PRABHURAM V. PRAJAPATI, MUMBAI V. ITO - 19(2)(5), MUMBAI

ITA 5956/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9897 (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: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase
• Section: 143(1); 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 5956 & 5957/MUM/2018(AY : 2011-12 & 2009-10 ) MR PRABHURAM V PRAJAPATI 23/25, L.K. BUILDING, 5 TH KUMBHARWADA, MUMBAI-400 004 PAN : AIHPP9884E VS ITO-19(2)(5), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY NONE RESPONDENT BY SHRI AKHTAR H ANSARI DATE OF HEARING 26-11-2019 DATE OF PRONOUNCEMENT 04-12-2019 O R D E R PER PAWAN SINGH, JM : 1. THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LEARNED CIT(A)-30, MUMBAI DATED 31-05- 2018 FOR ASSESSMENT YEAR(AY) 2009-10 & 2011-12. THE ASSESSE E HAS RAISED ALMOST COMMON GROUNDS OF APPEAL FOR BOTH THE YEARS. THEREFORE, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE DISPOS ED OF BY THIS COMMON ORDER. THE APPEAL FOR AY 2011-12 IS CONSIDERED AS THE LEAD CASE. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT (A) ERRED IN ASCERTAINING 12.5% GROSS PROFIT OF RS. 12,34,832 ON ALLEGED PURCHASE OF 98,78,661/- TO THE TOTAL INCOME UNDER THE INCOME TAX ACT 1961, WITHOUT CONSI DERING THE FACTS OF THE CASE. 2 ITA 5956 & 5957/MUM/2018 PARBHURAM V PRAJAPATI 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN METALS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 13-09-2011 DECLARING TOT AL INCOME AT RS.4,77,300/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. THE ASSESSMENT WAS RE-OPENED UNDER SECT ION 147 ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTMENT, G OVERNMENT 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 (INVESTIGAT ION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST OF BENEFICIAR IES. THE ASSESSEE ALLEGEDLY MADE THE PURCHASES OF RS.98,78,661/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT, THEREFOR E, RE-OPENED THE ASSESSMENT UNDER SECTION 147. NOTICE UNDER SECTION 148 DATED 16-09-2014 WAS ISSUED TO THE ASSESSEE. THE REASONS RECORDED F OR REOPENING THE ASSESSMENT WAS ALSO FURNISHED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER ISSUED A NOTICES U/S 143(2) AND 142(1). DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS S HOWN PURCHASES FROM THE FOLLOWING PARTIES, WHICH WAS DECLARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA: 3 ITA 5956 & 5957/MUM/2018 PARBHURAM V PRAJAPATI NAME OF THE PARTIES BILL AMOUNT (RS.) 1 RAHUL STEELS 26,20,893 2 MONU METAL 8,91,293 3 MONA METALS / METALEX METAL CORPORATION 7,13,467 4 PARMAR STEEL (INDIA) 56,44,512 5 REBHAR ENTERPRISES 8,496 TOTAL 98,78,661/- 3. DURING THE ASSESSMENT THE ASSESSEE WAS ASKED TO SUB STANTIATE THE PURCHASES. THE ASSESSEE FILED ITS EXPLANATION AND A LSO FURNISHED EVIDENCES RELATING TO THE PURCHASES, CONSISTING THE LEDGER ST ATEMENT AND THE PAYMENTS THROUGH CHEQUE. THE EXPLANATION FILED BY THE ASSESSEE IN WAS NOT FOUND ACCEPTABLE TO THE AO. HE OBSERVED THAT T HE ASSESSEE FAILED TO FURNISH EVIDENCE SUCH AS, DELIVERY CHALLANS, TRANSP ORTATION DETAILS, ETC. TO SUBSTANTIATE HIS CLAIM OF PURCHASES FROM AFORESAID PARTIES. THEREFORE, BY RELYING UPON THE JUDGMENTS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH ( 356 ITR 451(GUJ) AND IN THE CASE OF M/S BHOLANATH POLY FAB P LTD (355ITR 290), THE ASSESSIN G OFFICER, MADE ADDITION OF 12.5% OF THE AMOUNT OF ALLEGED BOGUS PU RCHASES TO THE TOTAL INCOME. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRE SENT APPEAL BEFORE US. 4 ITA 5956 & 5957/MUM/2018 PARBHURAM V PRAJAPATI 5. NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE US, DESPITE SERVICE OF NOTICE OF HEARING ON THE ASSESSEE. THEREFORE, WE A RE LEFT WITH NO ALTERNATIVE BUT TO HEAR THE LEARNED DEPARTMENTAL RE PRESENTATIVE (LD. DR) FOR THE REVENUE AND DISPOSE OF THE APPEAL ON THE BA SIS OF MATERIAL AVAILABLE ON RECORD. 6. THE LD DR FOR THE REVENUE SUPPORTED THE ORDER OF TH E LOWER AUTHORITIES. THE LD DR FURTHER SUBMITS THAT THE ASSESSEE IS ALRE ADY GRANTED SUFFICIENT RELIEF BY THE LOWER AUTHORITIES AND THE APPEALS OF THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR FO R THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSING OFFICER BY RELYING UPON THE JUDGEMENT OF THE HONBL E GUJARAT HIGH COURT IN CIT VS SIMIT P SHETH (SUPRA) AND M/S BHOLANATH P OLY FAB P LTD (SUPRA), HAS MADE AN ADDITION OF 12.5% OF THE ALLEG ED BOGUS PURCHASES BEING THE PROFIT ELEMENT EMBEDDED IN SUCH ALLEGED B OGUS PURCHASES. THE LD CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICE R WITH SIMILAR OBSERVATIONS. 8. WE HAVE NOTED THAT THE LOWER AUTHORITIES HAVE NOT DOUBTED THE SALES OF THE ASSESSEE. THE LOWER AUTHORITIES HAVE NOT EXAMIN ED THE GROSS PROFIT (GP) DECLARED BY THE ASSESSEE DURING THE PREVIOUS O R SUBSEQUENT ASSESSMENT YEARS. WE ARE OF THE CONSIDERED OPINION THAT UNDER INCOME 5 ITA 5956 & 5957/MUM/2018 PARBHURAM V PRAJAPATI TAX ACT ONLY REAL INCOME CAN BE TAXED BY THE REVENU E. WE MAY FURTHER CONCLUDE THAT EVEN IF THE TRANSACTION IS NOT VERIFI ABLE, THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT THE ENTIRE TRA NSACTION. AND AFTER CONSIDERING THE FACTS OF THE CASE AND THE RIVAL CON TENTIONS OF THE PARTIES WE ARE OF THE OPINION THAT IN ORDER TO FULFIL THE G AP OF REVENUE LEAKAGE THE DISALLOWANCE OF REASONABLE PERCENTAGE OF SUCH PURCH ASES WOULD MEET THE END OF JUSTICE. 9. CONSIDERING THE FACTS THE ASSESSEE IS DEALING IN TR ADING OF METALS, WHEREIN THE MARGIN OF PROFIT IS NOT VERY MUCH, THEREFORE, C ONSIDERING THE BUSINESS ACTIVITIES OF THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITIONS / DISALLOWANCE ON ACCOUNT OF THE ALLEGED BOGUS PURCHASE @12.5 % MINUS GP DECLARED BY THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ITA NO.5957/MUM/2018 (AY 2009-10) 11. THE FACTS AND CIRCUMSTANCES IN THIS APPEAL ARE IDEN TICAL TO THE FACTS AND CIRCUMSTANCES FOR THE ASSESSMENT YEAR 2011-12, BUT FOR THE FIGURES. THEREFORE, THE DECISION ARRIVED AT FOR ASSESSMENT Y EAR 2011-12, SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. ACCORD INGLY, CONSISTENT WITH OUR DECISION FOR ASSESSMENT YEAR 2011-12, THE APPEA L FILED BY THE ASSESSEE FOR AY 2009-10 IS ALSO PARTLY ALLOWED. 6 ITA 5956 & 5957/MUM/2018 PARBHURAM V PRAJAPATI 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESS EE ARE PARTLY ALLOWED. . 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