ITO 19 (1)(1), MUMBAI V. ANKIT M. DOSHI, MUMBAI

ITA 6318/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2087 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Assessee Lawyers: MANISH RANKA
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO. 6318/MUM/2018 ( ASSESSMENT YEAR: 2010-11) I.T.O.-19(1)(1), ROOM NO. 223,2 ND FLOOR, MATRU MANDIR, MUMBAI- 400007. VS. SHRI ANKIT M. DOSHI, SHOP NO. 3, N.S. DESHMUKH BLDG. 9, DR. DESMUKH LANE, MUMBAI-400004. PAN/GIR NO.AJRPD 5582 G (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI KUMAR PADMAPANI BORA (SR.DR) ASSESSEE BY SHRI MANISH RANKA DATE OF HEARING 05/12/2019 DATE OF PRONOUNCEMENT 06/12/2019 / 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)-30, MUMBAI DATED 13/08/2018 FOR THE A.Y. 2010-11 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. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A) FOR DELETING THE ADDITION ON ACCOUNT OF BOGU S PURCHASES MADE BY THE A.O. 3. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE ORDERS OF THE ITA NO. 6318/MUM/2018 ITO VS SHRI ANKIT M DOSHI 2 AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT TH E ASSESSMENT WAS REOPENED AS PER INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT REGARDING BOGUS PURCHASE BILL TAKING BY THE ASSESSE E. THE A.O. MADE DETAILED ENQUIRY WITH REGARD TO GENUINENESS OF THE PURCHASES AND CONCLUDED THE SAME AS PER PARA 8 PAGE 5 OF HIS ORDE R. THE A.O. OBSERVED THAT THE INDEPENDENT ENQUIRIES/INVESTIGATI ONS WERE CARRIED OUT BY THIS OFFICE U/S 133(6) OF THE ACT BUT IN ALL THE CASES, THE NOTICES SENT TO THE SUPPLIERS WERE RETURNED UNSERVED WITH T HE REMARK EITHER LEFT, NOT TRACEABLE, NOT KNOWN ETC. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE WAS ASKED TO PRODUCE THE SAID PAR TIES FROM WHOM SUCH PURCHASES CLAIMED TO HAVE BEEN MADE FOR EXAMIN ATION BUT THE ASSESSEE FAILED TO DO SO. HOWEVER, THE ADDITION SO MADE BY THE A.O. BY ESTIMATING PROFIT AT 12.5% FROM ALLEGED BOGUS PU RCHASES WERE DELETED BY THE LD. CIT(A) AFTER OBSERVING AS UNDER: 7.2 ON GOING THROUGH THE ANNEXURES ATTACHED TO THE VAT AUDIT REPORT (FORM 704), IT IS SEEN THAT ANNEXURE J RELATES TO C USTOMER WISE VAT SALES. SR. NO. 96 OF ANNEXURE J REFLECTS THAT AN AM OUNT OF RS. 66,450/- HAS BEEN PAID BY THE SELLER VIZ M/S ANANDD EEP METAL TOWARDS VAT FOR THE SALES MADE TO M/S RYAN IMPEX OF RS. 17,27,700/-. IT IS ALSO MENTIONED IN THE PROPRIETOR OF M/S RYAN IMPEX EXPIRED ON 02/07/2010, COPY OF THE DEATH CERTIFICAT E DATED 12/11/2010 WAS FURNISHED. THEREFORE, THE APPELLANT COULD NOT HAVE PRODUCED THE SUPPLIER BEFORE THE A.O. DURING THE AS SESSMENT PROCEEDINGS. AFTER WEIGHING THE EVIDENCE OF PROS AN D CONS, I AM OF THE OPINION THAT THE APPELLANT HAS MITIGATED THE SH ADOW OF DOUBT ITA NO. 6318/MUM/2018 ITO VS SHRI ANKIT M DOSHI 3 CAST ON HIM AND PROVED THE GENUINENESS OF THE TRANS ACTION FROM THE SAID PARTY BY PRODUCING THE COPY OF VAT AUDIT REPOR T. THEREFORE, THE TRANSACTION IS TO BE CONSIDERED AS GENUINE AND CANN OT BE TERMED AS A BOGUS TRANSACTION. IN VIEW OF THE SAME THE ADDITI ON MADE BY THE A.O. @ 12.5% OF THE PURCHASES OF RS. 17,27,700/- MA DE FROM M/S ANAND DEEP METALS IS DELETED. THE APPEAL IS TREATED AS ALLOWED. 4. