PANKAJ K. SHAH, MUMBAI V. ITO 19 (2)(5), MUMBAI

ITA 6505/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1641 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHILD
• Assessee Lawyers: NEELKANTH KHANDELWAL LD
• Keywords: Bogus purchase
• Section: 143(3); 143(2); 148

Judgement Text

ITA NO.6505/MUM/2018 PANKAJ K. SHAH ASSESSMENT YEAR :2010-11 1 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6505/MUM/2018 ( / ASSESSMENT YEAR: 2010-11 ) PA N KAJ K. SHAH SHOP NO.5 HARARWALA BUILDING ISLAMPURA STREET MUMBAI-400 004. / VS. INCOME TAX OFFICER - 19 ( 2 )( 5 ) ROOM NO.210, 2 ND FLOOR MATRU MANDIR MUMBAI-400 007. ! ./ ./PAN/GIR NO. AXFPS-9623-K ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : SHRI NEELKANTH KHANDELWAL-LD.AR REVENUE BY : SHRI R. BHOOPATHI LD. DR / DATE OF HEARING : 04/12/2019 / DATE OF PRONOUNCEMENT : 04/12/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-30, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)] APPEAL NO. CIT(A)-30/19(2)(5)/306/2016-17 DATED 05/ 10/2018. IT IS EVIDENT FROM GROUNDS OF APPEAL THAT THE SOLE ISSUE THAT ARISES FOR OUR CONSIDERATION IS ADDITION ON ACCOUNT OF ALLEGED BOG US PURCHASES. ITA NO.6505/MUM/2018 PANKAJ K. SHAH ASSESSMENT YEAR :2010-11 2 2. THE LEARNED AR HAS RESTRICTED THE ARGUMENTS TO S UBMIT THAT A FAIR ESTIMATION MAY BE MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. RELIANCE HAS BEEN PLACED ON THE DECISION OF THIS TR IBUNAL RENDERED IN SHRI CHETAN SHASHIKANT SHAH V/S ITO (ITA NO. 4294/M UM/2018 DATED 12/06/2019). THE LD. DR SUBMITTED THAT ESTIMATION MADE WAS QUITE REASONABLE. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED RELEVANT MATERIAL ON RECORD AND DELIBERATED ON VARIOUS JUDICIAL PRONOUNCEMENTS BEING RELIED UPON BY BOTH THE REPRES ENTATIVES. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF METAL S, WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S. 143(3) R.W.S. 147 ON 01/03/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.34. 19 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.29.21 LA CS AS AGAINST RETURNED INCOME OF RS.4.98 LACS E-FILED BY THE ASSE SSEE ON 24/09/2010 WHICH WAS PROCESSED U/S 143(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION), MUMBAI / SALES TAX DEPARTMENT, IT WAS ALLEGED THAT THE ASSESSEE OBTAINED BOGUS PURCHASES BILLS AMOUNTING TO RS.233. 70 LACS FROM 15 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EX TRACTED AT PARA-2 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 16/09/2014 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142( 1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3.3 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES BY SUBMITTING LEDGER EXTRACTS AND DETAILS OF CHEQUES PAYMENT BUT FAILED TO SUBSTANTIATE THE DELIVERY OF MATERIAL. CONSEQUENTLY, LD. AO ESTI MATED ADDITION @ ITA NO.6505/MUM/2018 PANKAJ K. SHAH ASSESSMENT YEAR :2010-11 3 12.5% ON THESE NON-VERIFIABLE / UNPROVED PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. THE LEARNED CIT(A), AFTER WEIGHING THE FACTUAL M ATRIX IN TERMS OF RATIO OF VARIOUS JUDICIAL PRONOUNCEMENTS, CONFIRMED THE STAND OF LD.AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. AFTER CAREFUL CONSIDERATION, WE ARE OF THE CONSI DERED OPINION THAT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF M ATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. UNDISPUTEDL Y THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. HOWEVER, A T THE SAME TIME, THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS. THE ONUS CASTED UPON ASSESSEE, IN THI S REGARD, REMAINED UNDISCHARGED. 6. THE STATED FACTUAL MATRIX, IN OUR CONSIDERED OPI NION, WOULD MAKE IT A FIT CASE TO MAKE ADDITIONS ON ESTIMATED BASIS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LOWER AUTHORITIES HAVE RIGHTLY DONE SO. HOWEVER, KE EPING IN VIEW THE FACT THAT THE ASSESSEE WAS DEALING IN LOW-MARGIN ITEM LI KE METALS AND HAD ALREADY REFLECTED GROSS PROFIT OF 6.77% DURING THE YEAR UNDER CONSIDERATION, WE REDUCE THE ESTIMATION TO 5% OF ALLEGED BOGUS PURCHASES OF RS.2,33,70,771/- WHICH COMES TO RS.11,68,539/-. THE ORDERS OF LOWER AUTHORITIES STAND MODIFIED TO THAT EXTENT. SO FAR AS THE RELIANCE ON CASE LAWS IS CONCERNED, THE DECISIONS H AVE BEEN RENDERED KEEPING IN VIEW THE OVERALL FACTUAL MATRIX OF A PAR TICULAR CASE AND ITA NO.6505/MUM/2018 PANKAJ K. SHAH ASSESSMENT YEAR :2010-11 4 THEREFORE, THE SAME WOULD NOT HAVE UNIVERSAL APPLIC ATION IN THE MATTER OF ESTIMATION. 7. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED TO THE EXTENT INDICATED IN THE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2019 SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04/12/2019 SR.PS, JAISY VARGHESE 6789:69 / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. I ( ) / THE CIT(A) 4. I / CIT CONCERNED 5. JK > L , L , / DR, ITAT, MUMBAI 6. KMNO / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.