ITO 33(1)(1), MUMBAI V. GEETA ATUL KOTHARI (L/H. LATE SHRI ATUL KOTHARI), MUMBAI

ITA 6393/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2019 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: HEMANT JADIA
• Keywords: Bogus purchase; Rejection of books of accounts; Unexplained expenditure; Accommodation entries
• Section: 69C; 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , HON'BLE ACCOUNTANT MEMBER ITA NO. 6393 /MUM/201 8 ( A. Y : 2009 - 10) INCOME TAX OFFICER - 3 3( 1)(1) ROOM NO. 705, 7 TH FLOOR C - 12, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI - 400 0 51 V. SMT GEETA ATUL KOTHARI {L/H LATE SHRI ATUL KOTHARI} B - 21, SANJANA APARTMENT BORSA PADA, SITA SADAN TOWER OFF SAI BABA NAGAR ROAD KANDIVALI (W), MUMBAI 400 067 PAN: AABPK1074F ( ASSESSEE ) (RESPONDENT) ASSESSEE BY : SHRI HEMANT JADIA DEPARTMENT BY : SHRI R. BHOOPATHI DATE OF HEARING : 03 .12.2019 DATE OF PRONOUNCEMENT : 03 .1 2 .2019 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 23.07.2018 FOR THE A.Y. 2009 - 10 IN RESTRICTING THE 2 ITA NO. 6393/MUM/2018 (A.Y: 2009 - 10) SMT GEETA ATUL KOTHARI DISALLOWANCE TO 10 % OF THE PURCHASES OF . 8,19,669 / - AS AGAINST THE ENTIRE PURCHASES DISALLOWED AS NON - GENUINE/BOGUS BY THE ASSESSING OFFICER. 2. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE FILED RETURN OF INCOME ON 26.09.2009 FOR THE A.Y. 2009 - 10 DECLARIN G INCOME OF . 4,77,986/ - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM DDIT(INV.), UNIT 2(3), MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE O F THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DDIT (INV.), MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES FROM M/S. ASIATIC AGENCY WHO IS PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANSPORTATION OF ANY GOODS. IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM THE ABOVE PART Y TO WHICH NO REPLY WAS FILED BY THE ASSESSEE. ASSESSING OFFICER CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS BY FURNISHING THE RELEVANT DOCUMENTS TO PROVE THE TRANSACTIONS ARE GENUINE AND SINCE THE PARTIES WERE NOT PRODUCED BEFORE HIM, HE REJECTED THE BOOKS OF ACCOUNTS AND TREATE D THE PURCHASES A S NON - GENUINE . ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY 3 ITA NO. 6393/MUM/2018 (A.Y: 2009 - 10) SMT GEETA ATUL KOTHARI TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. TH US, ASSESSIN G OFFICER TREATED ENTIRE PURCHASES OF . 8,19,669 / - AS NON - GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDENCES FILED BEFORE HIM BY THE ASSESSEE SUCH AS PURCHASE BILLS, LEDGER ACCOUNT OF THE DEALERS , DELIVERY CHALLANS, INVOICES, BANK STATEMENTS HIGHLIGHTING THE PAYMENTS MADE FOR PURCHASES , PURCHASES AND SALES RECONCILIATION AND ALSO THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO THE EXTENT 10 % OF THE NON - GENUINE PURCHASES. 3. LD. DR VEHEMENTLY SUP PORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS AND EVIDENCES PRODUCED BY THE ASSESSEE AND THE AVERMENTS IN THE ASSESSMENT ORDER AND CONSIDERING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF THE PR. CIT V. TEJUA ROHIT KUMAR KAPADIA IN SLP NO. 12670/2018 RESTRICTED THE DISALLOWANCE TO 4 ITA NO. 6393/MUM/2018 (A.Y: 2009 - 10) SMT GEETA ATUL KOTHARI 10 % OF THE NON - GENUINE PURCHASES, WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - 5 . 1 I HAVE CONSI DERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT INCLUDING THE CASE LAWS CITED. THE AO HELD IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTS, SO HE REJECTED THE BOOKS AND ALSO ADDED THE ENTIRE PURCHASES AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. DURING THE APPELLATE PROCEEDINGS, THE AR FILED COPIES OF PURCHASE BILLS, LEDGER ACCOUNT OF THE SELLER PARTY, DELIVERY CHALLANS, INVOICES, BANK STATEMENTS HIGHLIGHTING THE PAYMENTS MADE FOR PURCHASES. HE ALSO FILED PURCHASE AND SALES RECONCILIATION. IT IS SEEN THAT ALMOST ALL PURCHASES WERE SOLD BY THE LATE ASSESSEE DIRECTLY TO THE ONWARD BUYERS BILL TO BILL. IT IS NOTICED THAT THE AR OF THE ASSESSEE FILED ALL THE DOCUMENTS TO PROVE THE PURCHASES AND THE PAYMEN TS ARE GENUINE. IN THIS REGARD, IT IS FOUND THAT MANY BENCHES OF ITAT AND HON'BLE HIGH COURTS HAVE HELD THAT WHEN PURCHASES ARE SUPPORTED BY SUFFICIENT DOCUMENTARY EVIDENCES THEN MERELY BECAUSE OF NON - APPEARANCE BEFORE THE AO, ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE APPELLANT. IN A RECENT ORDER HON'BLE SUPREME COURT CONFIRMED THE ORDER OF GUJARAT HIGH COURT ON SIMILAR ISSUE IN THE CASE OF PR.CIT V TEJUA ROHIT KUMAR KAPADIA IN SLP NO. 12670/2018. IN THIS CASE THE HIGH COURT HELD THAT THE BOGUS PURCHASES CANNOT BE TREATED AS BOGUS IF THEY ARE DULY SUPPORTED BY BILLS, ALL PAYMENTS ARE MADE BY ACCOUNT PAYEE CHEQUES AND SALES OUT OF PURCHASES HAVE BEEN ACCEPTED. 5 .2. IN THIS CASE IT IS A FACT THAT THE APPELLANT PRODUCED BANK ACCOUNT STATEMENT, PURCHASE BILLS, PAYMENT PROOF FOR PURCHASES AND DEMONSTRATED THAT ALL THE PURCHASES WERE SOLD BACK TO BACK TO PROVE THE GENUINENESS OF THE PURCHASES. HENCE THE ADDITION MADE BY A O IS NOT SUSTAINABLE IN FULL. TAKING INTO ACCOUNT ALL THE FACTS OF THE CASE THE DISALLOWANCE MADE BY THE AO IS RESTRICTED TO 10% OF SUCH PURCHASES OF RS.8,19,669 WHICH COMES TO RS.81,967. THE AO IS DIRECTED TO MODIFY THE ADDITION ACCORDINGLY AND THE APPELL ANT GETS PART RELIEF. THIS GROUND IS PARTLY ALLOWED. 5. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). NONE OF THE FINDINGS AND OBSERVATIONS OF THE LD.CIT( A) HAVE BEEN REBUTTED WITH EVIDENCES BY THE R EVENUE AND THUS WE DO NOT SEE ANY 5 ITA NO. 6393/MUM/2018 (A.Y: 2009 - 10) SMT GEETA ATUL KOTHARI INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN RESTRICTING THE DISALLOWANCE TO THE EXTENT OF 10 % OF THE PURCHASES. GROUNDS RAISED BY THE R EVENUE ARE DISMISSED. 6. IN THE RESULT , APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 03 RD DECEMBER, 2019 SD/ - SD/ - ( MANOJ KUMAR AGGARWAL ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 0 3 / 12 / 2019 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM