MUKESH SAMRTHMAL JAIN, MUMBAI V. ITO - 19 (2)(3), MUMBAI

ITA 6433/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8536 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• 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
• Department Lawyers: KAMAL MANGAL
• Assessee Lawyers: BHAGYASHREE JAIN
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY , JM & SHRI M.BALAGANESH, AM ITA NO. 6433 /MUM/201 8 ( ASSESSMENT YEAR : 2010 - 11 ) SHRI MUKESH S AMRATHMAL JAIN 50, LAXMI NIVAS, MINTY HOUSE 2 ND PANJRAPOLE LANE C.P.TANK, M UMBAI - 400 004 VS. INCOME TAX OFFICER 19(2)(3) MATRU MANDIR TARDEO, GRANT ROAD MUMBAI PAN/GIR NO. AFHPJ8141B (APPELLANT ) .. (RESPONDENT ) ITA NO. 6280 /MUM/201 8 ( ASSESSMENT YEAR : 2010 - 11 ) INCOME TAX OFFICER 19(2)(3) MATRU MANDIR TARDEO, GRANT ROAD MUMBA I VS. SHRI MUKESH SAMRATHMAL JAIN 50, LAXMI NIVAS, MINTY HOUSE 2 ND PANJRAPOLE LANE C.P.TANK, MUMBAI - 400 004 PAN/GIR NO. AFHPJ8141B (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI BHAGYASHREE JAIN REVENUE BY SHRI KAMAL MANGAL DATE OF HEARING 13 / 01 /2020 DATE OF PRONOUNCEMENT 15 / 01 /2020 / O R D E R PER M. BALAGANESH (A.M) : THESE CROSS APPEAL S IN ITA NO S . 6433/MUM/2018 & 6280/MUM/2018 FOR A.Y. 2010 - 11 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 29, MUMBAI IN APPEAL NO. CIT(A) - 30/IT - 420/ITO - 19(2)(3)/2016 - 17 D ATED 27/08/2018 (LD. CIT(A) IN SHORT) AGAINST THE ITA NO. 6433/MUM/2018 & 6280/MUM/2018 SHRI MUKESH SAMR A THMAL JAIN 2 ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 18/02/2016 BY THE LD. INCOME TAX OFFICER 19(2)(3), MUMBAI (HEREINAFTER REFERRED TO AS LD . AO). 2. THE ONLY ISSUE ON MERITS TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE LD. AO TO REDUCE THE GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE FROM THE PROFIT ELEMENT ADDED AT 12.5% BY THE LD. AO IN RESPE CT OF ALLEGED BOGUS PURCHASES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS A PROPRIETOR OF M/S. MOKSH STEELS AND HAD FILED HIS RETURN OF INCOM E FOR THE A.Y.2010 - 11 ON 10/10/2010 DECLARING TOTAL INCOME OF RS.1,84,257/ - . WE FIND THAT THE LD. AO HAD OBSERVED THAT ASSESSEE H AD MADE PURCHASES FROM FOUR PARTIES FOR RS.93,11,923/ - AS UNDER: - A . RAJDEEP METALS & TUBES B . PRAKASH STEEL INDIA C . HARISH METAL & T UBES D . GOOD LUCK METAL IMPEX 2.2 . THE LD. AO OBSERVED THAT THESE PARTIES APPEARED IN THE LIST OF HAWALA DEALERS PREPARED BY MAHARASHTRA SALES TAX DEPARTMENT AND THE SAID INFORMATION WAS DULY PASSED ON TO THE INCOME TAX DEPARTMENT WHICH ULTIMATELY TRIGGERED THE REOPENING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE. SUCH INFORMATION ALSO CONTAINED THAT THESE SUPPLIERS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF ISSUING BOGUS SALES / PURCHASE BILLS WITHOUT SUPPLIYING ANY GOODS AND WERE PROVIDI NG ITA NO. 6433/MUM/2018 & 6280/MUM/2018 SHRI MUKESH SAMR A THMAL JAIN 3 MERELY ACCOMMODATION ENTRIES TO VARIOUS PARTIES. THE SAID INFORMATION WAS ALSO BASED ON DEALERS ADMISSION ON THE BASIS OF STATEMENTS / DEPOSITION / AFFIDAVITS FILED BEFORE THE SALES TAX AUTHORITIES. THE ENTIRE LIST OF BENEFICIARIES PART IES ARISING OUT O F SUCH LIST WERE PUBLISHED IN THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT AND FORWARD ED TO DGI T INVESTIGATION, MUMBAI WHEREIN IT WAS FOUND THAT ASSESSEE WAS ALSO ONE OF THE BENEFICIARIES WHEREIN HE HAD MADE PURCHASES FROM FOUR OF SUCH TAINTED PARTIES T OTALL ING TO RS.93,11,923/ - . IT IS NOT IN DISPUTE THAT ASSESSEE HAD SUBMITTED THE PURCHASE INVOICES OF THE AFORESAID PARTIES, COPIES OF BANK STATEMENTS EVIDENCING PAYMENTS MADE THROUGH PROPER BANKING CHANNELS BY ISSUING ACCOUNT PAYEE CHEQUES IN RESPECT OF A LL THE PARTIES AND HIGHLIGHTING RELEVANT ENTRIES, SHOWING THE DETAILS OF PURCHASES OF THE ALLEGED PARTIES, QUANTITATIVE TALLY IN RESPECT OF ENTIRE PURCHASES FROM THE ABOVE NAMED PARTIES TOGETHER WITH THE CORRESPONDING SALES MADE THEREON. ACCORDINGLY, THE L D. AO PROCEEDED TO TAX ONLY PROFIT ELEMENT EMBEDDED IN SUCH ALLEGED PURCHASES BY HOLDING THAT THE PURCHASES WERE MADE FROM GREY MARKET AND ACCORDINGLY TAXED 12.5% OF THE VALUE OF SUCH PURCHASES AS PROFIT IN THE ASSESSMENT. WE FIND THAT THE LD. CIT(A) HAD I N PRINCIPLE UPHELD THE ADDITION OF PROFIT ELEMENT ALONE EMBEDDED IN SUCH P URCHASES AT 12.5% BUT FURTHER, GRANTED RELIEF TO THE EXTENT OF GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. WE FIND AFTER THIS RELIEF , THE PROFIT THAT HAS BEEN SUBJECTED TO TAX WORKED OUT TO 7.15% OF THE TOTAL VALUE OF ALLEGED PURCHASES. CONSIDERING THE INDUSTRY IN WHICH ASSESSEE IS ENGAGED, WE HOLD THAT ADOPTION OF PROFIT AT 5% OF VALUE OF ALLEGED PURCHASES WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE G ROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED AND BY THE REVENUE ARE DISMISSED . ITA NO. 6433/MUM/2018 & 6280/MUM/2018 SHRI MUKESH SAMR A THMAL JAIN 4 3. WE HOLD THAT THE ASSESSMENT HAD BEEN REOPENED BASED ON INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT WITH CONCRETE FINDING THAT THE AFORESAID FOUR SUPPLIERS HAD APPEARED IN THE LIST OF HAWALA DEALERS PUBLISHED IN WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT AND ALSO BASED ON CERTAIN STATEMENTS AND DEPOSITIONS RECORDED FROM VARIOUS PARTIES BY THE SALES TAX AUTHO RI TIES . I T HAD BEEN BROUGHT TO NOTICE THAT THE AFO RESAID FOUR PARTIES WERE INDEED ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. SINCE, THE ASSESSEE HAD CLAIMED TO HAVE MADE PURCHASES FROM THE AFORESAID FOUR TAINTED PARTIES, CERTAINLY THE LD. AO DID HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAD ESCA PED ASSESSMENT IN THE HANDS OF THE ASSESSEE. WE HOLD THAT THE LAW IS NOW WELL SETTLED THAT SUFFICIENCY OF REASONS AT THE TIME OF REOPENING IS NOT RELEVANT. WHAT IS REQUIRED TO BE SEEN IS AS TO WHETHER THERE WA S PRIMA FACIE MATERIAL AVAILABLE WITH THE LD. A O FOR TRIGGERING OR INITIATING REASSESSMENT PROCEEDINGS, WHICH IN THE INSTANT CASE , HAS BEEN ESTABLISHED BY THE REVENUE BEYOND DOUBT. HENCE, IN OUR CONSIDERED OPINION, THE REOPENING HAS BEEN CORRECTLY MADE BY THE REVENUE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF REOPENING ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 / 01 /2020 SD/ - ( SAK TIJIT DEY ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 01 / 2020 KARUNA , SR.PS ITA NO. 6433/MUM/2018 & 6280/MUM/2018 SHRI MUKESH SAMR A THMAL JAIN 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI D ATE INITIAL 1. DRAFT DICTATED ON 14/01/2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15/01/2020 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/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 11 . DICTATION PAD IS ENCLOSED YES 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//