INCOME TAX OFFICER WARD 3(4), KALYAN V. SMT SAROJ SHAILENDRA BHAGAT , MUMBAI

ITA 6861/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0975 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 6674/MUM/18 2009-10 SMT. SAROJ SHAILENDRA BHAGAT, (PROPRIETOR OF M/S.KAMLARYA ENGINEERS & FABRICATORS) 12/1, KISHAN MHATRE BLDG, CHOLEGAON, THAKURLI (EAST) [PAN: ALHPB9932C] THE INCOME TAX OFFICER, WARD-3(3), KALYAN PRESENT JURISDICTION: THE INCOME TAX OFFICER, WARD-3(4), KALYAN 6861/MUM/18 2009-10 THE INCOME TAX OFFICER, WARD-3(4), KALYAN SMT. SAROJ SHAILENDRA BHAGAT 12/1, KISHAN MHATRE BLDG, CHOLEGAON, THAKURLI (EAST) [PAN: ALHPB9932C] A SSESSEE BY : SHRI NIMESH CHOTHANI, AR RE VENUE BY : SHRI R.BHOOPATHI, DR DATE OF HEARING : 1 6 - 12 - 201 9 DATE OF PRONOUNCEMENT : 16 - 12 - 201 9 O R D E R THESE CROSS-APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, THANE, DATED 28-09-2018, FOR THE AY.2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINES S OF STEEL AND STAINLESS STEEL GOODS. AN INFORMATION FROM SALES T AX DEPARTMENT, GOVERNMENT OF MAHARASHTRA WAS RECEIVED BY THE REVENUE THAT THE ASSESSEE HAS INDULGED IN OBTAINING BOG US PURCHASE BILLS FROM CERTAIN HAWALA OPERATORS. ON THE B ASIS OF ITA NOS. 6674 & 6861/MUM/2018 : 2 : THE AFORESAID INFORMATION, THE ASSESSMENT FOR AY.2009-1 0 WAS RE-OPENED. THE AO VIDE ORDER DT.20-10-2014 PASSED U/S.143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (HER EIN AFTER REFERRED TO AS THE ACT) HELD THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FROM THE FOLLOWING DEALERS: S.NO NAME OF THE DEALER AMOUNT RS. 1 M/S.TRICHIPURAM TRADING CO 1,10,007 2 M/S.NIDDHISH IMPEX PVT LTD 93,663 3 M/S.UNIVERSAL ENTERPRISE 7,08 , 931 4 M/S.KOTSONS IMPEX PVT LTD 3,03,471 5 M/S.HAJI RAJABALI CHITTALWALA 1,94,604 6 M/S.MAHAVIR ENTERPRISES 3,73,360 TOTAL RS. 17,84,036 THE AO MADE ADDITION OF THE ENTIRE AFORESAID ALLEGED B OGUS PURCHASES. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). 3. THE FIRST APPELLATE AUTHORITY (FAA), AFTER CONSIDER ING THE FACTS OF THE CASE AND VARIOUS DECISIONS, RESTRICTED THE ADDITION TO 25% OF ALLEGED BOGUS PURCHASES I.E., RS.4,46,009/-. AGAINST THE FINDINGS OF THE CIT(A), B OTH, THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE THE TRI BUNAL. 4. THE ASSESSEE IN HER APPEAL HAS ASSAILED RE-OPENI NG OF ASSESSMENT U/S.147 OF THE ACT AND ALSO THE ADDITION CONFIRMED BY THE CIT(A). 5. SHRI NIMESH CHOTHANI, APPEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN TRADI NG OF STEEL, THE GROSS PROFIT (GP) ESTIMATED BY THE CIT(A) @25 % IS ITA NOS. 6674 & 6861/MUM/2018 : 3 : VERY MUCH ON THE HIGHER SIDE. THE LD.AR REFERRED TO TH E GP DECLARED BY THE ASSESSEE DURING THE FY.2006-07 TO 201 1-12 AT PARA 6.10 PG.10 OF THE CIT(A)S ORDER. THE LD.AR POI NTED THAT THE GP DECLARED BY THE ASSESSEE VARIES BETWEEN 14% TO 18%. THE ASSESSEE HAD DECLARED GP OF 14.67% IN THE IMPUG NED ASSESSMENT YEAR. THE LD.AR PRAYED FOR RESTRICTING THE ADDITION TO 3% OVER AND ABOVE THE GP ALREADY DECLARED. TO SUPPORT HIS CONTENTIONS, THE LD.AR PLACED RELIANCE ON TH E FOLLOWING DECISIONS: I. SHRI SANJAY H SHAH VS. ITO IN ITA NOS.5063, 5064 & 5065/MUM/17, AYS.2009-10 TO 2011-12, DECIDED ON 16-02-2018; II. ACIT