ITO WARD 1 (2), KALYAN V. MYPAL SUMERMALJI JAIN, MUMBAI

ITA 6508/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2472 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHILD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 143(2); 148

Judgement Text

ITA NO.6508/MUM/2018 SHRI MYPAL SUMERMALJI JAIN ASSESSMENT YEAR :2011-12 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.6508/MUM/2018 ( / ASSESSMENT YEAR: 2011-12 ) I TO - WARD - 1(2) 1 ST FLOOR IT OFFICE MOHAN PLAZA, NR. PODDAR SCHOOL WAYLE NAGAR, KALYAN (W)-421 301. / VS. SHRI MY PAL SUMERMALJI JAIN 413, 1 ST FLOOR SHIV DARSHAN BUILDING, KASARALI, MAHESH PARK GOKUL NAGARI, BHIWANDI-421 302. ! ./ ./PAN/GIR NO. AFIPJ-8188-H ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : NONE 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 REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2011-12 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-2, PUNE, [IN SHORT REFERRED TO AS CI T(A)] APPEAL NO. 562/2017-18 DATED 06/08/2018. IT IS EVIDENT FROM GR OUNDS OF APPEAL THAT ITA NO.6508/MUM/2018 SHRI MYPAL SUMERMALJI JAIN ASSESSMENT YEAR :2011-12 2 THE SOLE ISSUE THAT ARISES FOR OUR CONSIDERATION IS ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJO URNMENT APPLICATION IS ON RECORD AND HENCE, THE MATTER WAS PROCEEDED WITH EX- PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD AND AFTER HEARING LEARNED DEPARTMENTAL REPRESENTATIVE, WHO SU PPORTED THE STAND OF LD.AO. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ASSESSEE STATED TO BE ENGAGED IN THE BU SINESS OF YARN, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 27/02/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T RS.19.30 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.17.63 LACS AS AGAINST RETURNED INCOME OF RS.1.67 LACS E-FILED BY THE ASSESSEE ON 28/09/2011 WHICH WAS PROCESSED U/S 143(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, IT WAS ALLEGED THAT THE ASSESSEE OBTAIN ED BOGUS PURCHASES BILLS AMOUNTING TO RS.17.63 LACS FROM 3 ENTITIES, T HE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED AT PARA-3 OF THE QUANTU M ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENED AS PER DU E PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 17/07/2013 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1) WHEREIN THE A SSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3.3 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES BU T FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSAC TIONS. NOTICES ISSUED U/S 133(6), TO CONFIRM THE TRANSACTIONS, DID NOT EL ICIT SATISFACTORY ITA NO.6508/MUM/2018 SHRI MYPAL SUMERMALJI JAIN ASSESSMENT YEAR :2011-12 3 RESPONSE. CONSEQUENTLY, THE SAID PURCHASES WERE DIS ALLOWED AND ADDED 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, CAME TO A CONCLUSION THAT THE ADDITIONS WERE TO BE RESTRICTED TO THE EXTENT OF ES TIMATED GROSS PROFIT EARNED BY THE ASSESSEE ON THESE TRANSACTIONS. THE S AID ESTIMATION WAS MADE @20% AND THE BALANCE ADDITIONS WERE DELETED. AGGRIEVED, THE REVENUE 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 NOT TO DISALLOW ENTIRE PURCHASES BUT THE ADDITION, WHICH COULD BE SUSTAINED, WOULD BE TO ACCOUNT FOR PROFIT ELEMEN T EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIR ST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. THEREFORE, FINDING T HE ESTIMATION OF 20% TO BE QUITE FAIR AND REASONABLE, WE CONFIRM THE SAME. ITA NO.6508/MUM/2018 SHRI MYPAL SUMERMALJI JAIN ASSESSMENT YEAR :2011-12 4 7. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 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. C ( ) / THE CIT(A) 4. C / CIT CONCERNED 5. DE 8 F , F , / DR, ITAT, MUMBAI 6. EGHI / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.