HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF PCIT -17 VS. M/S. MOHAMMAD HAJI ADAM & CO. IN INCOME TAX APPEAL NO.10 04 OF 2016 DECIDED ON 11/02/2019. 6. ON THE OTHER HAND, SHRI RAM TIWARI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDERS AND PRAYED FOR DISMISSING APPEALS OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT SINCE THE ASSESSEE HAD FAILED TO PROVE GENUI NENESS OF THE PURCHASES AND THE PARTIES, THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED G.P AT 12.5% OF SUCH BOGUS PURCHASES. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORIT IES BELOW. THE ASSESSEE IS IN APPEAL AGAINST ESTIMATION OF G.P AT 12.5% ON ALLEGED BOGUES PURCHASES BY THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT SALES DECLARED BY THE ASSESSEE IN BOTH THE IMPUGNED ASSESSMENT YEARS HAVE NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, THE ADDITION CAN ONLY BE MADE ON ACCOUNT OF UNDISCLOSED PROFITS ON ALLEG ED BOGUS PURCHASES. HOWEVER, THE G.P RATE SHOULD BE ESTIMATED ON SOME R ATIONAL BASIS. TAKING 5 ITA NO.5936/MUM/2018(A.Y. 2009-10) ITA NO.5937/MUM/2018(A.Y. 2011-12) INTO CONSIDERATION ENTIRETY OF FACTS AND THE PRAY ER OF THE ASSESSEE, WE DEEM IT APPROPRIATE TO RESTORE BOTH THE APPEALS B ACK TO THE FILE OF ASSESSING OFFICER, WITH A DIRECTION TO RECOMPUTE G. P IN THE LIGHT OF JUDGMENT RENDERED IN THE CASE OF PCIT -17 VS. M/S . MOHAMMAD HAJI ADAM & CO. (SUPRA). 8. IN THE RESULT, BOTH THE APPEALS BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY THE 30 TH DAY OF OCTOBER, 2019. SD/- SD/- (RAJESH KUMAR) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30/10/2019 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI