ITO 33(2)(2), MUMBAI V. KAUSHIK S VAKHARIA, MUMBAI

ITA 6533/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2082 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO. 6531 & 6533/MUM/2018 ( ASSESSMENT YEAR: 2009-10 & 2012-13) I.T.O.-33(2)(2), ROOM NO. 609, 6 TH FLOOR, C-12, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400051. VS. SHRI KAUSHIK SUMANLAL VAKHARIA, B/42, DEV NAGAR, NEAR BHATIA SCHOOL, SAI BABA NAGAR, KANDIWALI (WEST), MUMBAI-400067. PAN/GIR NO.AANPV 7006 Q (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI KUMAR PADMAPANI BORA (SR.DR) ASSESSEE BY SHRI VIMAL PUNMIYA DATE OF HEARING 09/10/2019 DATE OF PRONOUNCEMENT 06/12/2019 / O R D E R PER: R.C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A)-45, MUMBAI DATED 02/07/201 8 FOR THE A.Y. 2009-10 AND 2012-13 IN THE MATTER OF ORDER PASSED U /S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) . 2. IN BOTH THESE APPEALS, THE REVENUE IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A) FOR DELETING THE ENTIRE ADDITION MAD E BY THE A.O. BY ESTIMATING 2.5% OF THE TOTAL TURNOVER AS INCOME OF THE ASSESSEE. ITA NO. 6531 & 6533/MUM/2018 ITO VS SHRI KAUSHIK SUMANLAL VAKHARIA 2 3. THE LD SR.DR RELIED ON THE ORDER PASSED BY THE A .O. AND CONTENDED THAT AFTER MAKING DETAILED INQUIRIES, THE A.O. FOUND THE PURCHASES AS BOGUS, THEREFORE, CORRECTLY ADDED THE SAME IN ASSESSEES INCOME. 4. AT THE OUTSET, THE LD AR OF THE ASSESSEE PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E A.Y. 2008-09 & 2009-10 IN ITA NO. 2380/MUM/2012 AND 2621/MUM/2016 ORDER DATED 29/05/2018 WHEREIN UNDER SIMILAR FACTS AND CIRCUMST ANCES, THE ORDER OF THE LD. CIT(A) WAS UPHELD WHEREIN HE HAS RESTRIC TED THE ADDITION BY ADOPTING G.P. RATE OF 2.5% AND FURTHER REDUCING IT BY THE G.P. RTE ALREADY DECLARED BY THE ASSESSEE. THE PRECISE OBSER VATION OF THE TRIBUNAL WAS UNDER: 8. HAVING HEARD RIVAL SUBMISSIONS, WE FIND THAT IN THIS CASE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS. 1,38,29,815/- FRO M HAS MADE PURCHASES FROM M/S DHARMENDRA ASSOCIATES, WHICH WERE FOUND TO BE NON-GENUINE BY THE ASSESSING OFFICER AS THE SAID PARTY HAD DENIED TO ANY TRANSACTIONS WITH THE ASSESSEE. IN DEFENCE, THE ASSESSEE FURNISHED BE FORE THE ASSESSING OFFICER COPIES OF PURCHASE BILLS, LEDGER ACCOUNT CO PIES OF SAID PARTIES AND COPIES OF BANK STATEMENTS SHOWING PAYMENT MADE TO T HE PARTIES DURING THE ACCOUNTING PERIOD 2008-09 AND 2009-10. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATIONS AND ADDED THE ENTIRE AMOUNT TO THE INCOME OF THE ASSESSEE. ON APPEAL, TH E LEARNED CIT(A) REDUCED THE ADDITION TO RS. 19,03,381/- BY APPLYING THE HIGHEST GROSS PROFIT RATE DURING THE PREVIOUS YEAR I.E. @ 0.744% OF THE TOTAL TURNOVER. WE HAVE CONSIDERED THE FACTS OF THE CASE AS ALSO THE D ECISIONS OF THE CO- ORDINATE BENCHES TAKING A VIEW THAT IN CASE OF NON- GENUINE PURCHASES THE ITA NO. 6531 & 6533/MUM/2018 ITO VS SHRI KAUSHIK SUMANLAL VAKHARIA 3 ADDITION SHOULD BE SUSTAINED FROM 2% TO 12.5%. WE F IND THAT THOUGH THE ASSESSING OFFICER HAS CONSIDERED THE PURCHASES AS N ON-GENUINE, HAS NOT DISPUTED THE SALE OF MATERIAL. UNDER THESE FACTS, W E ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT(A) CONFIRMING THE ADDIT ION OF RS. 19,03,381/- IS QUITE REASONABLE AND DOES NOT REQUIRE ANY INTERFERE NCE. 5. THE LD. AR ALSO INVITED OUT ATTENTION TO THE DET AILED FINDINGS RECORDED BY THE LD. CIT(A) WHICH READS AS UNDER: 4.2 THOUGH, IT MAY BE A FACT THAT APPELLANT WAS NO T ABLE TO PRODUCE THE CONCERNED PARTIES BEFORE THE ASSESSING OFFICER, FAC T REMAINS THAT THE APPELLANT PRODUCED BANK ACCOUNT STATEMENT, PURCHASE BILLS, ETC., TO PROVE THE GENUINENESS OF THE PURCHASES. IT IS ALSO A FACT ON RECORD THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE SALE S AFFECTED BY THE APPELLANT. THUS, IT IS LOGICAL TO CONCLUDE THAT WIT HOUT CORRESPONDING PURCHASES BEING AFFECTED, THE APPELLANT COULD NOT H AVE MADE THE SALES. MERELY RELYING UPON THE INFORMATION FROM THE SALES TAX DEPARTMENT, THE ASSESSING OFFICER COULD NOT HAVE TR EATED THE SAID PURCHASES AS BOGUS. THE APPELLANT HAS BROUGHT DOCUM ENTARY EVIDENCES ON RECORD TO PROVE GENUINENESS OF SUCH TR ANSACTIONS, THE ACTION OF THE ASSESSING OFFICER IS IGNORING THEM CA NNOT BE ACCEPTED. WHEN THE PAYMENT TO THE CONCERNED PARTIES ARE THROU GH PROPER BANKING CHANNEL AND THERE IS NO EVIDENCE BEFORE THE ASSESSING OFFICER THAT THE PAYMENTS MADE WERE ROUTED BACK TO THE APPELLANT, THE ADDITION OF ADDITIONAL RS. 50,00,344/- BEING 2. 64% (4%-1.36%) OF GROSS PROFIT ON THE TOTAL TURNOVER IS NOT SUSTAINAB LE IN LAW AND FACTS. THE SAVING ON ACCOUNT OF VAT AND OTHER INCIDENTAL C HARGES MADE BY THE APPELLANT ON THE SAID BOGUS PURCHASES CAN BE BR OUGHT TO TAX AS ADDITIONAL PROFIT. KEEPING IN VIEW THAT TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ESTIMATION MADE AT 4 % IS RESTRICTED TO 2.5%. THE ASSESSEE HAD ALREADY DECLARED GP @ 1.36%. THEREFORE, THE ADDITION WILL BE 1.14% OF THE TOTAL TURNOVER 18,91, 01,626/- WHICH WILL WORK OUT TO RS. 21,55,758/-. THE AO IS DIRECTED TO MODIFY THE ADDITION ACCORDINGLY AND THE APPELLANT GETS PART RE LIEF. THIS GROUND IS PARTLY ALLOWED. 6. IT IS CLEAR THAT DURING THE YEARS UNDER CONSIDER ATION, THE LD. CIT(A) HAS APPLIED THE SAME GP RATE OF 2.5% AND RED UCED IT BY THE ITA NO. 6531 & 6533/MUM/2018 ITO VS SHRI KAUSHIK SUMANLAL VAKHARIA 4 GP SHOWN BY THE ASSESSEE. AS THE FACTS AND CIRCUMST ANCES DURING THE YEARS UNDER CONSIDERATION ARE PARI MATERIA, RESPECT FULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E A.Y. 2008-09 AND 2009-10 DATED 29/05/2018, I DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE LD. CIT(A) FOR RESTRICTING THE ADDITION ON ACCO UNT OF ALLEGED BOGUS PURCHASES BY APPLYING GP RATE OF 2.5% AND GIVING FU RTHER REDUCTION ON ACCOUNT OF PROFIT SHOWN BY THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH DECEMBER, 2019. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 06/12/2019 *RANJAN 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//