ITO 31 (2)(1), MUMBAI V. SHRI. INAMULLAH H CHOUDHARY , MUMBAI

ITA 6063/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6366 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2021
• 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); 142(1); 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.6063/M/2019 ASSESSMENT YEAR: 2009-10 ITO 31(2)(1), ROOM NO.615, 6 TH FLOOR, KAUTALYA BHAVAN, BKC, BANDRA (E), MUMBAI 51 VS. SHRI INAMULLAH H CHOUDHARY, (PROP. OF AMIR STEEL CORP.) OPP GARUDA PETROL PUMP, GANESH NAGAR, LINK RD., CHARKOP, KANDIVILI (W), MUMBAI 67 PAN: AFTPC6795A (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 24.06.2021 DATE OF PRONOUNCEMENT : 02.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 03.05.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2.AT THE TIME OF HEARING WHEN THE CASE WAS CALLED F OR HEARING, NEITHER ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE US TO ATTEND THE CASE NOR ANY ADJOURNMENT AP PLICATION WAS FILED SEEKING ADJOURNMENT. THEREFORE WE ARE DEC IDING THE ITA NO.6063/M/2019 SHRI INAMULLAH H CHOUDHARY 2 APPEAL OF THE REVENUE AFTER HEARING THE LD DR AND A FTER TAKING INTO ACCOUNT THE MERITS OF THE CASE. 2. THE ONLY ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A) REST RICTING THE ADDITION TO 12.5% AS AGAINST THE ADDITION MADE BY T HE AO @25% ON THE BOGUS PURCHASES OF RS.42,74,801/-. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 30.09.2009 DECLARING AN INCOME OF RS.3,68 ,904/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . 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 13.03.2014 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.42,74,801/-. 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 SERVICES THEREOF . 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 22.09.2014 WHICH WAS RETURNED UNSERVED. THE ASSESS EE IN RESPONSE TO NOTICE UNDER SECTION 142(1) OF THE ACT FILED BEFORE THE AO THE COPIES OF BILLS, VOUCHERS, DELIVERY CHAL LANS IN CASE OF A FEW SUPPLIERS AND ALSO BANK STATEMENTS HIGHLIGHTI NG THE PAYMENTS. THE AO ALSO REQUIRED THE ASSESSEE TO PRO DUCE THESE PARTIES IN PERSON, HOWEVER, THE SAME COULD NOT BE D ONE BY THE ASSESSEE. FINALLY, THE AO AFTER FOLLOWING THE DECI SION OF HONBLE ITA NO.6063/M/2019 SHRI INAMULLAH H CHOUDHARY 3 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 25% ON THE B OGUS PURCHASES IN ORDER TO TAX THE PROFIT ELEMENT EMBEDD ED THEREIN THEREBY MAKING AN ADDITION OF RS.10,68,700/- IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) READ WITH SECTION 147 O F THE ACT DATED 10.03.2015. 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 MARGIN OF 12.5% ON THE BOGUS PURCHASES AS THE GP AP PLIED BY THE AO OF 25% IS HIGHLY EXPENSIVE AND UNREASONABLE BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. SIMIT P. SHETH (SUPRA) BY HOLDING THAT IN VIEW OF T HE INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTME NT AND ALSO THE FACT OF NON SERVICE OF NOTICES ISSUED UNDER SEC TION 133(6) OF THE ACT, IT IS UNDOUBTEDLY PROVED THAT ASSESSEE HAS INDULGED IN MAKING BOGUS PURCHASES. 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 TO THE TUNE OF RS. 42,7 4,801/-. WE NOTE THAT THE ASSESSEE HAS MADE THE PAYMENTS BY BA NKING CHANNEL AND ALSO PLACED BEFORE THE AUTHORITIES BELO W THE COPIES OF BILLS, VOUCHERS, DELIVERY CHALLANS ETC. AFTER PE RUSING THE APPELLATE ORDER WE OBSERVE THAT THE LD CIT(A) HAS P ASSED A VERY REASONED ORDER BY CONSIDERING THE DECISION OF CIT V S. SIMIT P. SHETH (SUPRA). THE COORDINATE BENCHES OF THE TRIBUN AL HAVE BEEN TAKING CONSISTENT VIEW OF APPLYING GP RATE ON THE ALLEGED BOGUS ITA NO.6063/M/2019 SHRI INAMULLAH H CHOUDHARY 4 PURCHASES TO BRING TO TAX THE PROFIT EMBEDDED IN SU CH BOGUS PURCHASES VARYING FROM 2% TO 12.5% DEPENDING ON T HE FACTS OF THE CASE. IN THE INSTANT CASE THE LD. CIT(A) HAS DI RECTED THE AO TO APPLY 12.5% OF THE BOGUS PURCHASES WHICH IS REA SONABLE AND JUSTIFIED AND CONSEQUENTLY WE DO NOT FIND ANY REAS ON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). ACCOR DINGLY, 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 02.07.2021. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 02.07.2021. * KISHORE, SR. P.S. 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.