JEWELRY UNLIMITED, MUMBAI V. INCOME TAX OFFICER 23(2)(1), MUMBAI

ITA 651/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6976 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: PRADIP N KAPASI LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147

Judgement Text

ITA.NOS.650-653/MUM/2018 JEWELRY UNLIMITED ASSESSMENT YEARS- 2007-08 TO 2010-11 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NOS.650-653/MUM/2018 ( / ASSESSMENT YEARS: 2007-08 TO 2010-11) JEWELRY UNLIMITED 401, SAMUDRA SEEMA DR.AMBEDKAR ROAD BANDRA (WEST) MUMBAI 400 050 / VS. INCOME TAX OFFICER - 2 3 ( 2 )( 1 ) MATRU MANDIR OPP.BHATIA HOSPITAL GRANT ROAD MUMBAI- 400 007 ! ./ ./PAN/GIR NO. AAEFJ-8736-A ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : PRADIP N. KAPASI, LD.AR REVENUE BY : N. HEMALATHA, LD. DR / DATE OF HEARING : 21/05/2018 / DATE OF PRONOUNCEMENT : 23/05/2018 / O R D E R PER BENCH 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [AY] 2007- 08 TO 2010-11 CONTEST COMMON ORDER OF LD. COMMISSIO NER OF INCOME- TAX (APPEALS)-33 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)- 33/RG.23/17/89/90/91/2015 DATED 14/11/2017 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR ALL ITA.NOS.650-653/MUM/2018 JEWELRY UNLIMITED ASSESSMENT YEARS- 2007-08 TO 2010-11 2 THESE YEARS HAS BEEN FRAMED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961. SINCE COMMON ISSUE OF ESTIMAT ION OF ADDITION AGAINST ALLEGED BOGUS PURCHASE IS INVOLVED IN ALL THE APPEALS, THE SAME ARE BEING DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. 2. THE FACTS AS EMERGING FROM QUANTUM ASSESSMENT OR DER DATED 30/03/2015 FOR AY 2007-08 ARE THAT THE ASSESSEE BEI NG RESIDENT FIRM ENGAGED IN THE BUSINESS OF GOLD, DIAMONDS, JEWELLERY & PRECIOUS STONES HAS BEEN SADDLED WITH ADDITION OF RS.3 LACS ON ACC OUNT OF ALLEGED BOGUS PURCHASES IN THE REASSESSMENT PROCEEDINGS. PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATI ON WING REGARDING CERTAIN GROUPS / ENTITIES INDULGING IN PROVIDING AC COMMODATION ENTRIES IN THE NATURE OF BOGUS BILLS, IT WAS FOUND THAT THAT T HE ASSESSEE STOOD BENEFICIARY OF SUCH ACCOMMODATION PURCHASE BILLS FO R RS.3 LACS FROM AN ENTITY NAMELY AVI EXPORTS . THE SAID FIRM WAS BEING CONTROLLED & MANAGED BY A PERSON NAMELY RAJENDRA JAIN AGAINST WHICH SEARCH & SEIZURE ACTION WERE CARRIED OUT BY THE DEPARTMENT O N 03/10/2013 WHEREIN THE SAID GROUP ADMITTED TO BE INDULGING IN CARRYING OUT PAPER TRANSACTIONS ONLY WITHOUT DOING ANY ACTUAL BUSINESS . CONSEQUENTLY, THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES ST ATED TO BE MADE FROM THE SAID ENTITY THROUGH DOCUMENTARY EVIDENCES. THE ASSESSEE DEFENDED THE PURCHASES MADE BY HIM BUT COULD NOT PR ODUCE THE PARTY FOR CONFIRMATION OF TRANSACTION. FURTHER, THE ASSES SEE FAILED TO SUBSTANTIATE THE DELIVERY OF MATERIAL AND RECONCILE THE QUANTITATIVE DETAILS. NOTICES ISSUED U/S 133(6) TO THE SAID ENTI TY ELICITED NO RESPONSE WHICH LED THE LD. AO TO TREAT THE AFORESAID PURCHAS ES AS BOGUS ITA.NOS.650-653/MUM/2018 JEWELRY UNLIMITED ASSESSMENT YEARS- 2007-08 TO 2010-11 3 PURCHASES AND THEREFORE THE SAME WAS ADDED TO THE INCOME OF T HE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/11/2 017 WHEREIN LD. CIT(A) CONFIRMED THE STAND OF LD. AO. AGGRIEVED, TH E ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE, SHRI PRADIP N.KAPASI, BY WAY OF WRITTEN SUBMISSIONS, DREW OUR ATTENTION T O THE GROSS PROFIT / NET PROFIT RATES REFLECTED BY THE ASSESSEE OVER SEVERAL YEARS. THE ATTENTION WAS DRAWN TO THE FACT THAT QUANTITATIVE DETAILS OF THE STOCK WERE DULY SUBMITTED BY THE ASSESSEE TO THE LOWER AUTHORI TIES AND ALL THE PAYMENT TO THE SUPPLIER WAS THROUGH BANKING CHANNEL S. OUR ATTENTION IS FURTHER DRAWN TO THE FACT THAT THE REVENUE IN AY 20 12-13, ESTIMATED THE SIMILAR ADDITIONS @5% AND THEREFORE, THE ASSESSEE D ESERVE RELIEF ON FACTUAL MATRIX. ON THE OTHER HAND, THE LD. DEPARTME NTAL REPRESENTATIVE [DR], MS.N.HEMALATHA, SUBMITTED THAT THE ASSESSEE MISERABLY FAILED TO PROVE THE AFORESAID PURCHASES, WHICH JUSTIFIES THE STAND OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT TH ERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL KEEPING IN VIEW THE AS SESSEES NATURE OF BUSINESS. THE TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKIN G CHANNELS. THE ASSESSEE RECONCILED QUANTITATIVE DETAILS ALSO TO CE RTAIN EXTENT. HOWEVER, AT THE SAME TIME, THE ASSESSEE FAILED TO PROVE THE PURCHASES THROUGH REQUISITE DOCUMENTARY EVIDENCES. THE SEARCH ON THE SUPPLIER GROUP ITA.NOS.650-653/MUM/2018 JEWELRY UNLIMITED ASSESSMENT YEARS- 2007-08 TO 2010-11 4 REVEALED THAT THE SAID GROUP, THROUGH WEB OF NUMERO US ENTITIES, INDULGED IN PROVIDING BOGUS PURCHASE BILLS WITHOUT CARRYING OUT ANY BUSINESS ACTIVITY. THE ASSESSEE COULD NOT SUBSTANTIATE THE D ELIVERY OF MATERIAL AND COULD NOT PRODUCE THE SUPPLIER FOR CONFIRMATION OF THE TRANSACTIONS. ALL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEES CL AIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE , WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTI ONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES. THEREFORE, ON TOTALITY OF FACTS, WE ESTI MATE THE ADDITIONS @6% OF ALLEGED BOGUS PURCHASES , WHICH FOR VARIOUS AYS WORK OUT TO BE AS FOLLOWS:- NO. AY ALLEGED BOGUS PURCHASE ESTIMATED RATE OF ADDITION ADDITION AS CONFIRMED BY US 1. 2007-08 3,00,000/- 6% 18,000/- 2. 2008-09 9,05,078/- 6% 54,305/- 3. 2009-10 5,39,902/- 6% 32,394/- 4. 2010-11 3,05,486/- 6% 18,329/- 6. RESULTANTLY, ALL THE APPEALS STAND PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23.05.2018 SR.PS:- THIRUMALESH ITA.NOS.650-653/MUM/2018 JEWELRY UNLIMITED ASSESSMENT YEARS- 2007-08 TO 2010-11 5 ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI