SHRI MILIND M MESTRY, MUMBAI V. ITO WD-4(2), THANE

ITA 5948/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1485 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase; Set aside
• Section: 133(6); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI C.N.PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 5948/MUM/2018 ASSESSMENT YEAR : 2010-11 SHRI MILIND M MESTRY, PROP: M/S.HARSH METALS, GALA NO.2, RAJPRABHA INDUSTRIAL ESTATE-3, NAIKPADA, VASAI ROAD (E), [PAN : AFUPM0879A] VS. INCOME TAX OFFICER, WARD-4(2), THANE (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI R.BHOOPATHI, DR DATE OF HEARING : 1 9 - 0 9 - 201 9 DATE OF PRONOUNCEMENT : 22 - 1 0 - 201 9 O R D E R PER RAJESH KUMAR, A.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, THANE, DATED 12-03-2018. 2. AT THE TIME OF HEARING WHEN THE APPEAL WAS CALLE D UP FOR HEARING , NEITHER ASSESSEE NOR HIS AUTHORIZED REPRE SENTATIVE WAS PRESENT TO ATTEND THE HEARING DESPITE SERVICE O F NOITICE. THEREFORE WE ARE PROCEEDING TO DECIDE THE APPEAL OF THE ASSESSEE ON MERITS AFTER HEARING THE LD DR. 3. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE ,BEIN G PROPRIETOR OF M/S. M/S.HARSH METAL, IS DOING THE B USINESS OF ITA NO. 5948/MUM/2018 : 2 : MANUFACTURING OF PRECISION DIE AND SHEET METAL AND FILED HIS RETURN OF INCOME ON 30-09-2009, DECLARING TOTAL INC OME OF RS.1,68,936/-. THE CASE OF THE ASSESSEE WAS RE-OP ENED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE SALE S TAX DEPARTMENT THAT PARTY M/S.BLUE NILE ENTERPRISES, FR OM WHICH THE ASSESSEE HAD MADE PURCHASES, WAS INVOLVED IN PR OVIDING HAWALA ENTRIES AND THE ASSESSEE WAS ONE OF THE BENE FICIARIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ,THE ASSESSEE FURNISHED THE COPIES OF BILLS FOR PURCHASES FROM BL UE NILE ENTERPRISES, AMOUNTING TO RS.10,71,875/- ALONGWITH THE LEDGER ACCOUNT AND DETAILS OF PAYMENTS BY CHEQUES. THE AO ALSO ISSUED 133(6) DATED BUT WAS NOT REPLIED. THE AO OBSERVED THAT MERE PAYMENT BY A/C PAYEE CHEQUE IS N OT SUFFICIENT PROOF OF ANY EXPENDITURE CLAIMED BY THE ASSESSEE. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS FAILE D TO PRODUCE SUPPLIERS FOR VERIFICATION. HE THEREFORE C ONCLUDED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST UPON HIM TO PROVE THE GENUINENESS OF THE EXPENDITURE AND FINALLY THE AO MADE AN ADDITION OF RS.10,71,875/- U/S.69C O F THE ACT. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, LD.C IT(A) OBSERVED THAT NEITHER THE ASSESSEE NOR THE AUTHORIZ ED REPRESENTATIVE OF THE ASSESSEE, ATTENDED TO ARGUE THE CASE, DESPITE GIVING SEVERAL OPPORTUNITIES AND DISMISSED THE APPEALS EX-PARTE . 5. AFTER HEARING LD DR AND PERUSING THE MATERIAL O N RECORD, WE OBSERVE THAT IN THIS CASE, UNDISPUTEDLY, ASSESSEE IS BENEFICIARY OF BOGUS HAWALA PURCHASE ENTRIES. WE N OTE THAT ITA NO. 5948/MUM/2018 : 3 : THE ASSESSEE IS ENGAGED IN MANUFACTURING AND DEALIN G IN PRECISION DIE AND SHEET METAL. THE AO ADDED THE ENT IRE PURCHASES TO THE INCOME OF THE ASSESSEE BY TREATING THEM AS NON GENUINE DESPITE ASSESSING FILING ALL THE INFORM ATION ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE SUPP LIER. THOUGH THE ASSESSEE DID NOT SHOW UP BEFORE THE LD C IT(A) TO ATTEND THE HEARING THE APPEAL WAS DISMISSED EX-PA RTE. IN OUR OPINION EVEN IN THE CASE OF BOGUS PURCHASES WHERE T HE SALES ARE NOT DISPUTED BY THE AO, 100% IS EXCESSIVE AND UNREASONABLE IN VIEW OF THE NATURE OF BUSINESS OF T HE ASSESSEE AND PROFIT IN THAT LINE OF ASSESSEE. HOWEVER WE CE RTAINLY FEEL THAT SOME ESTIMATED PROFIT ON THE SAID BOGUS PURCHA SES HAS TO BE BROUGHT TO TAX AS THE AO HAS NOT DISPUTED THE CORRESPONDING SALES. IN OUR VIEW IT WOULD BE REASO NABLE AND FAIR IF 6% IS APPLIED ON THE SAID BOGUS PURCHASES TO ASSESS THE PROFITS. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO MAKE ADDITION @4% ON THE SAME. 6. SO FAR AS THE ISSUE OF INITIATION OF PENALTY PRO CEEDINGS UNDER SECTION 271(1) IS CONCERNED , WE OF THE VIEW THAT TO RAISE THE GROUND AT THIS STAGE IS PREMATURE AND THE REFORE DOES NOT REQUIRE ANY ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2019 SD/- SD/- ( C.N. PRASAD ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI; /DATED : 22-10-2019 TNMM ITA NO. 5948/MUM/2018 : 4 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A), MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI