DEVENDRA P.SHETH, MUMBAI V. ITO WARD- 33 (1)(4), MUMBAI

ITA 6424/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1342 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADAMPA NI BORA
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.6424/MUM/2018(A.Y. 2010-11) ITA NO.6425/MUM/2018(A.Y. 2011-12) DEVENDRA P. SHETH, C-604, PUSHPA HERITAGE, DHANUKAR WADI, GOKHALE ROAD, MUMBAI 400 067. PAN:ALQPS0537B ...... APPELLANT VS. ITO WARD 33(1)(4), INCOME TAX OFFICE, BANDRA KURLA COMPLEX, MUMBAI ..... RESPON DENT APPELLANT BY : SHRI DHARMIL JHAVERI RESPONDENT BY : SHRI KUMAR PADAMPA NI BORA DATE OF HEARING : 10/12/2019 DATE OF PRONOUNCEMENT : 10/12/2019 ORDER PER VIKAS AWASTHY, JM: THE APPEAL OF THE ASSESSEE IN ITA NO.6424/MUM/2018 IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APP EAL)-45, MUMBAI (IN SHORT THE CIT(A)) DATED 25/07/2018 FOR ASSESSMENT YEAR 2010-11. THE SECOND APPEAL OF THE ASSESSEE IN ITA NO.6425/MUM/18 IS DIRECTED AGAINST THE ORDER OF CIT(A)-44, MUMBAI DATED 28/08/2018 FOR ASSESSMENT YEAR 2011-12. SINCE THE ISSUE RAISED IN BOTH THE APPEA LS IS IDENTICAL AND IS 2 ITA NO.6424/MUM/2018(A.Y. 2010-11) ITA NO.6425/MUM/2018(A.Y. 2011-12) ARISING FROM SAME SET OF FACTS, THEREFORE, THESE AP PEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DISPOSED OF VIDE THIS COMMON ORDER. 2. FOR THE SAKE OF CONVENIENCE THE FACTS ARE EXTRAC TED FROM APPEAL OF THE ASSESSEE IN ITA NO.6424/MUM/2018 FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE IS A TRADER IN IRON AND STEEL. INFORM ATION WAS RECEIVED BY THE INCOME TAX DEPARTMENT FROM THE SALES TAX DEPARTMENT , GOVERNMENT OF MAHARASHTRA REGARDING ASSESSEES ALLEGED INDULGENCE IN BOGUS PURCHASES OF IRON AND STEEL FROM HAWALA DEALERS. CONSEQUENTL Y, THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2010-11 AND 2011-1 2 WERE REOPENED UNDER SECTION 147 R.W.S. 148 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). IN REASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2010-11, IT WAS ALLEGED THAT ASSESSEE HAS MADE BOGUS PURCHASES TO T HE TUNE OF RS.60,55,355/- FROM THE FOLLOWING PARTIES: S.NO. NAME FY AMOUNT(RS) 1. NATIONAL TRADING CO. 2009-10 6,97,272 2. AMBIKA TRADE IMPEX 2009-10 19,16,415 3. MAHAVIR ENTERPRISES 2009-10 9,20,864 4. BALAJI TRADING COMPANY 2009-10 18,17,311 THE ASSESSING OFFICER AFTER PLACING RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P . SHETH REPORTED AS 356 ITR 451 (GUJ) MADE ADDITION OF 12.5% OF SUCH ALLEGE D BOGUS PURCHASES (I.E. RS. 7,56,916/-. 3. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE CIT(A). THE CIT(A) AFTER CONSIDERING THE FACTS AND THE CONTENTIONS OF THE ASSESSEE RESTRICTED THE ADDITION TO 8% OF THE ALLEGED BOGUS PURCHASES, I.E. THE ADDITION WAS 3 ITA NO.6424/MUM/2018(A.Y. 2010-11) ITA NO.6425/MUM/2018(A.Y. 2011-12) RESTRICTED TO RS.4,84,428/-. STILL AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. SHRI DHARMIL JHAVERI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FURNISHED VARIOUS DOCUMENTS B EFORE THE AUTHORITIES BELOW TO SUBSTANTIATE GENUINENESS OF THE PURCHASE S. THE CIT(A) AFTER CONSIDERING THE SAME ESTIMATED GP ADDITION AT 8% OF THE BOGUS PURCHASES. THE LD.REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF MR. MILAN KANTILAL SHAH IN ITA NO.5161/MUM/2016 DECIDED ON 19 /09/2019 TO CONTEND THAT UNDER SIMILAR SET OF FACTS THE TRIBUNA L HAD RESTRICTED THE ADDITION TO 5% OF THE ALLEGED BOGUS PURCHASES. 5. PER CONTRA, SHRI KUMAR PADAMPANI BORA REPRESENT ING THE DEPARTMENT HAS VENEMENTLY DEFENDED THE FINDING OF C IT(A). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSES SEE IS A TRADER IN IRON & STEEL. THE ASSESSEE HAS FILED A STATEMENT OF FACTS , WHEREIN HE HAS GIVEN GP RATIO OF THE LAST THREE YEARS. FOR THE SAKE OF CONVENIENCE, THE SAME IS REPRODUCED HEREIN BELOW:- A.Y G.P. RATIO 2008-09 2.22% 2009-10 2.49% 2010-11 3.69% THE SALES DECLARED BY THE ASSESSEE HAVE NOT BEEN DI SPUTED BY THE AUTHORITIES BELOW. THE GP @ 8% IS ESTIMATED ON THE ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE FROM GREY MARKET. WE FIND THAT CO- 4 ITA NO.6424/MUM/2018(A.Y. 2010-11) ITA NO.6425/MUM/2018(A.Y. 2011-12) ORDINATE BENCH OF THE TRIBUNAL IN THE CASE MILAN KANTILAL SHAH VS. ITO (SUPRA), WHEREIN THE ASSESSEE WAS ALSO INVOLVED IN SIMILAR BUSINESS OF TRADING IN IRON & STEEL, HAS APPLIED GP RATE OF 5% ON ALLEGED BOGUS PURCHASES. 7. TAKING INTO CONSIDERATION ENTIRETY OF FACTS AN D THE DECISIONS OF CO- ORDINATE BENCH, WE DEEM IT APPROPRIATE TO ESTIMATE GP ON ALLEGED BOGUS PURCHASES AT 5% OVER AND ABOVE THE GP DECLARED BY THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ITA NO.6425/MUM/2018- A.Y.2011-12: 9. BOTH SIDES ARE UNANIMOUS IN STATING THAT FACTS IN THE ASSESSMENT YEAR 2011-12 ARE IDENTICAL TO ASSESSMENT YEAR 2010- 11. THE FINDING GIVEN BY US IN ASSESSMENT YEAR 2010-11 WOULD APPLY MUTATIS MUTANDIS TO THE FACTS IN 2011-12, AS WELL. CONSEQUENTLY, THE IMPU GNED ORDER IS MODIFIED AND GP ON BOGUS PURCHASES IS ESTIMATED AT 5% OVER A ND ABOVE GP DECLARED BY THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE FOR 2011- 12 IS PARTLY ALLOWED IN THE TERMS AFORESAID. 12. TO SUM UP, APPEALS OF THE ASSESSEE FOR A.Y 20 10-11 AND 2011-12 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER HEARING T HE APPEAL ON TUESDAY THE 10 TH DAY OF DECEMBER , 2019. SD/- SD/- (R.C.SHARMA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 10/12/2019 5 ITA NO.6424/MUM/2018(A.Y. 2010-11) ITA NO.6425/MUM/2018(A.Y. 2011-12) VM , SR. PS(O/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