DCIT CIR 3, THANE V. RAJIV RAGHAVAN, THANE

ITA 628/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8360 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 628 / MUM/20 1 6 ( ASSESSMENT YEAR : 2009 - 10 ) DCIT CIR 3 R.NO.2, 6 TH FLOOR, ASHAR IT PARK, B WING, WAGLE INDUSTRIAL ESTATE, THANE (W), THANE 400 604 VS. SHRI RAJIV RAGHAVAN D - 2, PLOT NO.1, JAY BHAWANI NAGAR, ROAD NO.32, WAGLE INDUSTRIAL ESTATE, THANE 400 601 PAN/GIR NO. AFBPR2645K APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI V. JUSTIN ASSESSEE BY NONE DATE OF HEARING 07 / 09 /201 7 DATE OF PRONOUNCEME NT 06 / 12 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF CIT(A) - 2, THANE DATED 16/11/2016 FOR A.Y. 2009 - 10 IN THE MATTER OF ORDER PASSED U/S.14 3(3) R.W.S. 147 OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE OUT OF TOTAL BOGUS PURCHASES EVEN THOUGH - (I) THE ASSESSEE COULD NOT PRODUCE PRIMARY EVIDENCES LIKE OCTROI RECEIPTS, DELIVERY CHALLAN ETC. EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES BEFORE THE AO AND BEFORE CIT(A). (II) THE AFFIDAVITS FILED BY THE ENTRY PROVIDERS BEFORE SALES TAX AUTHORITIES CANNOT BE IGNORED HAVING EVIDENTIARY VALUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN NOT FOLLOWING THE ORDER OF UAT, PUNE IN ITA NO. 1411 - 1415 DATED 20 .02.2015 IN THE CASE OF M/S. KOL TE PATIL DEVELOPERS LTD. WHEREIN 100% ADDITION OF BOGUS PURCHASES WAS CONFIRMED. ITA NO. 628/MUM/2016 SHRI RAJIV RAGHAVAN 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF SUPREME COURT IN THE CASE OF KANCHANWALA GEMS VS. JOT 288 ITR 10(SC) AND HON BLE HIGH COURT S DECISION IN THE CASE OF VIJAY PROTEIN, SANJAY OIL CAKE INDUSTRIES, ETC.. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 3. NOBODY APPEARED ON BEHALF OF ASSESSEE INSPITE OF GIVING OPPORTUNITY, THE BENCH, THEREFORE, DECIDED TO DISPOSE THE APPEAL AFTER HEARING LEARNED DR AND CONSIDERING THE MATERIAL PLACED ON RECORD. 4. FACTS IN BRIEF ARE THAT IN THIS CASE THE RETURN OF INC OME DECLARING INCOME OF RS 15,79.730 / - WAS FILED ON 25.09.2010. THE ASSESSEE, RAJIV RAGHAVAN, IS A PROPRIETOR OF M/S SHABRI TRADING & ENGG WORKS, ENGAGED IN FABRICATION AND ENGINEERING. ASSESSMENT U/S . 143(3) R.W.S. 147 OF THE ACT, WAS FINALIZED ON 05.03.2 014, AT TOTAL INCOME OF RS 64,16,620/ - . SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS AFFECTED PURCHASES FROM CERTAIN PARTIES, WHO HAVE BEEN DECLARED AS SUSPICIOUS. THE SE PARTIES, IN THEIR STATEMENT / ON TH E BASIS OF SPOT VERIFICATION / SURVEY ACTION, DULY A DMITTED THE FACT THAT THEY HAVE NOT ACTUALLY DELIVERED ANY GOODS, BUT HAVE MERELY PROVIDED THE BILLS AND REFUNDED BACK CASH TO THE BUYERS, AFTER DEDUCTING THEIR NOMINAL COMMISSION . 5. 3.2 SUBSEQUENTLY, ST ATUTORY NOTICES U/S 143(2) / 142(1) OF THE ACT ALONGWITH DETAILED QUESTIONNAIRE, WERE ISSUED AND SERVED UPO N THE ASSESSEE ON 05.08.2013. IN ORDER TO ASCERTAIN THE GENUINENESS OF ABOVE PURCHASES, THE AO RESORTED TO CALL FOR IN FORMATION U/S 133(6) OF THE ACT ITA NO. 628/MUM/2016 SHRI RAJIV RAGHAVAN 3 FROM ALL THE PARTIES. ALL THE NOTICES, EXCEPT THAT OF K C ENTERPRISES WERE RETURNED BACK BY THE POSTAL AUTHORITIES, WITHOUT BEING SERVED. IN RESPONSE TO THE NOTICE ISSUED TO K C ENTERPRISES, PROP OF K C ENTERPRISES. MR NIRAV SHAH, VIDE LETTER D ATED 23.01.2014, VEHEMENTLY DENIED ANY BUSINESS TRANSACTION WITH THE ASSESSEE. HE ALSO SUBMITTED COPY OF AFFIDAVIT ALONG WITH ORDER OF DY. COMMISSIONER OF SALES TAX. WHEREIN IT IS STATED THAT 'IT IS NOTICED FROM CASE RECORDS AND INVESTIGATION RECORDS THAT THE DEALER HAS NOT DONE ANY GENUINE BUSINESS OF BUYING OR SELLING OF GOODS, BUT ISSUED ONLY BILLS .'' ACCORDINGLY, A SHOW - CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ASKING HIM TO EXPLAIN, WHY THE ABOVE MENTIONED PARTIES SHOULD NOT BE TREATED AS BOGUS AND PURCH ASES DEBITED SHOULD NOT BE ADDED BACK TO THE TOTAL INCOME OF A YR 2009 - 10. THE ASSESSEE FAILED TO COMPLY WITH THE SHOW - CAUSE NOTICE AND ONLY CLAIMED THAT THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUES. 6. IN VIEW OF THE ABOVE DISCUSSION, AO ADDED ENTIRE PURCH ASE IN ASSESSEES INCOME. 7. BY THE IMPUGNED ORDER, CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 25%. PRECISE OBSERVATION OF CIT(A) WAS AS UNDER: - FROM THE ABOVE CHART IT IS SEEN THAT DURING THE YEAR, UNDER CONSIDERATION, GP HAS BEEN DECLARED % 28.76 %. AS COMPARED TO GP @ 33.31% IN A YR 2009 - 10 AND 34.01% IN A YR 2010 - 11 AS ABOVE. SIMILARLY THE NP HAS BEEN SHOWN @ 7.97%, AS COMPARED TO 11.44% DURING A YR 2009 - 10 AND 10.15% DURING A YR 2010 - 11. THIS HAS RESULTED INTO, SUPPRESSION OF GROSS PROFIT TO THE EXTENT OF RS 12,06,260/ - RS . 66,04,177/ - LESS RS 72,10,437/ - (2,29,65,121X34.01/100) IN VIEW OF THESE FACTS, THE APPELLANT VIDE WRITTEN SUBMISSION DATED 4.11.2015, HAS REQUESTED TO RESTRICT THE DISALLOWANCE AT THE MOST 25% OF THE OF HAWALA PURCHASES. THE APPELLANT HAS SUPPRESSED THE GP BY RS 12 ,06,260/ - . AS ABOVE, WHICH IS ITA NO. 628/MUM/2016 SHRI RAJIV RAGHAVAN 4 MORE THAN RS 11.34.768/ - . BEING 25% OF HAWALA PURCHASES OF RS 45,39.071/ - , THEREFORE, THE DISALLOWANCE ON ACCOUNT OF HAWALA PURCHASES IS RESTRICTED TO RS 12.06.260/ - . AS AGAINST RS 11.34 ,768/ - PRAYED BY THE APPELLANT. ACCORDINGLY, THE DISALLOWANCE OF RS 12.06.260/ - IT UPHELD AND BALANCE DISALLOWANCE OF RS 33,32,811/ - IS HEREBY DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 8. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT AFTER CONSIDERING THE GP RATE DECLARED BY THE ASSESSEE IN A.Y.2010 - 11, THE CIT(A) HAS REASONABLY RESTRICTED ADDITION TO THE EXTENT OF 25% O N SUCH PURCHASES. NOTHING WA S BROUGHT ON RECORD BY LEARNED D R SO AS TO PERSUADE US DEVIATE FROM TH E FINDING SO RECORDED BY CIT(A). 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 06 / 12 /2017 S D/ - ( S ANDEEP GOSAIN ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 06 / 12 /201 7 KARUNA SR. PS 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//