ANIL JAGANNATH TIWARI PROPRIETOR M/S. ANIL AND BROTHERS, MUMBAI V. INCOME TAX OFFICER WARD 2(1), KALYAN

ITA 6493/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3766 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARISH CHANDRA RAJORE
• Assessee Lawyers: PARESH C SHAPARIA
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries
• Section: 69C; 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6492/MUM/2017 ITA NO.6493/MUM/2017 : A.Y : 2010-11 A.Y: 2011-12 SHRI ANIL JAGANNATH TIWARI PROPRIETOR M/S. ANIL & BROTHERS GROUND FLOOR, KULGAON BADLAPUR(E)-421503 VS. INCOME TAX OFFICER WARD2(1), KALYAN PAN NO: ACGPT4287Q ASSESSEE BY : SHRI PARESH C SHAPARIA REVENUE BY : SHRI SARISHCHANDRA RAJORE DATE OF HEARING : 26/02/2020 DATE OF PRONOUNCEMENT : 02/03/2020 O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-3, MUMBAI DATED 05/07/2017 & 27/03/2017 FOR A.Y. 2010-11 & 2011-12, IN THE MATTER OF ORDER PASSED U/S.143(3) & 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961. 2. COMMON GRIEVANCE OF ASSESSEE IN BOTH THE YEARS R ELATE TO UPHOLDING ADDITION ON ACCOUNT OF BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN TRADING IN ST EEL MATERIAL AND MS MATERIAL. DURING THE COURSE OF SCRUTINY ASSESSMENT / RE-ASSESSMENT ITA NO.6492 & 6493/MUM/2017 SHRI ANIL JAGANNATH TIWARI 2 PROCEEDINGS, AO FOUND THAT ASSESSEE HAS TAKEN ACCOM MODATION BILL OF THE PURCHASES, ACCORDINGLY, HE ADDED ENTIRE SUCH PURCHA SES IN ASSESSEES INCOME. 4. BY THE IMPUGNED ORDER, CIT(A) HAS CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. LD. AR PLACED ON RECORD THE ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING A.Y.2009-10, WHE REIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, ADDITION WAS RESTRICTED TO 8% OF THE ALLEGED BOGUS PURCHASES. 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND FOUND THAT AO HAS ADDED ENTIRE PURCHASES IN ASSESSE ES INCOME. HOWEVER, BEFORE CIT(A), ASSESSEE COULD NOT APPEAR B ECAUSE HIS AUTHORISED REPRESENTATIVE WAS SUFFERING FROM CANCER . RELEVANT MEDICAL CERTIFICATES WERE PLACED ON RECORD TO JUSTIFY NON-A PPEARANCE BEFORE CIT(A). SO FAR AS MERIT OF ADDITION IS CONCERNED, T HE TRIBUNAL HAVE DECIDED EXACTLY SIMILAR ISSUE IN ASSESSEES OWN CAS E FOR THE IMMEDIATELY PRECEDING A.Y.2009-10, WHEREIN TRIBUNAL VIDE ITS OR DER DATED 27/02/2019 IN ITA NO.6491/MUM/2017 HELD AS UNDER:- 11. WE HAVE HEARD' BOTH' THE PARTIES, PERUSED T HE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW, THE ASSESSES CLAIMS TO HAVE PURCHASED GOODS FROM 11 PARTIES AS L ISTED BY THE AO IN HIS ASSESSMENT AMOUNTING TO RS.1,11,14,941, BUT COULD N OT SUBSTANTIATE ITS CLAIM BY FILING NECESSARY EVIDENCE BEFORE THE LOWER AUTHORITIES. FURTHER, THE INVESTIGATION CARRIED OUT BY THE SAL ES-TAX DEPARTMENT ALSO PROVES THE FACT THAT PARTIES WERE INVOLVED IN PROV IDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GOODS. FURTHER, THE, PARTIES FAILED TO FILE NECESSARY DETAILS SOUGHT BY THE AO BY ISSUING 133(6 ) NOTICES. FROM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE HAS FAILE D TO PROVE, THE PURCHASES TO THE SATISFACTION OF THE AO. ACCORDINGLY, WE REJECT THE ARGUMENTS OF THE ITA NO.6492 & 6493/MUM/2017 SHRI ANIL JAGANNATH TIWARI 3 ASSESSEE THAT PURCHASES FROM THE ABOVE PARTIES WERE GENUINE, WHICH ARE SUPPORTED BY NECESSARY EVIDENCE. AT THE SAME TIME, IT IS DIFFICULT TO ACCEPT THE .AR GUMENTS OF THE LD. DR THAT THE PURCHASES FROM THE ABOVE PARTIES ARE NOT SUPPOR TED BY ANY EVIDENCE BECAUSE THE AO HAS NOT CARRIED GUT ANY FURTHER IN VESTIGATION IN THE LIGHT OF FACTS BROUGHT OUT BY THE MVAT DEPARTMENT TO ASCE RTAIN THE TRUE CHARACTER OF TRANSACTIONS BETWEEN THE PARTIES. MERE ISS UING NOTICE U/S 133(6) IS NOT SUFFICIENT ENOUGH TO HOLD PURCHASES FROM THOSE PARTIES AS NON GENUINE WITHOUT CARRYING OUT ANY FURTHER ENQUIRIES. THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO ALSO FAILED TO-MAKE OUT A CASE' OF UNEXPLAINED EXPENDITURE WHICH COULD BE BROUGHT TO TAX U/S 69C O F THE INCOME-TAX ACT, .1961. UNDER THESE FACTS, TO RESOLVE THE DISPUTE, W HAT IS BE DONE IS TO ESTIMATE A REASONABLE AMOUNT OF PROFIT ON SUCH ALLE GED BOGUS PURCHASES. IN FACT, THE LD.AR FOR THE ASSESSEE HAS ACCEPTED FO R ESTIMATION OF REASONABLE PROFIT. THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN A NUMBER OF CASES HAVE TAKEN A CONSISTENT VIEW DEPENDING UPO N FACTS OF EACH CASE AND DIRECTED THE AO TO ESTIMATE NET PROFIT OF 5 TO 12.5% ON ALLEGED BOGUS PURCHASES. IN THIS CASE THE ASSESSEE IS INVOLVED IN TRADING IN IRON & STEEL WHERE THE PROFIT MARGIN VARIES FROM 3% TO 8%. SINC E, THE ASSESSEE FAILED TO FILE NECESSARY EVIDENCES TO PROVE THE PURCHASES, WE ARE OF THE CONSIDERED VIEW THAT IN ORDER TO RESOLVE THE DISPUTE, A PROFIT MARGIN OF 8% WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO ESTIMATE 8% PROFIT ON ALLEGED BOGUS PURCHASES. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 7. WE HAD CAREFULLY GONE THROUGH THE ORDERS OF THE TRIBUNAL AND FOUND THAT EXACTLY UNDER SIMILAR FACTS AND CIRCUMST ANCES, THE TRIBUNAL HAVE RESTRICTED ADDITION TO THE EXTENT OF PROFIT MA RGIN OF 8% ON THE ALLEGED BOGUS PURCHASES. AS THE FACTS AND CIRCUMSTA NCES DURING BOTH THE YEARS UNDER CONSIDERATION ARE PERIMATRIA, RESPECTFU LLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AS STATED AB OVE, WE DIRECT AO TO RESTRICT ADDITION TO THE EXTENT OF 8% OF ALLEGED BO GUS PURCHASES. ITA NO.6492 & 6493/MUM/2017 SHRI ANIL JAGANNATH TIWARI 4 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02/03/2 020. SD/- (PAWAN SINGH) SD/- (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 02/03//2020 KARUNA SR.PS 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//