RISHABH STEEL CENTRE, MUMBAI V. ITO 19 (3)(5), MUMBAI

ITA 6410/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7489 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 147; 148; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 6409 & 6410 /M UM /20 18 ASSESSMENT YEAR S : 2011 - 12 & 2010 - 11 RISHABH STEEL CENTRE, MUMBAI 97/99, ROOM NO.3, SHIV BLDG., MARUTI MANDIR MARG., 5 TH KUMBAHRWADA, MUMBAI, PIN - 400004 . PAN: AADPJ7645R VS. ACIT - 21(1), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: APPELLANT BY : POOJA CHHAWACHHARIA, CA RESPONDENT BY : JOTHILAKSHMI NAYA K , SR. DR DATE OF HEARING : 09 .01.2020 DATE OF PRONOUNCEMENT : 29 .01 . 20 20 O R D E R PER RAJESH KUMAR , ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASS ESSEE AGAINST THE ORDER DATED 22.06 .2018 OF THE COM MISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011 - 12 & 2010 - 11 . 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF CIT(A) UPHOLDING THE ORDER OF THE AO ITA NO.6409 & 6410/MUM/2018 RISHABH STEEEL CENTRE, MUMBAI 2 WHEREIN THE AO HAS MADE THE ADDITION OF RS.10 , 06 , 293/ - BEING 12.5 0 % OF THE ALLEGED BOGUS PURCHASES. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HI S RETURN OF INCOME ON 16.08.2011 DECLARING TOTAL I NCOME OF RS.3,14,67 0/ - WHICH WAS PROCESSED U/S 143(1 ) OF THE ACT. THEREAFTER THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 BY ISSUING A NOTICE U/S 148 DATED 06.11.2014 AFTER RECORDING REASONS UNDER SECTION 148(2) OF THE ACT ON THE GROUND THAT INCOME HAS ESCAPED ASSESSMENT. THE ASSESSEE ENGAGED IN THE BUSIN ESS OF FERROUS AND NON - FERROUS METALS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES TO THE TUNE OF RS.80,50,342/ - ALLEGEDLY MADE FROM TEN HAWALA PARTIES AS BROUGHT OUT BY S ALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA . THE ASSESSEE FILED BEFORE THE AO THE COP IES OF BANK STATEMENT S , PAYMENT S THROUGH BANKING CHANNELS, CHART SHOWING THE DETAILS OF PURCHASES OF THE ALLEGE D PARTIES AND CORRESPONDING SALES ALONG WITH BILLS AND VOUCHERS. THE AO , HOWEVER NOT FINDING THE REPLY OF THE ASSESSEE SATISFACTORY FOR THE REASONS THAT THE ASSESSEE COULD NOT PRODUCE THE SAID PARTIES BEFORE THE AO BESIDES NON - PRODUCTION OF TRANSPORTATION RECEIPTS . F INALLY RELYING ON THE DECISION OF CIT VS. SIMIT P. SHETH 35 6 ITR 451 (GUJ.) APPLIED A RATE OF 12% AND THUS MAKING AN ADDITION OF RS.10,06,293/ - . 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE CONTENTIONS AND SUBMISSION OF THE ASSESSEE AND HELD THAT THE ADDITION TO BE JUSTIFIED IN VIEW OF THE DECISION OF SIMIT P. SHETH (SUPRA). 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE UNDISPUT ED FACTS ARE THAT THE ASSESSEE W AS BENEFICIARY OF HAW ALA PURCHASES FROM SEVERAL PARTIES AS ITA NO.6409 & 6410/MUM/2018 RISHABH STEEEL CENTRE, MUMBAI 3 REPORTED BY THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA. IN THIS CASE, WE NOTE THAT THE ASSESSEE FILED COP IES OF BANK STATEMENT S , PAYMENT S PROOFS THROUGH BANKING CHANNELS BESIDE DETAILS OF PURCHASE S AND CORRESPONDI NG SALES, BILLS AND VOUCHERS ETC , HOWEVER, THE CHALLANS AND TRANSPORT BILLS COULD NOT BE PRODUCED BY THE ASSESSEE. WE NOTE THAT THE ASSESSEE ALREADY DECLARED A MARGIN OF 9% APPROXIMATELY. THUS THE GP RATE APPLIED BY THE LD. CIT(A) IS EXCESSIVE AND UNREASO NABLE IN VIEW OF THE NATURE BUSINESS OF THE ASSESSEE AND GP SHOWN ON THE PURCHASES INCLUDING HAWALA PURCHASES. IN THE PRESENT FACTS AND CIRCUMSTANCES , WE FEEL IT WOULD BE REASONABLE IF WE APPLY GP OF 5% TO TAX THE PROFIT ELEMENT IN THE ALLEGED BOGUS PURCHA SES. A CCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO APPLY GP RATE OF 5% . 6. NOW COMING TO ITA NO.6410/MUM/2018, THE IDENTICAL ISSUE HAS BEEN DECIDED IN ITA NO.6409/MUM/2018 (SUPRA) WHEREIN WE HAVE DIRECTED THE AO TO APPLY A RATE OF 5% ON THE BOGUS PURCHASES. ACCORDINGLY, IN THIS CASE ALSO IN ITA NO.6410/MUM/2018, THE AO IS DIRECTED TO APPLY GP RATE OF 5%. 7. IN THE RESULT, THE TWO APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01 . 20 20 . SD/ - SD/ - ( SAKTIJIT DEY ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 29 .01 . 2020 . RS , SR. P.S. ITA NO.6409 & 6410/MUM/2018 RISHABH STEEEL CENTRE, MUMBAI 4 COPY TO: THE A PPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DATE INITIAL WHETHER DICTATION PAD ENCLOSED WITH THE FILE : YES/NO (AS THE ORDER HAS BEEN TYPED WITH THE HELP OF MANUSCRI PT) 1. DRAFT DICTATED ON SR.PS 2. DRAFT PLACED BEFORE AUTHOR SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUN CEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER