INCOME TAX OFFICER -13(3) (3), MUMBAI, MUMBAI V. MANGALAM INFRA DEVELOPMENT PRIVATE LIMITED , MUMBAI

ITA 6184/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6372 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 143(3); 143(1)

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.6184/M/2019 ASSESSMENT YEAR: 2013-14 INCOME TAX OFFICER- 12(3)(3), ROOM NO.224, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 VS. M/S. MANGALAM INFRA DEVELOPMENT PVT. LTD., SHOP NO.16, GROUND FLOOR, SHREEJI SHOPPING CENTRE, M.G. ROAD, BORIVALI EAST, MUMBAI 400 066 PAN: AAFCM3854Q (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 30.06.2021 DATE OF PRONOUNCEMENT : 08.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 18.03.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2013-14. 2. AT THE TIME OF HEARING WHEN THE CASE WAS CALLED FOR HEARING, NEITHER ASSESSEE NOR HIS AUTHORISED REPRESENTATIVE WAS PRESENT TO ATTEND THE HEARING NOR ANY APPLICATION FOR ADJOU RNMENT WAS FILED. THEREFORE, WE ARE DECIDING THE APPEAL OF TH E REVENUE AFTER HEARING THE LD. D.R. AND AFTER CONSIDERING THE MERI TS OF THE CASE. ITA NO.6184/M/2019 M/S. MANGALAM INFRA DEVELOPMENT PVT. LTD. 2 3. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A) RESTRICTING THE ADDITION TO 14.89% OF TH E BOGUS PURCHASES AS AGAINST 100% MADE BY THE AO. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 19.09.2013 DECLARING TOTAL INCOME OF RS.9 ,98,110/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. AO DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT ASSESSEE IS BE NEFICIARY OF HAWALA PURCHASE ENTRIES TO THE EXTENT OF RS.19,53,7 83/-. THE AO CALLED FOR VARIOUS DETAILS AND INFORMATION FROM THE ASSESSEE FROM TIME TO TIME DURING THE COURSE OF ASSESSMENT P ROCEEDINGS WHICH WERE DULY FILED BEFORE THE AO. THE AO FINALL Y REJECTED THE CONTENTIONS OF THE ASSESSEE AND TREATED THE PURCHAS ES AS NON GENUINE THEREBY MAKING AN ADDITION OF BEING 100% OF THE PURCHASES OF RS.19,53,783/- TO THE INCOME OF THE AS SESSEE BY FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 18.03.2016. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO A PPLY RATE OF 14.89% OF THE BOGUS PURCHASES BY FOLLOWING THE DECI SION OF CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) AND FOL LOWING THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO.6106/M/2016 DATED 22.09.2017 A.Y 2011-12 WHEREIN THE RATE OF 11% HAS BEEN APPLIED ON THE BOGUS PURCHASES BY HOLDING THAT DURING THE YEAR THE GP RATE OF THE ASSESSEE WA S 14.89% AND THE SAME SHOULD BE APPLIED TO TAX THE BOGUS PURCHAS ES. ITA NO.6184/M/2019 M/S. MANGALAM INFRA DEVELOPMENT PVT. LTD. 3 6. AFTER HEARING THE LD. D.R. AND PERUSING THE MATE RIAL ON RECORD, WE OBSERVE THAT LD. CIT(A) HAS PASSED THE A PPELLATE ORDER AFTER FOLLOWING THE DECISION OF HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH (SUPRA) WHER EIN IT HAS BEEN HELD THAT IN CASE OF BOGUS PURCHASES ONLY PROFIT EL EMENT EMBEDDED IN THE BOGUS PURCHASES IS TO BE ASSESSED. LD. CIT(A) ALSO FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO.6106/M/2016 DATED 22.09.2017 A.Y 2011- 12 WHEREIN THE RATE OF 11% HAS BEEN APPLIED ON THE BOGUS PURCHASES BY HOLDING THAT DURING THE YEAR THE GP RA TE OF THE ASSESSEE WAS 14.89% AND THE SAME SHOULD BE APPLIED TO TAX THE BOGUS PURCHASES. WE NOTE THAT THE CO-ORDINATE BENC HES OF THE TRIBUNAL HAVE BEEN TAKING A CONSISTENT VIEW THAT IN CASE OF BOGUS PURCHASES ONLY A GP RATE RANGING BETWEEN 2% TO 12.5% WHEREAS THE LD. CIT(A) HAS DIRECTED TO ASSESS THE I NCOME @ 14.89% WHICH IS QUITE REASONABLE AND JUSTIFIED AND THEREFORE WE DO NOT FIND ANY REASON WHY THE REVENUE IS AGGRIEVED BY THIS ORDER. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.07.2021. SD/- SD/- (SAKTIJIT DEY ) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 08.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT ITA NO.6184/M/2019 M/S. MANGALAM INFRA DEVELOPMENT PVT. LTD. 4 THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.