ITO 21 (1)(5), MUMBAI V. SHRI. JITENDRA P SHINDE , MUMBAI

ITA 6055/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2121 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 143(1); 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6055/M/2019 ASSESSMENT YEAR: 2009-10 ITO 21(1)(5), ROOM NO.120, 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400012 VS. SHRI JITENDRA P. SHINDE, 50, MANUBHAI CHAWL, T.H. KATARIYA MARG, MAHIM, MUMBAI 400 016 PAN: ANCPS 4359P (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 24.06.2021 DATE OF PRONOUNCEMENT : 24.06.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 10.07.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE COMMON ISSUE RAISED IN THE VARIOUS GROUNDS O F APPEAL BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A) R ESTRICTING THE DISALLOWANCE TO RS.4,38,327/- BEING 20% OF THE BOGU S PURCHASES AS AGAINST RS.6,57,491/- BEING 30% OF BOG US PURCHASES OF RS.21,09,635/- MADE BY THE AO. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 26.09.2009 DECLARING AN INCOME OF RS.8,50 ,480/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . ITA NO.6055/M/2019 SHRI JITENDRA P. SHINDE 2 THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED U NDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT DATED 07.02.2014 AFTER THE AO RECEIVED THE INFORMAT ION FROM DGIT(INV.), MUMBAI AND SALES TAX DEPARTMENT THAT AS SESSEE IS BENEFICIARY OF HAWALA PURCHASE ACCOMMODATION ENTRIE S FROM 13 PARTIES TO THE TUNE OF RS.21,91,635/-. THE STATUTO RY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND INSTALLATION OF ELECTRICAL ITEMS, MOTOR ENGINEERING ITEMS AND SERVICING THERE OF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THESE PURCHASE S. THE AO ALSO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT DATED 26.06.2014 TO ALL THE PARTIES WHICH WERE RETURNED U NSERVED. THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 14 2(1) OF THE ACT FILED BEFORE THE AO THE COPIES OF BILLS, VOUCHE RS, DELIVERY CHALLANS IN CASE OF A FEW SUPPLIERS AND ALSO BANK S TATEMENTS HIGHLIGHTING THE PAYMENTS. THE AO ALSO REQUIRED TH E ASSESSEE TO PRODUCE THESE PARTIES IN PERSON WHICH COULD NOT BE DONE BY THE ASSESSEE. FINALLY, THE AO AFTER FOLLOWING THE DECI SION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 38 TAXMANN.COM 385 (GUJ) CAME TO CONCLUSION THAT SU CH TYPE OF PURCHASES ARE NORMALLY MADE TO SAVE THE PROFIT MARG IN AND ACCORDINGLY APPLIED A PROFIT MARGIN OF 30% ON THE B OGUS PURCHASES IN ORDER TO TAX THE PROFIT ELEMENT EMBEDD ED THEREIN THEREBY MAKING AN ADDITION OF RS.6,57,491/- IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) READ WITH SECTION 147 O F THE ACT DATED 16.03.2015. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO A PPLY A PROFIT ITA NO.6055/M/2019 SHRI JITENDRA P. SHINDE 3 MARGIN OF 20% ON THE BOGUS PURCHASES BY FOLLOWING T HE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS . SIMIT P. SHETH (SUPRA) BY HOLDING THAT IN VIEW OF THE INVEST IGATION CARRIED OUT BY THE SALES TAX DEPARTMENT AND NON SERVICE OF NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT, IT IS UNDOU BTEDLY PROVED THAT ASSESSEE HAS INDULGED IN MAKING BOGUS PURCHASE S BUT THESE ARE TO BE ASSESSED REASONABLY. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT UNDISPUTEDLY THE ASSESSEE I S BENEFICIARY OF HAWALA PURCHASE ENTRIES AND THE ASSESSEE HAS MAD E THE PAYMENTS BY BANKING CHANNEL AND ALSO PLACED BEFORE THE AUTHORITIES BELOW THE COPIES OF BILLS, VOUCHERS, DE LIVERY CHALLANS ETC. HISTORICALLY, IN SUCH TYPE OF CASES IT HAS BE EN CONSISTENTLY HELD BY THE CO-ORDINATE BENCH OF THE TRIBUNAL THAT RATE TO BE APPLIED TO ASSESS THE PROFIT EMBEDDED IN THE BOGUS PURCHASES VARIES FROM 2% TO 12.5% WHEREAS IN THE PRESENT CASE THE LD. CIT(A) HAS DIRECTED THE AO TO APPLY 20% OF THE BOGU S PURCHASES WHICH IS QUITE GOOD AND CONSEQUENTLY WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). AC CORDINGLY, WE ARE UPHOLDING THE ORDER OF LD. CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.06.2021. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.06.2021. * KISHORE, SR. P.S. ITA NO.6055/M/2019 SHRI JITENDRA P. SHINDE 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.