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE R EVENUE IS IN FURTHER APPEAL BEFORE THE ITAT. IT WAS VEHEMENTLY A RGUED BY SHRI KUMAR PADMAPANI BORA, SR.DR THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEE DINGS SO AS TO PROVE THE GENUINENESS OF THE PURCHASES. THE LD. SR. DR SHRI KUMAR PADMAPANI BORA ALSO INVITED OUR ATTENTION TO THE FA CT THAT EVEN THE NOTICES ISSUED U/S 133(6) TO THE RESPECTIVE SUPPLIE RS WERE RETURNED UNSERVED WITH THE REMARK EITHER LEFT, NOT TRACEA BLE, NOT KNOWN ETC. AS PER THE LD SR.DR EVEN THE A.O. ASKED THE AS SESSEE TO PRODUCE THE SUPPLIERS FOR EXAMINATION BUT THE ASSESSEE GROS SLY FAILED TO PRODUCE THEM. AS PER THE LD. SR. DR EVEN THE ASSESS EE COULD NOT FILE VALID DOCUMENTS TO PROVE THE GENUINENESS OF PURCHAS ES, LIKE DELIVERY CHALLANS, TRANSPORT RECEIPTS, GOODS INWARD REGISTER MAINTAINED AT GODOWN. UNDER THESE FACTS AND CIRCUMSTANCES, AS PER THE LD. SR. DR, THE A.O. HAS VERY REASONABLY ESTIMATED ONLY 12.5% O N SUCH BOGUS PURCHASES RATHER THAN MAKING 100% ADDITION. HE FURT HER ARGUED THAT WITHOUT CONTROVERTING THE DETAILED FINDINGS OF THE A.O. RECORDED AT PAGE 3, PARA 8, THE LD. CIT(A) HAS DELETED THE ADDI TION JUST BY STATING ITA NO. 6318/MUM/2018 ITO VS SHRI ANKIT M DOSHI 4 THAT THE ASSESSEE HAS MITIGATED THE SHADOW OF DOUBT S CAST ON HIM AND PROVED THE GENUINENESS OF THE TRANSACTIONS FROM THE SAID PARTY. HE HAS ALSO CONTENDED THAT THE ORDER PASSED BY THE LD. CIT(A) IS PERVERSE, THEREFORE, NOT LEGALLY TENABLE. 5. ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HAS CONTENDED THAT THE PROPRIETOR OF SUPPLIER FIRM WAS EXPIRED, T HEREFORE, HE COULD NOT BE PRODUCED BEFORE THE A.O. AND HIS DEATH CERTI FICATE WAS ALSO FILED BEFORE THE A.O. BUT THE A.O. DID NOT MENTION THE SAME IN HIS ORDER. HE FURTHER CONTENDED THAT AS PER ANNEXURE-J, THE CUSTOMER WISE VAT SALES AND THE VAT PAID THEREON WAS DULY FI LED BEFORE THE LOWER AUTHORITIES TO PROVE THE GENUINENESS OF THE S ALES MADE BY M/S ANANDDEEP METAL FOR THE SALES MADE TO THE ASSESSEE. THE LD AR FURTHER DEFENDED THE ORDER PASSED BY THE LD. CIT(A) FOR DELETING THE ENTIRE ADDITION MADE BY THE A.O. BY ESTIMATING THE PROFIT AT 12.5% ON SUCH ALLEGED BOGUS PURCHASES. 6. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND CONSIDERED THE CONTENTION OF LD. SR.DR AND LD. AR. I FOUND THAT THE LD. CIT(A) HAS DELETED THE ENTIRE ADDITION WITHOUT CONT ROVERTING DETAILED FINDINGS SO RECORDED BY THE A.O. TO THE EFFECT THAT THE NOTICE ISSUED TO THE ALLEGED PARTY WAS RETURNED UNSERVED AND EVEN TH E ASSESSEE COULD NOT PRODUCE THE PARTY FOR EXAMINATION. THESE FINDIN GS OF A.O. ARE AT ITA NO. 6318/MUM/2018 ITO VS SHRI ANKIT M DOSHI 5 PAGE 3 PARA 8 OF HIS ORDER. UNDER THESE FACTS AND C IRCUMSTANCES, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION JUST BY OBSERVING THAT THE ASSESSEE HAS MITIGATED THE SHADO W OF DOUBT CAST UPON HIM AND PROVED THE GENUINENESS OF THE TRANSACT ION FROM THE SAID PARTY BY PRODUCING COPY OF VAT AUDIT REPORT. ACCORD INGLY, I AM IN AGREEMENT WITH THE LD. SR.DR SHRI KUMAR PADMAPANI B ORA THAT WITHOUT CONTROVERTING THE SPECIFIC FINDINGS OF THE A.O., TH E LD. CIT(A) WAS NOT JUSTIFIED IN DELETING ENTIRE ADDITION MADE ON ACCOU NT OF BOGUS PURCHASES. ACCORDINGLY, I MODIFY THE ORDER OF THE L OWER AUTHORITIES AND KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCU MSTANCES OF THE CASE, I UPHOLD ADDITION TO THE EXTENT OF 5% OF THE ALLEGED BOGUS PURCHASES. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH DECEMBER, 2019. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 06/12/2019 *RANJAN COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT ITA NO. 6318/MUM/2018 ITO VS SHRI ANKIT M DOSHI 6 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//