NILESH METEL COMPANY , MUMBAI V. INCOME TAX OFFICER W-19(3)(1) MUMBAI, MUMBAI

ITA 5987/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9530 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 19-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Initiation of penalty proceedings
• Section: 271(1)(c); 133(6)

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 5987 / / 2019 (%. 2010-11 ) ITA NO.5987/MUM/2019(A.Y 2010-11 ) . 5988 / / 2019 (%. 2011-12 ) ITA NO.5988/MUM/2019(A.Y 2011-12 ) M/S. NILESH METAL COMPANY, (RAJKUMAR DOONGARMALLJI CHANDAK) 42/46 OFFICE NO.13, GURU RAJENDRA HOUSE, 5 TH KUMBHARWADA, 2 ND PATHAN STREET, MUMBAI 400 004 PAN: AAIPC-2403-R ...... ' / APPELLANT % VS. ITO-19(3)(1), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 ..... ()/ RESPONDENT '*/ APPELLANT BY : NONE ()*/ RESPONDENT BY : SHRI SANJAY J. SETHI %+) / DATE OF HEARING : 22/06/2021 ,-. +) / DATE OF PRONOUNCEMENT : 26/07/2021 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER COMMISSIONER OF INCOME TAX(APPEALS)-29, MUMBAI [IN SHORT 'THE CIT(A)] FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12, RESPECTIV ELY. BOTH THE IMPUGNED ORDERS ARE OF EVEN DATED I.E. 23/02/2017. SINCE, T HE FACTS GERMANE TO THE ISSUE RAISED IN BOTH APPEALS ARE IDENTICAL(EXCEPT FOR TH E AMOUNTS INVOLVED), THESE 2 ITA NO.5987/MUM/2019(A.Y 2010-11) ITA NO.5988/MUM/2019(A.Y 2011-12) APPEALS WERE TAKEN UP FOR HEARING TOGETHER AND ARE DECIDED BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM R ECORDS ARE: THE ASSESSEE IS ENGAGED IN TRADING OF FERROUS AND NON-FERROUS ME TALS. THE ASSESSMENT FOR ASSESSMENT YEAR 2010-11 AND 2011-12 WERE REOPENED O N THE BASIS OF INFORMATION RECEIVED FROM DGIT(INV), MUMBAI REGARDI NG ASSESSEES INVOLVEMENT IN OBTAINING BOGUS PURCHASE BILLS FROM DEALERS DECLARED AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT, GOVERNMENT O F MAHARASHTRA. IN ASSESSMENT YEAR 2010-11 THE ASSESSEE OBTAINED BOGUS PURCHASE BILLS AGGREGATING TO RS.1,72,12,521/- FROM TEN SUCH SUSPI CIOUS DEALERS ( IN ASSESSMENT YEAR 2011-12 THE ASSESSEE OBTAINED BOGUS PURCHASE BILLS AGGREGATING TO RS.1,79,39,898/- FROM HAWALA OPERATO RS). DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ISSUED NOTICE UND ER SECTION 133(6) OF INCOME TAX ACT,1961 ( IN SHORT 'THE ACT') TO THE AFORESAID DEALERS ON THE ADDRESSES FURNISHED BY THE ASSESSEE. HOWEVER, THE NOTICES WE RE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNO WN OR NO SUCH ADDRESS OR LEFT. THE ASSESSEE COULD NEITHER PRODUCE SUSPICIO US DEALERS NOR ANY CONFIRMATION FROM THE SAID DEALERS. FURTHER, NO DO CUMENTARY EVIDENCE WAS FURNISHED BY THE ASSESSEE IN THE FORM OF DELIVERY C HALLANS, TRANSPORT RECEIPTS, OCTROI RECEIPTS, GOODS INWARDS REGISTER, STOCK REGI STER, ETC. TO PROVE TRAIL OF GOODS. IN THE ABSENCE OF ANY COGENT EVIDENCE TO SUBSTANTIATE GENUINENESS OF SUSPICIOUS DEALERS AND PURCHASES MADE FROM THEM, TH E ASSESSING OFFICER DISALLOWED 12.5% OF BOGUS PURCHASES AND MADE ADDITI ON OF RS.21,51,565/-. FOR SIMILAR REASONS THE ADDITION OF RS.22,42,487/- WAS MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2011-12. THEREAFTER, TH E ASSESSEE FILED APPEALS BEFORE THE CIT(A) FOR RESPECTIVE ASSESSMENT YEARS. THE CIT(A) UPHELD THE 3 ITA NO.5987/MUM/2019(A.Y 2010-11) ITA NO.5988/MUM/2019(A.Y 2011-12) FINDINGS OF ASSESSING OFFICER TO THE EXTENT ASSESS EES INVOLVEMENT IN OBTAINING BOGUS PURCHASE BILLS FROM HAWALA OPERATORS. HOWEVE R, THE CIT(A) GRANTED PART RELIEF TO THE ASSESSEE BY REDUCING G.P ALREADY DECL ARED BY THE ASSESSEE FROM G.P ESTIMATED BY THE ASSESSING OFFICER I.E. 12.5% MINUS G.P ALREADY DECLARED BY THE ASSESSEE ON UNPROVED PURCHASES. STILL AGGRI EVED, THE ASSESSEE IS IN APPEAL FOR BOTH THE IMPUGNED ASSESSMENT YEARS. 3. SHRI SANJAY J. SETHI REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF CIT(A). THE LD.DEPARTMENTAL REPRES ENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN PROVIN G GENUINENESS OF THE DEALERS AND PURCHASES MADE FROM THEM. THE CIT(A) HAS BEE N VERY CONSIDERATE IN ALLOWING THE BENEFIT OF G.P ALREADY DECLARED ON UNP ROVED PURCHASES. THE LD.DEPARTMENTAL REPRESENTATIVE PRAYED FOR UPHOLDING THE IMPUGNED ORDERS AND DISMISSING APPEALS BY THE ASSESSEE. 4. THE SUBMISSIONS MADE BY LD.DEPARTMENTAL REPRESEN TATIVE HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. UNDISPUTEDLY, THE A SSESSEE FAILED TO DISCHARGE HIS ONUS IN PROVING AUTHENTICITY OF THE DEALERS AND THE PURCHASES MADE FROM THEM IN BOTH THE IMPUGNED ASSESSMENT YEARS. THE A SSESSING OFFICER ESTIMATED SUPPRESSED MARGIN ON UNPROVED PURCHASES A T 12.5%. GENERALLY, IN THE TRADE OF FERROUS AND NON-FERROUS METALS G.P R ANGES BETWEEN 5% TO 8%. THEREFORE, ESTIMATION OF G.P ON UNPROVED PURCHASE S BY THE ASSESSING OFFICER IS ON HIGHER SIDE. IN FIRST APPELLATE PROCEEDING S, THE CIT(A) HAS GRANTED RELIEF BY REDUCING THE G.P ALREADY DECLARED BY THE ASSESS EE ON UNPROVED PURCHASES FROM ESTIMATED ADDITION OF 12.5%. TAKING INTO CON SIDERATION ENTIRETY OF FACTS I AM OF THE CONSIDERED VIEW THAT ENDS OF JUSTICE WOUL D BE MET IF G.P ON UNPROVED PURCHASES IS RESTRICTED TO 6%. THE GROU ND NO.1 OF BOTH THE APPEAL IS THUS, PARTLY ALLOWED. 4 ITA NO.5987/MUM/2019(A.Y 2010-11) ITA NO.5988/MUM/2019(A.Y 2011-12) 5. IN GROUND NO.2 OF APPEAL, THE ASSESSEE HAS ASS AILED INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. CH ALLENGE TO PENALTY PROCEEDINGS AT THIS STAGE IS PREMATURE. THUS, GROU ND NO.2 RAISED IN BOTH THE APPEALS IS DISMISSED AS PREMATURE. 6. IN THE RESULT, APPEAL BY THE ASSESSEE FOR ASSES SMENT YEAR 2011-11 AND 2011-12 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 26 TH DAY OF JULY, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 0%/ DATED 26 /07/2021 VM , SR. PS (O/S) COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. () / THE RESPONDENT. 3. 1) ( )/ THE CIT(A)- 4. 1) CIT 5. 23()% , . . . , / DR, ITAT, MUMBAI 6. 34567 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI