DHIRAJLAL SOMAIYA, MUMBAI V. INCOME TAX OFFICER, WARD 33(1)(4), MUMBAI

ITA 6096/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0852 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMALATHA
• Assessee Lawyers: B R RAO
• Keywords: Bogus purchase
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.6096/M/2017 ASSESSMENT YEAR: 2009-10 SHRI DHIRAJLAL SOMAIYA, 12, SHREEJI VILLA, KASTURBA CROSS ROAD, KANDIVALI (WEST), MUMBAI-400 067 PAN: ANIPS2817G VS. I NCOME TAX OFFICER, WARD 33(1)(4), AAYAKAR BHAVAN, MUMBAI 400 020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B.R. RAO, A.R. REVENUE BY : MS. HEMALATHA, D.R. DATE OF HEARING : 01.01.2018 DATE OF PRONOUNCEMENT : 22.01.2018 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 17.08.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN BUSINESS OF STEEL HARDWARE AND GENERAL I TEMS. DURING THE YEAR THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) FOUND THAT ASSESSEE HAD MADE BOGUS PURCHASES FROM FOLLOWI NG PARTIES: SR. NO. NAME OF THE PARTY AMOUNT OF PURCHASE (RS) 1. N.B. ENTERPRISES 25,53,470 2. JINDAL STEEL CORPORATION 10,93,625 3. J.B. INTERLINK 28,54,034 4. P.K. TRADING CO . 7,98,906 73,00,035 ITA NO.6096/M/201 SHRI DHIRAJLAL SOMAIYA 2 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UND ER SECTION 133(6). THEREFORE, THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.73,00,035/-. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE CLAIM BY OBSERVING AS UNDER: 5. I HAVE CONSIDERED THE STAND OF THE AO AND THE SUBMI SSIONS OF THE APPELLANT. THE AO HAD RECEIVED INFORMATION FROM DGJ T(INV.), MUMBAI/SALES TAX DEPARTMENT THAT THE APPELLANT MADE PURCHASES TO THE TUNE OF RS.73,00,035/- FROM FOUR CONCERNS WHICH WER E HAWALA DEALERS. ACCORDINGLY, THE AO ISSUED NOTICE U/S 148 AND REOPE NED THE ASSESSMENT, MAKING ADDITION OF RS.9,12,504/- BEING 12.5% OF THE UNPROVED PURCHASES. THE APPELLANT STATED THAT HE HA D PAID THE AMOUNT TO THE AFORESAID CONCERNS THROUGHBANKING CHANNEL AN D HAD MAINTAINED STOCK REGISTERS AND ALSO ALL THE DETAILS CALLED FOR WERE SUPPLIED TO THE AO. THEREFORE, NO ADDITION CANNOT MADE ON THIS ACCOUNT. THE AO HAS RELIED UPON THE GUJARAT HIGH COURT'S DECISION REPORTED IN 356 ITR 290 IN THE CASE OF SIMIT P. SHETH WHEREIN IT HAS BEEN HELD THA T IN CASE OF BOGUS PURCHASES, THE ESTIMATION OF PROFIT AT 12.5% CAN BE MADE. FOLLOWING THE DECISION OF GUJARAT HIGH COURT'S CITED SUPRA, T HE AO HAS CORRECTLY ESTIMATED THE INCOME AT RS.9,12,504/- BEING 12.5% O F THE BOGUS PURCHASES AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT. I FIND NO ERROR IN THE ESTIMATION OF INCOME MADE BY THE AO AN D THEREFORE, UPHELD THE DISALLOWANCE MADE BY THE AO. ACCORDINGLY, THIS GR OUND OF APPEAL IS DISMISSED. 5. DURING THE COURSE OF HEARING, THE LD. A.R. SUBMI TTED THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN TH E CASE OF HIRALAL CHUNILAL JAIN & ORS. VS. ITO & ORS. IN ITA NOS.4547 , 2545, 1275/M/2014 WHEREIN THE TRIBUNAL HELD THAT WHEN ASS ESSING OFFICER HAD NOT MADE ANY INDEPENDENT ENQUIRY AND SIMPLY MAD E THE ADDITION ON THE BASIS OF THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, THEN THE ADDITION IS NOT JUSTIFIED. HENCE, THE SAM E IS SQUARELY APPLICABLE IN THIS CASE ALSO. ITA NO.6096/M/201 SHRI DHIRAJLAL SOMAIYA 3 6. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND FOUND THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRI BUNAL IN THE CASE OF HIRALAL CHUNILAL JAIN & ORS. VS. ITO & ORS. IN I TA NOS.4547, 2545, 1275/M/2014 WHEREIN THE TRIBUNAL HAS DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE. LOOKING TO THE FACTS AND C IRCUMSTANCES OF THE CASE WE FIND THAT THE ASSESSEE HAS ALREADY DECLARED THE GP. HENCE, AO IS DIRECTED TO ALLOW THE CREDIT OF GP DECLARED B Y THE ASSESSEE AND DEDUCT THE SAME FROM 12.5% AND ESTIMATE THE GP @ 8% OF TOTAL BOGUS PURCHASES WHICH COMES TO RS.5,84,003/- 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.01.2018. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 22.01.2018. * 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.