ITO -WD- 25(2)(3), MUMBAI V. DHARMESH NARENDRA BHAGAT, MUMBAI

ITA 6192/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0310 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 133(6); 201; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S/ SHRI SAKTIJIT DEY, J UDICIAL M EMBER & NABIN KUMAR PRADHAN , ACCOUNTANT MEMBER ITA NOS. 6192 & 6193/MUM/2018 A SSESSMENT Y EAR S : 20 1 0 - 11 & 2 011 - 12 ITO WARD 25(2)(3) MUMBAI VS. DHARMESH NARENDRA BHAGAT, 9, SHREE GANESH KUNJ, ABOVE KALA NIKETAN, VILE PARLE (W), MUMBAI 400 056. PAN AAEPB6764C ( APPELLANT ) (RESPONDENT) APPELLANT BY : SMT. JOTHILAKSH M I NAYAK RESPONDENT BY : SHRI ANIL SATHE DATE OF HEARING : 28.11. 201 9 DATE OF PRONOUNCEMENT : .12 .2019 O R D E R PER SAKTIJIT DEY , JUDICIAL MEMBER: THE AFORESA ID APPEALS BY THE REVENUE ARISE OUT OF TWO SEPARATE ORDERS, BOTH DATED 30.08.2018, OF LEARNED C OMMISSIONER OF INCOME TAX ( A PPEALS ) - 53, MUMBAI, PERTAINING TO ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. 2. THE ONLY COMMON DISPUTE IN THE PRESENT APPEALS RELATES TO THE DECISION OF LEARNED CIT(A) IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF NON - GENUINE PURCHASES TO 12.5% AS AGAINST THE DISA LLOWANCE OF 25% MADE BY THE ASSESSING OFFICER. ITA 6192 & 6193/MUM2018 DHARMESH NARENDRA BHAGAT 2 3. BRIEFLY, FACTS ARE THE ASSESSEE - AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF TRADING IN GIFT ITEMS. FOR THE ASSESSMENT YEAR 2010 - 11, THE ASSESSEE FILED H IS RETURN OF INCOME ON 18.09.2010 DECLARING INCOME OF RS 6,14,130. SIMILARLY, FOR ASSESSMENT YEAR 2011 - 12, THE ASSESSEE FILED HIS RETURN OF INCOME ON 26.09.2011 DECLARING INCOME OF RS 7,34,437. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION) MUMBAI, AND SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT PURCHASES WORTH RS 5,21,916 IN ASSESSMENT YEAR 2010 - 11 AND RS 15,60,122 IN ASSESSMENT YEAR 2011 - 12 , ARE NON - GENUINE , AS , SAID PURCHASES CLAIMED TO HAVE BEEN MADE DURING THE RELEVANT ASSESSMENT YEARS WERE FROM PARTIES WHO HAV E BEEN IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODATION BILLS, THE ASSESSING OFFICER RE - OPENED THE ASSESSMENTS U/S.147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES BY FURNISHING CERTAIN DOCUMENTARY EVIDENCES , SUCH AS , BANK STATEMENTS, PURCHASE BILLS, STOCK REGISTER, QUANTITATIVE DETAI LS OF PURCHASE S AND SALES, DELIVERY CHALLANS, LORRY RECEIPTS, OCTROI RECEIPTS ETC. FURTHER , TO ASCERTAIN THE GENUINENESS OF SAID PURC HASES INDEPENDENTLY, THE ASSESSING OFFICER ISSUE D NOTICES U/S. 133(6) OF THE ACT TO THE SELLING DEALERS. HOWEVER, SUCH NOTICES RETURN ED BACK UNSERVED BY THE POSTAL AUTHORITIES DUE TO ABSENCE OF THE PARTIES I N THE GIVEN ADDRESS. ULTIMATELY, THE ASSESSING O FFICER ALLEGING THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES HELD THEM TO BE BOGUS. HOWEVER, LOOKING AT THE CORRESPONDING ITA 6192 & 6193/MUM2018 DHARMESH NARENDRA BHAGAT 3 SALES AFFECTED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE MUST HAVE PURCHASED THE GOODS FROM UNDISCLOSED SOURCES. NOTICING THAT THE ASSESSEE HAS DECLARED GROSS PROFIT @ 22.13% IN ASSESSMENT YEAR 2010 - 11, HE DISALLOWED 25% OUT OF THE ALLEGED NON - GENUINE PURCHASES MADE DURING THE YEAR. SIMILARLY, FOR ASSESSMENT YEAR 2011 - 12, THE ASSESSING OFF ICER NOTICING THAT THE ASSESSEE HAD DECLARED GROSS PROFIT @ 27.94% DISALLOWED 30% OUT OF NON - GENUINE PURCHASES. BEING AGGRIEVED WITH THE DISALLOWANCES MADE BY THE ASSESSING OFFICER , ASSESSEE PREFERRED APPEAL S BEFORE LEARNED COMMISSIONER (A PPEALS ). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE NON - GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. 5. WE HAVE CONSI DERED THE RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT IS EVIDENT , IN COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAD CALLED UPON THE ASSESSEE TO FURNISH CERTAIN DOCUMENTARY EVIDENCES TO PROVE THE GENUINENESS OF PURCHASES CLAIMED TO HA VE BEEN MADE DURING THE ASSESSMENT YEAR S UNDER DISPUTE. THOUGH , THE ASSESSEE FURNISHED SOME EVIDENCES TO PROVE THE GENUINENESS OF PURCHASES, HOWEVER, THEY WERE NOT TO THE SATISFACTION OF THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT PURCHASES MADE WERE NOT GENUINE. HOWEVER, ITA 6192 & 6193/MUM2018 DHARMESH NARENDRA BHAGAT 4 CONSIDERING THE FACT THAT THE ASSESSEE HAS FURNISHED QUANTITATIVE DETAILS AND STOCK REGISTER TO SHOW PURCHASES AND CORRESPONDING SALES, THE ASSESSING OFFICER HAD ESTIMATED THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES LOOKING AT THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE AND RESTRICTED THE ADDITION TO THAT EXTENT OF 25% IN ASSESSMENT YEAR 2010 - 11 AND 30% IN ASSESSMENT YEAR 2011 - 12. LEARNED COMMISSIONER (APPEALS) HAS HOWEVER, REDUCED THE ADDITION TO 1 2.5% OF NON - GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS. THUS, AS COULD BE SEEN FROM THE AFORESAID FACTS, THE DISPUTE IS ONLY WITH REGARD TO THE PROFIT ELEMENT EMBEDDED IN THE NON - GENUINE PURCHASES, WHICH CAN BE CONSIDERED FOR ADDITION. AFTER CONSIDER ING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, THE NATURE OF BUSINESS CARRIED O N BY THE ASSESSEE AND OTHER RELEVANT FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE ADDITION TO 12.5% OF TH E NON - GENUINE PURCHASES IS JUST AND REASONABLE , HENCE, DOES NOT REQUIRE ANY INTERFERENCE FROM US. ACCORDINGLY, GROUNDS RAISED ARE DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COU RT ON THIS 26 TH D AY OF DECEM BER , 201 9 . SD/ SD/ ( NABIN KUMAR PRADHAN ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 26 TH DECEMBER , 201 9 . SA ITA 6192 & 6193/MUM2018 DHARMESH NARENDRA BHAGAT 5 COPY OF THE ORDER FORWARDED TO : 1. THE APP E L L ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI. 4. THE CIT 5. DR, SMC BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASS IS T AN T REGISTRAR) I NCOME T AX A PPELLATE T RIBUNAL , MUMBAI