ITO 21(1)(3), MUMBAI V. MANOJ D. CHITALIA, MUMBAI

ITA 6063/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0532 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: POONAM NARAM
• Keywords: Corroborative evidences; Accommodation entries
• Section: 69C; 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO . 6063 / MUM . / 2018 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 2(1)(3), MUMBAI . APPELLANT V/S MANOJ D. CHITALIA B/17, PUTLIBAI KAPOLE CHS LTD. 167/C, S.V. ROAD, VILE PARLE (W) MUMBAI 400 056 PAN ADDPC4819M . RESPONDENT REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH ASSESSEE BY : MS. POONAM NARAM DATE OF HEARING 03.09.2019 DATE OF ORDER 13.09.2019 O R D E R CAPTIONED APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 1 3 TH AUGUST 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3 7 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 09 10 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE T O 12.5% OF NON GENUINE PURCHASES. 2 MANOJ D. CHITALIA 3 . BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED HIS RETURN OF INCOME ON 14 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 4,39,217. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.), MUMBAI, AND THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, INDICATING THAT THE PURCHASES WORTH ` 17,83,402, CLAIMED TO HAVE BEEN MADE FROM TWO PARTIES ARE IN THE NATURE OF ACCOMMODATION ENTRIES, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINEN ESS OF THE PURCHASES THROUGH SUPPORTING EVIDENCE. FURTHER, TO VERIFY THE GENUINENESS OF PURCHASES, THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT, WHICH EITHER WERE NOT RESPONDED TO OR COULD NOT BE SERVE D . FURTHER, HE OBSERVED THAT TH E ASSESSEE FAILED TO FURNISH ANY EVIDENCE TO DEMONSTRATE ACTUAL DELIVERY OF GOODS. THUS, ULTIMATELY HE HELD THAT THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE ARE NOT GENUINE. ACCORDINGLY, HE PROCEEDED TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESS EE AND ADDED BACK THE PURCHASES OF ` 17,83,402, BY TREATING IT AS UNEXPLAINED 3 MANOJ D. CHITALIA EXPENDITURE UNDER SECTION 69C OF THE ACT. THE ASSESSEE CHALLENGING THE AFORESAID ADDITION BEFORE LEARNED COMMISSIONER (APPEALS), WHO RESTRICTED THE ADDITION TO 12.5% OF THE NON G ENUINE PURCHASES. 4 . I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE ASSESSING OFFICER HAS MADE THE ADDITION OF ENTIRE PURCHASES , ALLEGED TO BE NON GENUINE , ON THE REASONING THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE CONCERNED PARTIES AND FURTHER , COULD NOT PROVE THE ACTUAL DELIVERY OF GOODS FROM THE CONCERNED PARTIES. IT IS EVIDENT, THE ASSESSING OFFICER HAS NOT DOUBTED THE SALES EFFECTED BY THE ASSESSEE. THEREFORE, IN THE ABSENCE OF PURCHASES, T HE ASSESSEE COULD NOT HAVE EFFECTED THE CORRESPONDING SALES. THIS LEADS TO AN INFERENCE THAT THE ASSESSEE MAY NOT HAVE PURCHASED THE GOODS FROM THE DECLARED SOURCE BUT FROM THE GREY MARKET , THEREBY , NOT PAYING SALES TAX/ VAT WHICH MAY HAVE HELPED THE ASSESS EE IN EARNING MORE PROFIT. IN SUCH CIRCUMSTANCES, THE ENTIRE PURCHASES HELD TO BE NON GENUINE CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE BUT ONLY THE PROFIT ELEMENT EMBEDDED THEREIN CAN BE CONSIDERED FOR ADDITION. THEREFORE, THE DECISION OF LEARNED COMM ISSIONER (APPEALS) IN RESTRICTING THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES BEING IN CONFORMITY WITH VARIOUS DECISIONS OF THE TRIBUNAL ON IDENTICAL ISSUE, I DO NOT FIND ANY REASON TO INTERFERE WITH IT. ACCORDINGLY, THE GROUNDS RAISED ARE DISMISSED . 4 MANOJ D. CHITALIA 5 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 13.09.2019 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 13.09.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI