SHYAM K GYANCHANDANI, ULHASNAGAR V. ACIT CIR (2), KALYAN

ITA 6370/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4257 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 27-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ITA NO. 6370 / MUM/20 1 6 ( ASSESSMENT YEAR : 2010 - 11 ) SHRI SHYAM K GUANCHANDANI 402, SHREE GANPATI PLAZA CHOPRA COURT, ULHASNAGAR - 421 003 VS . ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2, OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, 2 ND FLOOR, MOHAN PLAZA WAYALE NAGAR, KALYAN (W) 421 301 PAN/GIR NO. AAZPG6817H ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY NONE REVENUE BY SHRI CHAUDHA RY ARUNKUMAR SINGH DATE OF HEARING 07 / 03 /201 9 DATE OF PRONOUNCEMENT 13 / 03 /201 9 / O R D E R PER M. BALAGANESH (A.M) : AFORESAID APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 23 RD JUNE 2016, PASSED BY THE LEARNED COMMISSIONER (APP EALS) 3, THANE, FOR THE ASSESSMENT YEAR 2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961. ITA NO. 6370/MUM/2016 SHRI SHYAM K GYANCHANDANI 2 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE ADDITIO N TO 25% ON THE ALLEGED UNVERIFIABLE PURCHASES. 3 . BRIEF FACTS ARE, THE ASSESSEE IS A PROPRIETOR OF M/S S.K.ENTERPRISES ENGAGED IN THE BUSINESS OF TRADING IN LDO AND FURNACE OIL. THE RETURN OF INCOME FOR THE ASST YEAR 2010 - 11 WAS FILED BY THE ASSESSEE ON 15. 10.2010 DECLARING TOTAL INCOME OF RS 7,34,196/ - . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV.), MUMBAI, THAT PURCHASES SHOWN BY THE ASSESSEE TO THE TUNE OF RS.2,36,37,328/ - FROM RUMEET ENTERPRISES WERE CONSIDERED TO BE NOT GENUINE, T HE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). DURING THE RE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON THE BASIS OF MATERIAL ON RECORD NOTICED THAT THE PARTY FROM WHOM THE ASSESSEE ( I.E RUMEET ENTERPRISES) HAD SHOWN PURCHASES HAVE BEEN IDENTIFIED BY THE SALES TAX / VAT DEPARTMENT OF GOVERNMENT OF MAHARASHTRA AS HAWALA DEALERS AND PROVIDING ACCOMMODATION ENTRIES ONLY. THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS FURNISHED THE D ETAILS OF PARTY WISE DETAILS OF PURCHASES AND SALES, DETAILS OF EXPENSES INCURRED, BANK STATEMENTS, WHICH ARE DULY ACKNOWLEDGED BY THE LD AO IN HIS ORDER. TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6) O F THE ACT TO RUMEET ENTERPRISES AND ALSO DEPUTED HIS INSPECTOR FOR GATHERING THE INFORMATION. THE INSPECTOR OF THE CHARGE REPORTED THAT NEITHER SUCH PARTY / SUPPLIER WAS PRESENT AT THE AVAILABLE ADDRESS NOR THE SAME WAS EVER PRESENT IN THE VICINITY. THE A SSESSEE VIDE HIS LETTER FILED ON 26.3.2015 SUBMITTED THAT THE ITA NO. 6370/MUM/2016 SHRI SHYAM K GYANCHANDANI 3 PAYMENTS TO RUMEET ENTERPRISES HAD BEEN MADE BY ACCOUNT PAYEE CHEQUES AND THE PURCHASES MADE FROM THE SAID SUPPLIER HAD BEEN DULY SOLD BY THE ASSESSEE , IN SUPPORT OF WHICH, HE ALSO PRODUCED THE STOCK REGISTER SHOWING THE MOVEMENT OF GOODS. THE ASSESSEE VIDE ANOTHER REPLY DATED 27.3.2015 SUBMITTED THAT HE IS A TRADER IN CHEMICALS AND REFINERY ITEMS THAT HE PURCHASES DIRECTLY FROM REFINERY OR THROUGH RESELLERS AND SELLS MOSTLY TO END USERS; THAT STOCK STATEMENT SHOWING MOVEMENT OF GOODS FROM WHOM ASSESSEE HAS PURCHASED AND TO WHOM ASSESSEE HAS SOLD THE GOODS HAD BEEN ALREADY SUBMITTED THAT PAYMENTS TO SUPPLIER MADE THROUGH ACCOUNT PAYEE CHEQUES THAT THE LEDGER ACCOUNT COPY OF RUMEET ENTERPRISES FO R THE RELEVANT PERIOD HAD ALSO BEEN SUBMITTED. IT IS ALLEGED BY THE LD AO THAT THE ASSESSEE ALSO DID NOT PRODUCE THE CONCERNED PARTY NOR FURNISHED THEIR LATEST ADDRESS / WHEREABOUTS. THE ASSESSEE SIMPLY FURNISHED LEDGER COPY OF THE ALLEGED SUPPLIER IN AS SESSEES BOOKS. THE LD AO OBSERVED, THE ASSESSEE WAS UNABLE TO PROVE PHYSICAL DELIVERY OF GOODS AT ITS PREMISES BY FURNISHING DELIVERY CHALLAN. THUS, ULTIMATELY, THE LD AO HELD THAT THE PURCHASES SHOWN BY THE ASSESSEE ARE NOT VERIFIABLE, HENCE, CANNOT BE T REATED AS GENUINE. THEREAFTER, THE LD AO PROCEEDED TO TREAT THE PURCHASES OF RS.2,36,37,328/ - AND ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED C OMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ITA NO. 6370/MUM/2016 SHRI SHYAM K GYANCHANDANI 4 ON RECORD, RESTRICTED THE ADDITION TO 25% OF THE ALLEGED UNVERIFIABLE BOGUS PURCHASES. 5 . WHEN THE APPEAL WAS CALLED FOR HEARING NO ONE WAS PRESENT FOR THE ASSESSEE. EVEN, THERE IS NO APPLICATION FILED BY THE ASSESSEE SEEKING ADJOURNMENT. HOWEVER, CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OF THE APPEAL EX ,PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE FAILED TO PROVE THE PURCHASES FROM THE CONCERNED PARTIES BY PRODUCING COGENT DOCUMENTARY EVIDENCES LIKE CONFIRMATION LETTERS, DELIVERY CHALLAN, ETC. THEREFORE, HE ARGUED THAT THE LD CITA WAS VERY FAIR ENOUGH TO RESTRICT THE DISALLOWANCE TO 25% OF SUCH UNVERIFIABLE PURCHASES. 7 . HAVING CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED MATERIAL ON RECORD, WE FIND THAT IN CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PRODUCED CERTAIN DOCUMENTARY EVIDENCES LIKE PURCHASE BILLS, STOCK REGISTER, RECONCILIATION OF PURCHASES WITH CORRESPONDING SALES, BANK STATEMENT SHOWING PAYMENT TO SELLERS, LEDGER ACCOUNT OF THE SUPPLIER, ET C. THUS, IT IS NOT A FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE TO PROVE THE PURCHASES. AS IT APPEARS, THE ASSESSING OFFICER HAS TREATED THE PURCHASES AS BOGUS BEING INFLUENCED BY THE FACT THAT THE CONCERNED DEALER HAS BEEN IDENTIFIED AS HAWALA OPERATOR BY THE ITA NO. 6370/MUM/2016 SHRI SHYAM K GYANCHANDANI 5 SALES TAX/VAT DEPARTMENT. ANOTHER REASON FOR DISALLOWING THE PURCHASES APPEARS TO BE NON PRODUCTION OF THE CONCERNED PARTY AND DELIVERY CHALLAN BY THE ASSESSEE. HOWEVER, IT IS A FACT ON RECORD THAT ASSESSING OFFICER HAS NOT DISPU TED THE SALES TURNOVER SHOWN BY THE ASSESSEE. FURTHER, HE HAS NOT POINTED OUT ANY DEFECT OR DISCREPANCY EITHER IN THE STOCK REGISTER OR RECONCILIATION OF PURCHASES WITH CORRESPONDING SALES. THUS, THE AFORESAID FACTS MAY CERTAINLY LEAD ONE TO CONCLUDE, THOU GH, THE ASSESSEE WAS UNABLE TO FULLY ESTABLISH THE GENUINENESS OF THE PURCHASES FROM THE DECLARED SOURCE, HOWEVER, IT IS QUITE POSSIBLE THAT HE MIGHT HAVE PURCHASED SUCH GOODS FROM GREY MARKET BY AVOIDING PAYMENT OF SALES TAX / VAT. THEREFORE, IN THESE CIR CUMSTANCES, ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE TREATED AS INCOME OF THE ASSESSEE. CONSIDERED IN THE AFORESAID PERSPECTIVE, THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE ADDITION TO 12.5%, IN OUR VIEW, IS REASO NABLE, AS IT IS CONSISTENT WITH THE VIEW EXPRESSED BY THE CO ORDINATE BENCH IN SIMILAR TYPE OF CASES. THEREFORE, WE DEEM IT FIT AND APPROPRIATE TO MODIFY THE ORDER OF THE LD CITA TO THIS EXTENT. 8 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 03 /201 9 SD/ - ( MAHAVIR SINGH ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 13 / 03 /201 9 KARUNA SR. PS ITA NO. 6370/MUM/2016 SHRI SHYAM K GYANCHANDANI 6 COPY OF THE ORD ER 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//