ITO 20 (2)(4), MUMBAI V. NAVIN RAMNIKLAL GALA, MUMBAI

ITA 6594/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4596 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 04-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUCHI RATHOD
• Keywords: Bogus purchase; Tax effect
• Section: 143(3)

Judgement Text

ITA NO. 6594/MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 1 OF 3 INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT)] AND SAKTIJIT DEY (JUDICIAL MEMBER)] ITA NO. 6594/MUM/2019 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER 20 (2)(4) .. APPELLANT MUMBAI. VS. NAVIN RAMNIKLAL GALA .RESPONDENT 3 - 120, M.H.B COLONY, KALACHOWKI, COTTON GREEN, MUMBAI 400027[PAN: AAFPG9082K] APPEARANCES: THARIAN OOMEN FOR THE APPELLANT RUCHI RATHOD FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : APRIL 7 , 2021 D ATE OF PRONOUNCEMENT : MAY 2 4 , 2021 O R D E R PER PRAMOD KUMAR, VP: 1. BY WAY OF THIS APPEAL, THE APPELLANT ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 1 ST JULY 2019, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2011 - 12. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS. 1,85,444/ - BY RESTRICTING THE ADDITION TO 8.26% OF THE ALLEGED BOGUS PURCHASE FROM HAWALA PARTIES.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ONUS IS ON THE ASSESSEE TO EXPLAIN AND SUBSTANTIATE THE GENUINESS AND TRUE NATURE OF THE PURCHASE TRANSACTION.' 3. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT C ONSIDERING THAT FACT THAT THE HAWALA DEALERS ADMITTED ON OATH BEFORE SALES TAX AUTHORITIES THAT THEY HAVE NOT SOLD ANY MATERIAL TO ANYBODY ASSESSEE ITA NO. 6594/MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 2 OF 3 FAILED TO PRODUCE SUCH PARTIES AT THE ASSESSMENT STAGE THROUGH SPECIFICALLY ASKED BY THE A.O. 4. ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IS NOT APPRECIATING THE FACT THAT PURCHASE WERE MADE FROM SOME OTHER PARTIES WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND ONLY ACCOMMODATION BILLS WERE OBTAINED FROM HAWAL A PARTIES AND THERE BY ATTRACTING PROVISIONS OF SECTION 40A(3).' 5. 'THOUGH THE TAX EFFECT IS BELOW THE MONETARY LIMIT PRESCRIBED IN THE CBDT INSTRUCTION NO.17/2019 DATED 08.08.2019 AS AMENDED ON 20.08.2018 AS THE CASE FALLS IN THE EXCEPTION PROVIDED IN PARA 10(E) OF THE SAID INSTRUCTION IN AS MUCH AS THE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES, NAMELY, SALES TAX AUTHORITIES.' 3. WHEN THIS APPEAL WAS TAKEN UP FOR THE HEARING, IT WAS NOTICED, THAT THE ISSUE IN APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE, BY CO - ORDINATE BENCH DECISIONS. IT IS SO EVIDENT FROM THE FOLLOWING OBSERVATIONS OF LEARNED CIT(A): 4.3 DECISION: - I HAVE CONSI DERED THE ASSESSMENT ORDER, THE SUBMISSIONS AND DETAILED FILED BY THE APPELLANT. THE APPELLANT HAS CONTESTED THE RATE OF PROFIT ELEMENT ON THE BOGUS PURCHASES ESTIMATED BY THE A.O AT 12.5%. IT HAS BEEN SUBMITTED THAT ITS OWN CASE FOR A.Y 2009 - 10 IN ITA NO. 3068/MUM/2018, THE ITAT MUMBAI VIDE THEIR ORDER DATED 23.04.2019 HAVE DIRECTED THE DISALLOWANCE TO BE RESTRICTED TO 12.5% OF BOGUS PURCHASE AS REDUCED BY THE GP RATE ALREADY DECLARED BY THE ASSESSEE ON THESE TRANSACTIONS. THE APPELLANT HAS SUBMITTED THAT THE GROSS PROFIT RATIO IS 8.26% FOR A.Y 2011 - 12. THE A.O. IS DIRECTED TO VERIFY THE SAME AND RECOMPUTE THE DISALLOWANCE AFTER REDUCING THE RATE OF 12.5% BY THE OF RATE OF THE APPELLANT DURING A.Y. 2011 - 12 ON SUCH TR ANSACTIONS, AS HELD BY THE HON'BLE ITAT F OR A.Y 2009 - 10 AND ALLOW APPROPRIATE RELIEF. GROUND NO. 1 IS PARTLY ALLOWED. 4. HAVING PERUSED THE IMPUGNED ORDER, AND HAVING RIVAL SUBMISSIONS ON THE SAME, WE SEE NO REASONS TO DEVIATE FROM THE CONSISTENT STAND TAKEN BY THE CO - ORDINATE BENCH. THE SAME, WE APPROVE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 2 4 T H DAY OF MAY 2021. S D / - S D / - SAKTIJIT DEY PRAMOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT) MUMBAI, DATED THE 2 4 T H DAY OF MAY 2021. ITA NO. 6594/MUM/2019 ASSESSMENT YEAR: 2011 - 12 PAGE 3 OF 3 N.V SR. PS COPIES TO: (1) THE APPLICANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI