HARESH UDAYCHANDJI JAIN, MUMBAI V. ITO WARD 20 (1)(2), MUMBAI

ITA 6454/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0348 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6); 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 6454 //20 19 (. . 2010-11 ) ITA NO.6454/MUM/2019 (A.Y.2010-11) HARESH UDAYCHANDJI JAIN 1 ST FLOOR, ROOM NO. 117, TIRANGA BUILDING, 2 ND FLOOR, KAMATHIPURA, NAGPADA, MUMBAI-400008. PAN: AGZPJ8790K ...... ' / APPELLANT VS. ITO, WARD-20(1)(2) 6 TH PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012. ..... (*/ RESPONDENT ' +/ APPELLANT BY : NONE (* +/ RESPONDENT BY : MS. SMITA VERMA , / DATE OF HEARING : 06/05/2021 , / DATE OF PRONOUNCEMENT : 12/07/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-55, MUMBAI [HE REINAFTER REFERRED TO AS THE CIT(A)] DATED 29.07.2019 FOR THE ASSESSMENT Y EAR (AY) 2010-11. 2. THE BRIEF FACTS OF CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS TRADER IN STEEL. IN ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER (AO) OBSERVED 2 . 6454 //20 19 (. .2010-11 ) ITA NO.6454/MUM/2019 (A.Y.2010-11) THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS. 29,63,955/- FROM FIVE DEALERS, DECLARED AS HAWALA O PERATORS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE AO ISSUE D NOTICE UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REF ERRED TO AS THE ACT] TO THE SAID VENDORS. NO REPLY WAS RECEIVED BY THE AO FROM SAID DEALERS, IN RESPONSE TO THE NOTICE ISSUED. THE ASSESSEE ALSO FAILED TO F URNISH CONFIRMATIONS FROM THE VENDORS. THE ASSESSEE PRODUCED COPIES OF LEDGER ACC OUNTS, BANK STATEMENTS AND INVOICES TO PROVE GENUINENESS OF PURCHASES, HOW EVER, NO DOCUMENT WAS FURNISHED BY THE ASSESSEE IN THE FORM OF LORRY RECE IPTS, STOCK REGISTER, OCTRY RECEIPTS, ETC. TO PROVE TRAIL OF GOODS. THE AO MADE ESTIMATED ADDITION OF 12.5% ON ALLEGED BOGUS PURCHASE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 19.02.2016 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING SUB MISSIONS OF ASSESSEE AND EXAMINING THE FACTS UPHELD THE FINDINGS OF AO AND C ONFIRMED THE ADDITION MADE IN ASSESSMENT PROCEEDINGS, HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 3. THE ASSESSEE IN APPEAL HAS ASSAILED CONFIRMING O F ADDITION OF RS. 3,70,499/- I.E. @ 12.5% OF ALLEGED BOGUS PURCHASES ON THE GROUND THAT: 1. THE PURCHASES ARE SUPPORTED BY BILLS. 2. PAYMENTS ARE MADE BY A/C PAYEE CHEQUES. 3. SALES OUT OF PURCHASE ARE ACCEPTED. 4. SUPPLIER HAS PAID TAXES ON PURCHASES. 5. APPELLANT HAS SUBMITTED CORRESPONDING SALES. 6. THE BOOKS OF ACCOUNTS ARE AUDITED. THEREFORE, NO ADDITION SHOULD HAVE BEEN MADE ON ACC OUNT OF BOGUS PURCHASES. 3 . 6454 //20 19 (. .2010-11 ) ITA NO.6454/MUM/2019 (A.Y.2010-11) 4. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVE (DR) SUPPORTED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE AP PEAL OF ASSESSEE. 5. SUBMISSIONS MADE BY LD. DR HEARD, ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS ON RECORD EXAMINED. THE ASSESSEE IN ORDER TO SUBSTANTIATE GENUINENESS OF PURCHASES HAS FURNISHED BANK STATEME NTS, PURCHASE INVOICES, BOOKS OF ACCOUNT, ETC. IT IS A SETTLED LEGAL PROPOS ITION THAT PAYMENT MADE THROUGH CHEQUES ARE NOT SACROSANCT TO PROVE GENUINE NESS OF THE TRANSACTION. HENCE, THE ASSESSEE IS NOT ABSOLVED FROM THE CHARGE OF OBTAINING BOGUS PURCHASE BILLS. THE ASSESSEE HAS FAILED TO FURNISH DOCUMENTS TO PROVE TRAIL OF GOODS. FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO S UBSTANTIATE AUTHENTICITY OF THE DEALERS FROM WHOM UNPROVED/BOGUS PURCHASES HAVE BEEN MADE. THEREFORE, I FIND NO INFIRMITY IN THE IMPUGNED ORDE R SO FAR AS ASSESSEES INVOLVEMENT IN OBTAINING ACCOMMODATION ENTRIES. AS REGARDS QUANTUM OF ADDITION, I FIND THAT ESTIMATION OF PROFIT MARGIN A T 12.5% ON BOGUS PURCHASES BY LOWER AUTHORITIES IS ON HIGHER SIDE. GENERALLY, THE GROSS PROFIT (GP) IN TRADING OF STEEL RANGES BETWEEN 5% TO 8%. TO MEET T HE ENDS OF JUSTICE, I RESTRICT THE ADDITION ON ACCOUNT OF BOGUS PURCHASE TO 7%. CONSEQUENTLY, THE IMPUGNED ORDER IS MODIFIED AND THE APPEAL OF ASSESS EE IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY , THE 12 TH DAY OF JULY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 1/ DATED: 12/07/2021 SK, PS 4 . 6454 //20 19 (. .2010-11 ) ITA NO.6454/MUM/2019 (A.Y.2010-11) ( 2 ( 2 ( 2 ( 2 COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. (* / THE RESPONDENT. 3. 3 ( )/ THE CIT(A)- 4. 3 CIT 5. ( , . . . , / DR, ITAT, MUMBAI 6. 7 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI