ITO 24(3)(2), MUMBAI V. PANKAJ BHASKAR TIKE, MUMBAI

ITA 6080/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3593 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 30-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RADHA KOTY AL NARANG
• Assessee Lawyers: HITESH M SHAH
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 143(3); 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI SANJAY ARORA, AM ./ I.T.A. NO. 6080/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) ITO - 24(3) (2), ROOM NO. 704, C - 11, PRATAYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400 051 / VS. PANKAJ BHASKAR TIKE 21/671, WEST VIEW CHS, SHASTRI NAGAR, GOREGAON (W), MUMBAI - 400 062 ./ ./ PAN/GIR NO. AAEPT 2598 Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. RADHA KOTY AL NARANG / RESPONDENT BY : SHRI HITESH M. SHAH / DATE OF HEARING : 05.7.2016 / DATE OF PRONOUNCE MENT : 05 .7.2016 / O R D E R PER MAHAVIR SINGH, JM : THIS A PPEAL BY THE REVENUE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 34 , MUMBAI (CIT(A) FOR SHORT) IN APPEAL NO. CIT(A)34/IT - 355/2013 - 14 DATED 31.7.2014. THE ASSESSMENT WAS FRAMED BY ITO, WARD 24(3)(2), MUMBAI FOR THE ASSESSMENT YEAR (A.Y.) 2009 - 10 VIDE HIS ORDER DATED 30.1.2014 U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) . 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE A.O. IN REGARD TO UNEXPLAINED PURCHASES AMOUNTING TO 2 ITA NO. 6080/MUM/2014 (A.Y. 2009 - 10) ITO VS. PANKAJ BHASKAR TIKE RS.49,69,910/ - FROM STHAPANA TRADE IMPEX (P) LTD. AND RS.49,69,910/ - FROM M/S. REAL TRADERS. 3. BRIEFLY STATED FACTS ARE THAT THE A.O. RECEIVED INFORMATION FROM SALES TAX DEPARTMENT , GOVERNMENT OF MAHARASHTRA THAT STHAPANA TRADE IMPEX (P) LTD. AND M/S. REAL TRADERS ARE INDULGED IN SUSPICIOUS DEALS FOR ISSUING BOGUS BILLS AND TO ASSESSEE HAVING MADE THE SALES TO THE EXTENT OF RS.52,23,035/ - , HE ISSUED NOTICE U/S. 148 FOR REOPENING OF THE ASSESSMENT. THE A .O. ISSUED NOTICES U/S.133(6) O F THE ACT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TO THESE PURCHASE PARTIES, WHICH RETURN UNSERVED BY THE POSTAL AUTHORITIES. ACCORDING TO THE A.O., THE FOLLOWING ARE THE DETA ILS OF PARTIES FROM WHOM THE ASSESSEE HAD MADE BOGUS PURCHASES: SR. NO. NAME OF THE PARTIES TIN PURCHASE AMOUNT IN RS. 1 M/S. STHAPANA TRADE IMPEX (P.) LTD. 27610598830V 49,59,910 2 M/S. REAL TRADERS 27170626911V 2,53,125 52,23,035 ACCORDING TO THE A.O. THESE ARE HAWALA TRANSACTIONS AS PROVED BY THE SALES TAX DEPARTMENT OF MAHARASHTRA AND THE PURCHASES MADE FROM THESE PARTIES AMOUNTING TO RS.52,23,035/ - IS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. ACCORDINGLY , HE MADE AN ADDITION TO THIS AMOUNT T O THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , WHO DELETED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS PRODUCED CONFIRMATION OF ACCOUNTS ALONG WITH PAN NUMBER, ACTIVE STATUS OF TIN NUMBER , CERTIFIC ATION OF TRANSACTIONS, COPIES OF INVOICES, COPY OF DELIVERY CHALLANS, AND PROOF OF PAYMENT MAD E THROUGH ACCOUNT PAYEE CHEQUES , SUCH AS BANK STATEMENTS. IN VIEW OF THESE FACTS, THE CIT(A) OBSERVED THAT THIS PROVES THE GENUINENESS OF THE PURCHASES MADE FROM THESE PARTIES. HE, FURTHER, OBSERVED THAT THE ASSESSEE HAS FURNISHED COMPLETE ACCOUNTS INCLUDING AUDITED BALANCE - SHEET AND ALSO THE A.O. HAS NOT REJECTED THE BOOKS OF ACCOUNT U/S. 145 OF THE ACT. IN VIEW OF THESE FACTS, RELYING ON THE DECISION BY THE H ONB LE BOMBAY HIGH COURT I N THE CASE OF NIKUNJ ENTERPRISES P. LTD. ( IN ITA NO. 5604 OF 2010 DATED 17.12.2012 ), HE DELETED THE ADDITION OF BOGUS PURCHASES. HE ALSO DIRECTED THAT GP DECLARED BY THE ASSESSEE AT 5% IS QUITE REASONABLE IN VIEW OF THE FACT THAT THE 3 ITA NO. 6080/MUM/2014 (A.Y. 2009 - 10) ITO VS. PANKAJ BHASKAR TIKE SALES HAVE BEEN ACCEPTED QUA THESE BOGUS PURCHASES. AGGRIEVED AGAINST THE DELETION , THE REVENUE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4 . WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE ALSO FI LED SOME DETAILS BEFORE THE BENCH WHICH WAS AVAILABLE BEFORE THE A. O . AND BEFORE THE CIT (A). DURING THE COURSE OF HEARING, THE QUERY WAS PUT TO THE ASSESSEE WHETHER THESE PARTIES EX IST O R NOT . I N REPLY , HE STATED THAT EVEN IF T HESE PARTIES DOES NOT EX IST , THE ASSESSEE MIGHT HAVE MADE PURCHASES FROM ONE SOURCE OR THE OTHER AND EFFECTED SALES ACCORDINGLY. ACCORDING TO HIM ONCE THE SALES ARE EFFECTED AND NOT DOUBTED BY THE A.O., THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF BOGUS PURCHASES. WHEN THE LD. COUNSEL WAS FURTHER ASKED THAT ONCE THE PURCHASES ARE BOGUS AND THE PURCHASES ARE MADE FROM ONE OR THE OTHER PARTY, THE ASSESSEE MIGHT HAVE EVADED SALES TAX AND OTHER LOCAL TAXES . IN REPLY, HE CONCEDED THE POSITION AND STATED THAT IN CASE THE PURCHASES ARE MADE FROM UN KNOWN SOURCE, HE REQUESTED THE B ENCH TO ESTIMATE THE REASONABLE PROFIT IN L IEU OF THE EVASION OF TAX. IN TERMS OF THE ABOVE EXPLANATION G IVEN BY THE ASSESSEE, WE ARE OF THE VIEW THAT THESE ARE BOGUS PURCHASES, BUT ONCE THE SALES ARE AFFECTED AND NOT DOUBTED BY THE REVENUE, AT THE B EST A REASONABLE PROFIT ON THESE SALES CAN BE ESTIMATED. HENCE , WE ESTIMATE THE PROFIT RATE ON THE BOGUS PURCHASES FROM THESE TWO PARTIES AT 10% INSTEAD OF 5% DECLARED BY THE ASSESSEE. THE A.O . IS DIRECTED TO BRING BALANCE 5% PROFIT IN TAX NET AND ASSESS ACCORDINGLY. 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF THE ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 05 , 201 6 SD/ - SD/ - ( SANJAY ARORA ) (MAHAVIR SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 05 . 0 7 .201 6 . . ./ ROSHANI , SR. PS 4 ITA NO. 6080/MUM/2014 (A.Y. 2009 - 10) ITO VS. PANKAJ BHASKAR TIKE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI