NARESH P. JAIN, MUMBAI V. INCOME TAX OFFICER 18(2)(4), MUMBAI

ITA 6842/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0313 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARJU GORADIA
• Assessee Lawyers: R C SHARMA
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 6842 /MUM/ 2017 (ASSESSMENT YEAR 20 09 - 10 ) MR. NARESH P. JAIN M/S. JANS OVERSEAS 34, LIFECAPES NILAY SHOP NO. 8, THAKUR DWAR ROAD OPP. BANK OF BARODA MUMBAI - 400 002. PAN : AACPJ1703H V S . ITO 18(2)(4) ROOM NO. 303 3 RD FLOOR EARNEST HOUSE NARIMAN POINT MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI R.C. SHARMA DEPARTMENT BY MS. ARJU GORADIA DATE OF HEARING 2 2 . 2 . 201 8 DATE OF PRONOUN CEMENT 22 . 2 . 201 8 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.9.2017 PASSED BY THE LEARNED CIT(A) - 29, MUMBAI AND IT RELATES TO A.Y. 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CO NFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN FERROUS AND NON - FERROUS METALS. CONSEQUENT TO THE INFORMATION RECEIVED BY TH E INCOME TAX DEPARTMENT FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA THAT CERTAIN DEALERS ARE INDULGING IN PROVIDING ONLY ACCOMMODATION BILLS, WITHOUT ACTUALLY SUPPLYING THE MATERIAL AND UPON NOTICING THAT THE ASSESSEE HAS PURCHASED MATERIAL S FROM TWO OF S UCH DEALERS AGGREGATING TO RS. 99.48 LAKHS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMIT ALL DOCUMENTARY EVIDENCE S TO PROVE THE GENUINENESS OF TH OS E PURCHASE S . HE ALSO ISS UED NOTICE S U/S. 133(6) OF THE ACT TO THOSE TWO PARTIES NAMED M/S. OM CORPORATION AND M/S. DISHA ENTERPRISES. HOWEVER, MR. NARESH P. JAIN 2 NOTICES WERE RETURNED BACK WITH THE REMAKE NOT KNOWN OR LEFT. THE ASSESSEE ALSO DID NOT FURNIS H ANY CONFIRMATION LETTER OBTAINED FROM TH OS E PAR T I ES. HENCE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION BILLS FOR THE PURPOSE OF ACCOUNTING HIS UNACCOUNTED GOODS. SINCE, THE SALES WERE ACCEPTED, THE ASSESSING OFFICER TOOK THE VIEW THAT THE PROFIT EMBEDDED IN THE ALLEGED BOGUS PURCHASE IS REQUIRED TO BE ASSESSED IN THE INCOME TAX PURPOSE. ACCORDINGLY, BY FOLLOWING THE DECISION RENDERED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (356 ITR 451) THE ASSESSING OFFICER TOOK THE VIEW THAT THE PROFI T MAY BE ESTIMATED AT 12.5%. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED THE ADDITION AT 12.5% OF RS. 99.48 LAKHS, WHICH WORKED OUT TO RS. 12.43 LAKHS. THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. THE LEARNED CIT(A) AL SO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL. 3. LEARNED AR SUBMITTED THAT THE ASSESSEE HAS RECONCILED THE PURCHASE AND SALE AND HENCE THE ASSESSING OFFICER HAS ESTIMATED PROFIT @ 12.5% BY FOLLOWING THE DECISION RENDERED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (SUPRA). HE SUBMITTED THAT THE VAT RATE APPLICABLE IN THE CASE BEFORE HON'BLE GUJARAT HIGH COURT WAS HIGHER AND HENCE PROFIT WAS ESTIMATED BY HON'BLE GUJARAT HIGH COURT AT 12.5%. L EARNED AR SUBMITTED THAT TH E VAT RATE APPLICABLE TO THE ASSESSEE TO THE MATERIAL DEALT BY THE ASSESSEE IS ONLY 4% AND FURTHER THE ASSESSEE HAS BEEN DECLARING GROSS PROFIT RATE OF 4% CONSISTENTLY OVER MANY YEARS. ACCORDINGLY, HE SUBMITTED THAT THE GROSS PROFIT RATE OF 12.5% IS VERY M UCH ON HIGHER SIDE. 4. ON THE CONTRARY, LEARNED DR STRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 5. HAVING HEARD THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THERE IS MERIT IN THE CONTENTION S OF LEARNED AR. CONSIDERING THE FACT THAT THE VA T RATE APPLICABLE TO THE MATERIAL DEALT BY THE ASSESSEE AT 4% AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE HAS BEEN DECLARING GROSS PROFIT RATE ALSO OF 4% MR. NARESH P. JAIN 3 CONSISTENTLY, I AM OF THE VIEW THAT THE PROFIT EMBEDDED IN THE ALLEGED BOGUS PURCHASES MAY BE ESTI MATED AT 8%. IN MY VIEW THE SAME WOULD PUT THIS ISSUE AT REST. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 8% OF THE ALLEGED BOGUS PURCHASE. 6. IN THE RESULT, A PPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 2 .2. 201 8 . SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 2 / 2 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI