ITO 28 (1)(3), MUMBAI V. DASHRATH AMRIT SINGH, MUMBAI

ITA 6448/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8556 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMAL MANGAL
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 13; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY , JM & SHRI M.BALAGANESH, AM ITA NO. 6448 /MUM/201 8 ( ASSESSMENT YEAR : 2009 - 10 ) ITO - 28(1)(3) ROOM NO.327, 3 RD FLOOR TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI NA VI MUMBAI 400 703 VS. SHRI DASHRATH AMRIT SINGH A - 701, SAI KRUPA CHS PLOT NO.100, SECTOR - 27 NERUL, NAVI MUMBAI - 400706 PAN/GIR NO. AABPS7512E (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI KAMAL MANGAL ASSESSEE BY SHRI M. SUBRAMANIAN DATE OF HEA RING 13 / 01 /2020 DATE OF PRONOUNCEMENT 15 / 01 /2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 6448/MUM/2018 FOR A.Y .2009 - 10 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 26, MUMBAI IN APPE AL NO. CIT(A) - 26/IT - 09/2014 - 15 DATED 24/08/2018 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 30/09/2014 BY THE LD. INCOME TAX OFFICER 22(3)(1), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE LD. AO TO RESTRICT THE ADDITION ITA NO .6448/MUM/2018 SHRI DASHRATH AMRIT SINGH 2 MADE TOWARDS GROSS PROFIT OF 23% OF BOGUS PURCHASES AS AGAINST 100% OF SUCH PURCHASES MADE BY THE LD. AO IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS AN INDIVIDUAL ENGAGED IN MANUFACTURING AND RESALE OF BUILD ING MATERIALS AND HAD FILED HIS RETURN OF INCOME FOR THE A.Y.2009 - 10 ON 29/09/2009 DECLARING INCOME OF RS.5,52,120/ - . THE BUSINESS OF THE ASSESSEE IS BEING RUN IN THE NAME OF M/S. TIRMA STONE, THE PROPRIETOR CONCERN OF THE ASSESSEE . THE ASSESSEE HAD DISCL OSED INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES IN HIS RETURN OF INCOME. WE FIND THAT THE LD. AO OBSERVED THAT ASSESSEE HAD MADE PURCHASES FROM M/S. R.K. TRADERS FOR RS.1,07,598/ - WHOSE NAME APPEARED IN THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTME NT TO BE A TAINTED PARTY AND THE SAID PARTY WAS SAID TO BE ENGAGED IN PROVIDING ACCOMMODATION BILLS. SINCE THE ASSESSEE HAD MADE PURCHASES FROM SUCH TAINTED PARTY AND BASED ON THE INFORMATION PROVIDED BY THE SALES TAX DEPARTMENT OF MAHARASHTRA TO THE INCOM E TAX DEPARTMENT, THE ASSESSMENT FOR THE ASST Y EAR 2009 - 10 WAS REOPENED BY THE LD. AO. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD ACTUALLY CONSUMED IN HIS BUSINESS THE GOODS THAT WERE MENTIONED IN THE INVOICE OF M/S. RK TRADERS, H ENCE, WHAT IS TO BE BROUGH T TO TAX IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. WE FIND THAT THE LD. AO HAD TAXED THE ENTIRE VALUE OF PURCHASES IN THE ASSESSMENT AS BOGUS IN THE SUM OF RS.1,07,598/ - AS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT. WE HOLD THAT NO ADDITION C OULD BE MADE IN RESPECT OF BOGUS PURCHASES U/S 69C OF THE ACT AS THE BASIC PRE - REQUISITE FOR INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT IS THAT AN EXPENDITURE SHOULD HAVE BEEN ACTUALLY INCURRED BUT THE SAME COULD NOT BE EXPLAINED BY PROPER SOURCE. IN THE INSTANT CASE, THE LD AO ITA NO .6448/MUM/2018 SHRI DASHRATH AMRIT SINGH 3 HAD ALLEGED THAT THE ENTIRE TRANSACTION OF PURCHASE FROM M/S R.K. TRADERS IS BOGUS AND NON - GENUINE. WE FIND THAT THE LD. CIT(A) HAD CONSIDERED THE GROSS PROFIT DECLARED BY THE ASSESSEE DURING THE YEAR AT 22.05% AND ACCORDING LY, ESTIMATED THE ADDITION TO RESTRICT THE GROSS PROFIT PERCENTAGE OF 23% ON VALUE OF ALLEGED PURCHASES. AGAINST THIS ACTION OF THE LD. CIT(A), ASSESSEE HAS NOT PREFERRED ANY APPEAL BEFORE US. HENCE OUR OBSERVATIONS MADE IN THE CONTEXT OF NON - APPLICABILITY OF PROVISIONS OF SECTION 69C OF THE ACT IN THE INSTANT CASE WOULD BE OF ACADEMIC IMPORTANCE ONLY. WE FIND THAT THIS TRIBUNAL HAS BEEN HOLDING CONSISTENTLY IN RESPECT OF THE INDUSTRY IN WHICH ASSESSEE IS ENGAGED IN THAT THE ADOPTION OF PROFIT OF 12.5% WOU LD BE JUST AND REASONABLE. SINCE THE ASSESSEE HAS NOT PREFERRED ANY APPEAL BEFORE THIS TRIBUNAL AGAINST THE ACTION OF THE LD. CIT(A), THE ADOPTION OF GROSS PROFIT AT 23% BY THE LD. CIT(A) IS MUCH MORE THAN THE PROFIT PERCENTAGE ADOPTED BY THIS TRIBUNAL IN SEVERAL CASES AT 12.5%. IN VIEW OF THESE PECULIAR CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) DOES NOT WARRANT ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON THIS 15 / 01 /2020 SD/ - ( SAKTIJIT DEY ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 01 / 2020 KARUNA , SR.PS ITA NO .6448/MUM/2018 SHRI DASHRATH AMRIT SINGH 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//