ITO-27(2)(1), Mumbai V. SHRI. KIRTI HEMCHAND DHAROD, Mumbai

ITA 674/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2879 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 674 / MUM . /201 9 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 2 7 ( 2 )(1), MUMBAI . APPELLANT V/S SHRI KIRTI HEMCHAND DHAROD FLAT NO.9, A WING, 2 ND FLOOR JAI BANDHU CHS, 90 FEET ROAD GHATKOPAR (E), MUMBAI 400 077 PAN AAEPD6620R . RESPONDENT REVENUE BY : SHRI ASHISH KUMAR ASSESSEE BY : NONE DATE OF HEARING 30.01.2020 DATE OF ORDER 13.03.2020 O R D E R PER SAKTIJIT DEY. J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 28 TH NOVEMBER 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 26, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2. WHEN THE APPEAL S WERE CALL ED FOR HEARING NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER . ACCORDINGLY, WE PROCEED TO D ISPOSE OFF THE 2 SHRI KIRTI HEMCHAND DHAROD APPEAL S EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO REDUCTION OF DISALLOWANCE MADE ON ACCOUNT OF NON GENUI NE PURCHASES TO 12.5%. 4. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF MANUFACTURING READYMADE GARMENT S . FOR TH E ASSESSMENT YEAR UNDER DISPUTE TH E ASSESSEE FILED HIS RETURN OF INCOME ON 10 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 5,19,269. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARAS HTRA, THROUGH THE OFFICE OF THE DGIT (INV.), MUMBAI, THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS PROVIDED BY CERTAIN ENTITIES IDENTIFIED AS HAWALA OPERATOR S , THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASE WORTH ` 2,76,483, CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM SIX PARTIES. FURTHER, TO INDEPENDENTLY VERIFY THE GENUINENESS OF SUCH PURCHASES , THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES. AS ALLEGED BY THE ASSESSING OFFICER , ALL SUCH NOTICE S RETURNED BACK UN 3 SHRI KIRTI HEMCHAND DHAROD SERVED WITH THE REMARK LEFT . FURTHER, ON VERIFICATION OF THE EVIDENCES FURNISHED BY TH E ASSESSEE, THE ASSESSING OFFICER DID NOT FIND THEM CONVINCING. HE OBSERVED , THE ASSESSEE FAILED TO FURNISH DELIVERY CHALLAN, TRANSPORTATION BILLS, ETC. TO PROVE ACTUAL DELIVERY OF GOODS. THUS, ULTIMATELY, TREATING THE PURCHASE TO BE NON GENUINE, THE ASSES SING OFFICER ADDED BACK THE AMOUNT OF ` 2,76,483, TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) REDUCED THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES. 6. WE HAVE C ONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. THE FACTORS WHICH INFLUENCED THE ASSES SING OFFICER TO DISALLOW THE PURCHASES TO BE NON GENUINE ARE , THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT RETURNED BACK UN SERVED, THE ASSESSEE FAILED TO FURNISH THE DELIVERY CHALLAN A ND TRANSPORTATION DETAILS, ETC. H OWEVER, A PERUSAL OF THE ASSESSM ENT ORDER MAKES IT CLEAR THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE CONSUMPTION OF RAW MATERIAL OR SALES EFFECTED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, LOGICAL CONCLUSION ONE CAN ARRIVE AT IS, THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM SOME OT HER SOURCES. THEREFORE, IN SUCH CIRCUMSTANCES, THE ENTIRE PURCHASE CANNOT 4 SHRI KIRTI HEMCHAND DHAROD BE DISALLOWED , BUT , THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE DISALLOWED. IN THAT VIEW OF THE MATTER, LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DISALLOWING 12.5% OF THE ALLEGED NON GENUINE PURCHASES , WHICH IN OUR VIEW IS REASONABLE. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 13.03.2020 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 13.03.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI