ITO 22 (2)(2), MUMBAI V. MAHENDRA KUMAR BAFNA , MUMBAI

ITA 6477/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0791 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 6477 / /201 9 ((. . 2009-10) . 6480 / /201 9 ((. . 2010-11) ITA NO.6477/MUM/2019 (A.Y.2009-10) ITA NO.6480/MUM/2019 (A.Y.2010-11) INCOME TAX OFFICER 22(2)(2), ROOM NO.309, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012. ...... ) / APPELLANT ( VS. MAHENDRA KUMAR BAFNA, FLAT NO.7, RAVI SHASHI CHSL, TILAK ROAD, SANTACRUZ (WEST), MUMBAI 400 054 PAN: AACPB-1466-B ..... *+/ RESPONDENT ),/ APPELLANT BY : MS. SMITA VERMA *+,/ RESPONDENT BY : NONE (-+ / DATE OF HEARING : 06/05/2021 ./0 -+ / DATE OF PRONOUNCEMENT : 12/07/2021 / ORDER PER VIKAS AWASTHY, J.M: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-34, MUMBAI (IN SHORT THE CIT(A)) DATED 04/07/2019 COMMON FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. SINCE, THE FACTS ARE IDENTICAL IN BOTH THESE APPEALS, THE APP EALS ARE TAKEN UP TOGETHER AND ARE DECIDED BY THIS SINGLE ORDER. 2 ITA NO.6477/MUM/2019 (A.Y.2009-10) ITA NO.6480/MUM/2019 (A.Y.2010-11) 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WHOLE SALE AND RETAIL TRADE OF PLYWOOD, SUNMICA, TEAKWOOD, FEVICOL AND OTHER HARDW ARE ITEMS. THE ASSESSMENT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2009-1 0 AND 2010-11 WERE REOPENED ON THE GROUND THAT THE ASSESSEE HAS INDULGED IN OBT AINING BOGUS PURCHASE BILLS FROM THE DEALERS, DECLARED AS HAWALA OPERATORS BY T HE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. IN ASSESSMENT YEAR 2009 -10, THE ASSESSEE ALLEGEDLY OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS.5,6 0,677/- AND IN ASSESSMENT YEAR 2010-11 THE ASSESSEE ALLEGEDLY OBTAINED ACCOMM ODATION BILLS AGGREGATING TO RS.8,78,328/- FROM SUSPICIOUS DEALERS. THE ASSESSI NG OFFICER MADE ADDITION OF ENTIRE ALLEGED BOGUS PURCHASES IN THE RESPECTIVE AS SESSMENT YEARS. AGAINST THE ASSESSMENT ORDERS, THE ASSESSEE FILED APPEAL FOR R ESPECTIVE ASSESSMENT YEARS BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY A FTER EXAMINING THE FACTS CONCURRED WITH THE FINDINGS OF ASSESSING OFFICER TO THE EXTENT THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS, HOWEVER, THE CIT (A) RESTRICTED THE DISALLOWANCE ON BOGUS PURCHASES TO 12.5% OF SUCH PU RCHASES. 3. MS. SMITA VERMA REPRESENTING THE DEPARTMENT VEHE MENTLY DEFENDED THE ASSESSMENT ORDER FOR THE IMPUGNED ASSESSMENT YEAR S. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAI LED TO DISCHARGE HIS ONUS IN PROVING GENUINENESS OF PURCHASES MADE FROM SUSPICIO US DEALERS. THE NOTICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 133( 6) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') TO THE DEALERS FROM WHOM THE ASSESSEE HAD ALLEGEDLY MADE PURCHASES WERE RECEIVED BACK UNSERVED FROM POSTAL A UTHORITIES. NO DOCUMENT WAS FURNISHED BY THE ASSESSEE TO SUBSTANTIATE TRAIL OF GOODS. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION RENDERED BY HON'BLE SUPREME COURT OF INDIA IN THE CASE OF N.K. PROTEINS VS. DCIT, 84 TAXAMANN.COM 195(SC) AND PRAYED FOR RESTORING COMPL ETE DISALLOWANCE OF BOGUS PURCHASES. 3 ITA NO.6477/MUM/2019 (A.Y.2009-10) ITA NO.6480/MUM/2019 (A.Y.2010-11) 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. UNDISPUTEDLY, THE ASSES SEE FAILED TO DISCHARGE HIS ONUS IN PROVING AUTHENTICITY OF DEALERS AND PUR CHASES MADE FROM THEM. AT THE SAME TIME IT IS OBSERVED THAT THE ASSESSING OFFICER HAS ACCEPTED THE SALES TURNOVER DECLARED BY THE ASSESSEE, HENCE, THE ENTIR E ALLEGED BOGUS PURCHASES CANNOT BE DISALLOWED. WITHOUT PURCHASES THERE CANN OT BE SALES. IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTIONS THAT C AN BE BROUGHT TO TAX [RE: PCIT VS. PARAMSHAKHTI DISTRIBUTORS PVT. LTD. IN INC OME TAX APPEAL NO.413 OF 2017 DECIDED ON 15/07/2019 BY HON'BLE BOMBAY HIGH COURT.] I AM OF CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS ERRED IN MAKING 100% DISALLOWANCE ON BOGUS PURCHASES. I CONCUR WITH THE FINDINGS OF CIT(A) IN ESTIMATING PROFIT MARGIN @ 12.5% ON ALLEGED BOGUS PURCHASES. THE IMPUGNED ORD ER IS UPHELD AND APPEAL OF THE REVENUE FOR ASSESSMENT YEARS 2009-10 AND 2010- 11 ARE DISMISSED, SANS MERIT. 5. IN THE RESULT, BOTH APPEALS BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 12 TH DAY OF JULY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 2(/ DATED: 12/07/2021 VM , SR. PS (O/S) 4 ITA NO.6477/MUM/2019 (A.Y.2009-10) ITA NO.6480/MUM/2019 (A.Y.2010-11) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. 3+ ( )/ THE CIT(A)- 4. 3+ CIT 5. 56*+( , . . . , / DR, ITAT, MUMBAI 6. 6789: / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI