ITO 33(1)(1), MUMBAI V. ANAND MADANLAL GUPTA, MUMBAI

ITA 6392/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4445 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Bogus purchase; Set aside
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM (HEARING THROUGH VIDEO CONFERENCING MODE) / I .T.A. NO. 6392 /MUM/20 1 8 ( / ASSESSMENT YEAR: 20 10 - 11 ) ITO - 33(1)(1) ROOM NO.705, 7 TH FLOOR, BLDG. NO. C - 12, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. / VS. ANAND MADANLAL GUPTA A/601, NEW PARK AVENUE, MAHATMA GANDHI ROAD, DAHANUKAR WADI, KANDIVALI (W), MUMBAI - 400067 . ./ ./ PAN/GIR NO. : AINPG8467G ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 03 / 0 8 /20 2 1 /DATE OF PRONOUNCEMENT: 27 /09 / 20 21 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 18 . 07 .201 8 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 45 MUMBAI [HEREIN AFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 10 - 11 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN RESTRICTING THE AMOUNT OF BOGUS PURCHASE FROM RS. 1,50,85,096/ - TO RS. 36,15,697/ - WITHOUT REVENUE BY : SHRI BRAJENDRA KUMAR ( D R) ASSESSEE BY: NONE ITA NO. 6392 /M UM /20 18 A.Y.20 10 - 11 2 APPRECIATING THE FACT THAT THE PURCHASE PARTY IS A DECLARED HAWALA DEALER BY THE SALES TAX DEPARTMENT, MAHARASHTRA AND HENCE ALL THE TRANSACTION ENTERED INTO WITH IT BY THE ASSESSEE NEEDS TO BE EXAMINED AND BROUGHT TO TAX ACCORDINGLY'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN RESTRICTING THE DISALLOWANCE UP TO THE INFORMATION RECEIVED WITHOUT APPRECIATING THE FACT THAT THE AO HAS HELD IT TO BE NON - GENUINE AFTER CARRYI NG OUT PROPER INDEPENDENT INVESTIGATION'. 3. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 4. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GR OUND WHICH MAY BE NECESSARY'. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 15 . 10 .20 10 DECLARIN G A TOTAL INCOME TO THE TUNE OF RS. 7,11,183 / - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS REOPENED UPON THE INFORMATION RECEIVED FROM THE DGIT(INV.), MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRY FROM THE RICHA STEEL IN SUM OF RS.38,15,697/ - . THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, THE AO RAISED THE ADDITION TO THE EXTENT OF 4% OF THE BOGUS PURCHASE IN SUM OF RS. 1,50,85,096/ - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.12,91,380/ - . F EELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE PARTLY BUT THE REVENUE WAS NOT SATISFIED, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 TO 3 ITA NO. 6392 /M UM /20 18 A.Y.20 10 - 11 3 4. ALL THE ISSUES ARE I N CONNECTION WITH THE RESTRICTION OF THE ADDITION TO THE EXTENT OF 4% OF THE BOGUS PURCHASE IN SUM OF RS. 1,50,85,096 / - . THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE AO HAS RIGHTLY RESTRICTED THE ADDITION TO THE EXTENT OF 4% OF THE BOGUS PURCHASE IN SUM OF RS.1,50,85,096/ - MADE FROM RICHA STEEL BUT THE CIT(A) HAS WRONGLY RESTRICTED THE ADDITION TO THE EXTENT OF 4% OF THE BOGUS PURCHASE IN SUM OF RS.38,15,697/ - , THEREFORE, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE AND IS NOT LIABLE TO BE SET ASIDE. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECOR D.: - 6.3 I HAVE CONSIDERED THE ASSESSMENT ORDER AND STATEMENT OF FACT FILED ALONG WITH FORM 35. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE PRODUCED THE DETAILS BUT AS PER THE SALES TAX DEPARTMENT THE HAWAL PARTY HAS NOT MADE VAT PAYMENT. D URING THE APPELLATE PROCEEDINGS THE APPELLANT FILED COPIES COPIES OF PURCHASE BILLS AND COPY OF BANK STATEMENTS. IT IS NOTICED THAT ON ACCOUNT OF INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE HAWALA PARTY HAS NOT PAID THE VAT, THE AO D ISALLOWED THE VA T CREDIT CLAIMED BY THE ASSESSEE. HOWEVER, THE INFORMATION FROM THE SALES TAX DEPARTMENT ONLY SAYS THAT THE BOGUS SALES MADE BY THE ASSESSEE FROM THE SAID HAWALA PARTY RICHA STEEL WAS ONLY OF RS. 3815,697/ - BECAUSE THE VAT WAS NOT REMITTED ON THE SALES OF RS.38, 15,697/ - ONLY. HOWEVER, THE AC) TREATED ALL THE SALES MADE BY THE SAID RICHA STEEL AS BOGUS AND ADDED 4% ON ALL THE SALES, WHICH IS NOT SUPPORTED BY THE INFORMATION RECEIVED AND NOT CORRECT. MERELY BECAUSE THE ASSESSEE FILED ALL THE DETAILS OF ALL P URCHASES, THE ASSESSING OFFICER COULD NOT HAVE TREATED ALL ITA NO. 6392 /M UM /20 18 A.Y.20 10 - 11 4 THE PURCHASES AS BOGUS. THE APPELLANT HAS BROUGHT DOCUMENTARY EVIDENCES ON RECORD TO PROVE GENUINENESS OF SUCH TRANSACTIONS, THE ACTION OF THE ASSESSING OFFICER IN IGNORING THEM CANNOT BE ACCEPTED. WHEN THE PAYMENT TO THE CONCERNED PARTIES ARE THROUGH PROPER BANKING CHANNEL AND THE INFORMATION OF THE SALES TAX DEPARTMENT IS REGARDING THE SALES OF RS.38,15,697, THE DISALLOWANCE OF VAT IS RESTRICTED TO PURCHASES OF RS.38,15,697 WHICH WORKS OUT TO RS.1 ,52,628. THE AO IS DIRECTED TO MODIFY THE ADDITION ACCORDINGLY. THE APPELLANT GETS PART RELIEF. THIS GROUND IS PARTLY ALLOWED. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 4% OF TH E BOGUS PURCHASE IN QUESTION I.E.38,15,697/ - . THE INFORMATION OF BOGUS PURCHASE WAS RECEIVED TO THE EFFECT THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRY IN SUM OF RS.38,15,697/ - WHEREAS THE AO HAS TAKEN INTO CONSIDERATION THE WHOLE PURCHASE WHICH W AS IN FACT NOT IN QUESTION. WHEN THE BOGUS PURCHASE WAS TO THE TUNE OF RS.38,15,697/ - THEN WHOLE PURCHASE IS NOT REQUIRED TO BE QUESTIONED. THE CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION @ 4% OF THE BOGUS PURCHASE I.E. 38,15,697/ - . THE BASIC LOGIC TO THE R ESTRICT THE ADDITION @ 4% OF THE BOGUS PURCHASE, WAS TO RESTRICT THE ADDITION TO THE EXTENT OF VAT IF ANY AVOIDED BY ASSESSEE. THE VAT HAS BEEN ADDED AND INCOME OF THE ASSESSEE WAS TAXED ACCORDINGLY . WE NOWHERE FOUND ANY ILLEGALITY AND INFIRMITY OF THE DEC ISION OF THE CIT(A) IN QUESTION. ACCORDINGLY, WE AFFIRM THE FINDING OF THE C I T(A) ON THESE ISSUES AND DECIDE THESE ISSUES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA NO. 6392 /M UM /20 18 A.Y.20 10 - 11 5 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY D ISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 27 / 09 / 202 1 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 27 / 09 / 2021 VIJAY PAL SINGH ( SR. P.S. ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI