INCOME TAX OFFICER, WARD- 25(1)(5), MUMBAI V. TUSHAR S. KAMDAR, MUMBAI

ITA 6251/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1344 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 143(3); 201; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI VIKAS AWASTHY, JM ITA NO. 6251/MUM/2018 ( ASSESSMENT YEAR: 2011-12) I.T.O.-25(1)(5), MUMBAI. VS. TUSHAR S. KAMDAR, GALA NO.5, MAKHANRIA INDL. COMPLEX, OFF MAHAKALI CAVES ROAD, ANDHERI (EAST), MUMBAI-400093. PAN/GIR NO.AACPK 7699 B (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI KUMAR PADMAPANI BORA (SR.DR) ASSESSEE BY NONE DATE OF HEARING 10/12/2019 DATE OF PRONOUNCEMENT 10/12/2019 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD. CIT(A)-37, MUMBAI DATED 28/09/2018 FOR THE A.Y. 201 1-12 IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. NON BODY APPEARED ON BEHALF OF THE ASSESSEE IN S PITE OF GIVING OPPORTUNITIES ON 02/12/2019 AND 10/12/2019, ACCORDI NGLY, THE BENCH DECIDED TO DISPOSE OFF THE APPEAL AFTER HEARING THE LD. SR.DR AND CONSIDERING THE MATERIAL PLACED ON RECORD. 3. IN THIS CASE, THE A.O. REOPENED THE ASSESSMENT O N THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THAT THE ASSESSEE WAS ITA NO. 6251/MUM/2018 ITO VS TUSHAR S. KAMDAR 2 ENGAGED IN TAKING ACCOMMODATION ENTRIES OF PURCHASE S. AFTER MAKING DETAILED ENQUIRY, THE A.O. ESTIMATED THE PROFIT @ 1 2.5% OF ALLEGED BOGUS PURCHASES. BY THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE ENTIRE ADDITION BY RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE IN ITA NO.4305/M/2017 AFTER HAVING THE OBSERVA TION AT PARA 6.7 OF THE APPELLATE ORDER, AGAINST WHICH THE REVENUE IS I N FURTHER APPEAL BEFORE THE ITAT. 4. IT WAS ARGUED BY THE LD. SR.DR SHRI KUMAR PADAMP ANI BORA THAT THE LD. CIT(A) HAS WRONGLY RELIED ON THE ORDER OF T HE EARLIER OF THE ASSESSEE IN SO FAR AS THE SUPPLIER OF GOODS IN THE APPEAL DECIDED BY THE TRIBUNAL WAS DIFFERENT FROM THE SUPPLIERS WHO WAS F OUND TO BE BOGUS DURING THE YEAR UNDER CONSIDERATION. AS PER THE LD DR DURING THIS YEAR, THE PURCHASES WERE FOUND TO BE MADE FROM THE FOLLOW ING PARTIES: 1. SAMARTH ENTERPRISES RS. 19,29,375/- 2. ARYAN ENTERPRISES RS. 22,75,481/- TOTAL RS. 42,04,856/- 5. THE LD. SR.DR HAS DRAWN OUR ATTENTION TO THE ORD ER OF THE TRIBUNAL WHEREIN SUPPLIERS WERE DIFFERENT I.E. FROM SHRINATH TRADING CO. AMOUNTING TO RS. 35,75,520/- AND SAILEELA TRADING A MOUNTING TO RS. 18,32,220/-. AS PER THE LD DR, SINCE THE SUPPLIES W ERE DIFFERENT DURING THE YEAR UNDER CONSIDERATION AND WHO WAS FOUND TO B E BOGUS BY THE A.O. AFTER MAKING DETAILED ENQUIRY, THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION JUST BY R ELYING ON THE ORDER OF THE ITA NO. 6251/MUM/2018 ITO VS TUSHAR S. KAMDAR 3 EARLIER YEAR WHEREIN FACTS WERE ENTIRELY DIFFERENT IN SO FAR AS SUPPLIERS IN THE EARLIER YEAR WAS DIFFERENT FROM THE SUPPLIES OF THE CURRENT YEAR UNDER CONSIDERATION. HE CONTENDED THAT THE ORDER OF THE A .O. MAY BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM THE RECORD THAT AFTER MAKING DETAILED ENQUIRY, THE A.O. FOUND THE PURCHASES TO BE BOGUS. HOWEVER, SINCE THE SALES WERE ACCEPTED, THE A.O. ONLY HAS ADDED ONLY 12.5% IN THE INCOME OF THE ASSESSEE. THE LD. C IT(A) HAS DELETED THE SAME BY FOLLOWING THE ORDER OF THE TRIBUNAL WHE REIN SUPPLIERS WERE ENTIRELY DIFFERENT. SINCE THE FACTS OF THE CURRENT YEAR UNDER CONSIDERATION ARE DIFFERENT FROM THE FACTS OF THE EARLIER YEAR, W E DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF THE LD. CIT(A) FOR FO LLOWING THE ORDER OF THE EARLIER YEAR WITHOUT DISCUSSING THE GENUINENESS OF THE SUPPLIERS, WHO WERE DIFFERENT FROM THE SUPPLIERS DEALT WITH BY THE TRIBUNAL. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) DELETING E NTIRE DISALLOWANCE. 7. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF PR.CIT VS M/S MOHOMMAD HAJI ADAM & CO. IN ITA NO. 1004 OF 2016 VI DE ITS ORDER DATED 11/02/2019 HAVE HELD AS UNDER: 8. IN THE PRESENT CASE, AS NOTED ABOVE, THE ASSESS EE WAS A TRADER OF FABRICS. THE A.O. FOUND THREE ENTITIES WHO WERE IND ULGING IN BOGUS BILLING ACTIVITIES. A.O. FOUND THAT THE PURCH ASES MADE BY THE ASSESSEE FROM THESE ENTITIES WERE BOGUS. THIS BEING A FINDING OF FACT, WE HAVE PROCEEDED ON SUCH BASIS. DESPITE THIS, THE QUE STION ARISES WHETHER ITA NO. 6251/MUM/2018 ITO VS TUSHAR S. KAMDAR 4 THE REVENUE IS CORRECT IN CONTENDING THAT THE ENTIR E PURCHASE AMOUNT SHOULD BE ADDED BY WAY OF ASSESSES ADDITIONAL INCOM E OR THE ASSESSEE IS CORRECT IN CONTENDING THAT SUCH LOGIC CANNOT BE APPLIED. THE FINDING OF THE CIT(A) AND THE TRIBUNAL WOULD SUGGEST THAT T HE DEPARTMENT HAD NOT DISPUTED THE ASSESSEE'S SALES. THERE WAS NO DIS CREPANCY BETWEEN THE PURCHASES SHOWN BY THE ASSESSEE AND THE SALES DECLARED. THAT BEING THE POSITION, THE TRIBUNAL WAS CORRECT IN COMING TO THE CONCLUSION THAT THE PURCHASES CANNOT BE REJECTED WITHOUT DISTURBING THE SALES IN CASE OF A TRADER. THE TRIBUNAL, THEREFORE, CORRECTLY RESTRICTED THE ADDITIONS LIMIT ED TO THE EXTENT OF BRINGING THE G.P. RATE ON PURCHASES AT THE SAME RAT E OF OTHER GENUINE PURCHASES. THE DECISION OF THE GUJARAT HIGH COURT I N THE CASE OF N.K. INDUSTRIES LTD.. (SUPRA) CANNOT BE APPLIED WITHOUT REFERENCE TO THE FACTS. IN FACT IN PARAGRAPH 8 OF THE SAME JUDGMENT THE COURT HELD AND OBSERVED AS UNDER- SO FAR AS THE QUESTION REGARDING ADDITION OF RS.3,7 0,78,125/- AS GROSS PROFIT ON SALES OF RS.37.08 CRORES MADE BY TH E ASSESSING OFFICER DESPITE THE FACT THAT THE SAID SALES HAD AD MITTEDLY BEEN RECORDED IN THE REGULAR BOOKS DURING FINANCIAL YEAR 1997-98 IS CONCERNED, WE ARE OF THE VIEW THAT THE A SSESSEE CANNOT BE PUNISHED SINCE SALE PRICE IS ACCEPTED BY THE REVENUE. THEREFORE, EVEN IF 6% GROSS PROFIT IS TAKE N INTO ACCOUNT, THE CORRESPONDING COST PRICE IS REQUIRED T O BE DEDUCTED AND TAX CANNOT BE LEVIED ON THE SAME PRICE . WE HAVE TO REDUCE THE SELLING PRICE ACCORDINGLY AS A RESULT OF WHICH PROFIT COMES TO 5.66%. THEREFORE, CONSIDERING 5.66% OF RS.3,70,78,125/WHICH COMES TO RS.20,98,621.88 WE TH INK IT FIT TO DIRECT THE REVENUE TO ADD RS.20,98,621.88 AS GRO SS PROFIT AND MAKE NECESSARY DEDUCTIONS ACCORDINGLY. ACCORDINGLY, THE SAID QUESTION IS ANSWERED PARTIALLY IN FAVOUR OF THE ASS ESSEE AND PARTIALLY IN FAVOUR OF THE REVENUE.' 8. SINCE THE FACTS OF THE CURRENT YEAR UNDER CONSID ERATION ARE DIFFERENT FROM THE FACTS OF THE EARLIER YEAR, WE DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF THE LD. CIT(A) FOR FO LLOWING THE ORDER OF THE ITA NO. 6251/MUM/2018 ITO VS TUSHAR S. KAMDAR 5 EARLIER YEAR WITHOUT DISCUSSING THE GENUINENESS OF THE SUPPLIERS, WHO WERE DIFFERENT FROM THE SUPPLIERS DEALT WITH BY THE TRIBUNAL. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR DECIDING THE MATTER AFRESH AFTER GIVING DUE AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN TERMS OF DECISION OF THE HONBLE BOMBAY HIGH COURT AS DISCUSSED ABOVE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER, 2019. SD/- (VIKAS AWASTHY) SD/- (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 10/12/2019 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//