VS. SHRI AKSHAY RAJESH SAMDARIYA IN ITA NO.2076/PUN/2016, AY.2009-10, DECIDED ON 31-12-2018; 6. ON THE OTHER HAND, SHRI R.BHOOPATHI, REPRESENTING TH E DEPARTMENT, VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. THE LD.DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE GENUINENESS OF THE PURCHASES. THE ASSESSEE ALSO FAIL ED TO FURNISH COPIES OF TRANSPORT AND OCTROI BILLS, THUS, THE ASSESSEE COULD NOT ESTABLISH TRIAL OF GOODS ORIGINATING FROM SUP PLIERS TO THE GODOWN OF THE ASSESSEE. THE LD.DR PRAYED FOR MODI FYING THE ORDER OF CIT(A) AND CONFIRMING THE ENTIRE BOGUS P URCHASES AS ADDITION. 7. HEARD THE SUBMISSIONS MADE BY RIVAL SIDES AND THE ORDERS OF THE AUTHORITIES BELOW PERUSED. THE SALES MAD E BY THE ASSESSEE HAVE NOT BEEN DISPUTED BY THE REVENUE. ITA NOS. 6674 & 6861/MUM/2018 : 4 : THEREFORE, THE ENTIRE ALLEGED BOGUS PURCHASE CANNOT BE ADDED BACK. WITHOUT PURCHASES, THERE CANNOT BE SALES. IN THE GIVEN FACTS OF THE CASE, IT APPEARS THAT THE ASSESSEE HAS MADE PURCHASES FROM GREY MARKET AND THEREAFTER, OBTAINED BILLS FROM ALLEGED HAWALA OPERATORS. THE FAA HAS RESTRICTE D THE ADDITION TO THE EXTENT OF 25% OF THE BOGUS PURCHASES. I AM OF CONSIDERED VIEW THAT ESTIMATION OF GP MADE BY THE FAA IS ON HIGHER SIDE. THE GP DECLARED BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION IS 14.67%. IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR, THE GP DECLARED B Y THE ASSESSEE IS 18.27% AND IN THE IMMEDIATE SUCCEEDING ASSESSMENT YEAR I.E., AY.2010-11, THE GP DECLARED BY THE ASSESSEE IS 17.28%. THE GP DECLARED BY THE ASSESSEE IN PRECEDING AND SUCCEEDING ASSESSMENT YEARS HAVE BEEN ACCEPTED BY THE DEPARTMENT. TAKING INTO CONSIDERATION ENTIRETY OF THE FACTS, THE ADDITION TO THE EXTENT OF 5% GP , OVER AND ABOVE THE GP DECLARED BY THE ASSESSEE WOULD MEET TH E ENDS OF JUSTICE. I HOLD AND DIRECT ACCORDINGLY. THE GROUND NO.3 OF THE APPEAL BY THE ASSESSEE IS THUS PARTLY ALLOW ED. 8. IN GROUND NOS.1 & 2 OF THE APPEAL, THE ASSESSEE HA S ASSAILED RE-OPENING OF ASSESSMENT AND REJECTION OF BO OKS OF ACCOUNT, RESPECTIVELY. NO SUBMISSIONS WERE MADE BY TH E LD.AR OF THE ASSESSEE ON BOTH THESE GROUNDS. I SEE NO REASON TO INTERFERE WITH THE FINDINGS OF CIT(A) ON THESE ISSUES . THE GROUND NOS.1 & 2 OF THE APPEAL ARE DISMISSED, ACCORD INGLY. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED. ITA NOS. 6674 & 6861/MUM/2018 : 5 : ITA NO.6861/MUM/2018: 10. THE REVENUE IN APPEAL HAS IMPUGNED THE FINDINGS OF CIT(A) IN RESTRICTING THE ADDITION TO 25% OF BOGUS PURC HASES. 11. SINCE THE APPEAL BY ASSESSEE IN RESTRICTING THE ADD ITION ON ACCOUNT OF BOGUS PURCHASES IS PARTLY ACCEPTED, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED FOR THE REASO NS DETAILED ABOVE. THE APPEAL BY THE REVENUE IS DISMISSE D, ACCORDINGLY. 12. TO SUM-UP, THE APPEAL OF ASSESSEE IS PARTLY ALLOW ED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 1 6 TH DAY OF DECEMBER, 2019 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER /MUMBAI; /DATED : 16-12-2019 TNMM ITA NOS. 6674 & 6861/MUM/2018 : 6 : / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. # $ ( ) / THE CIT(A), MUMBAI 4. # $ / CIT, MUMBAI 5. '()*+ , #-*+#. , / DR, ITAT, MUMBAI 6. )/01 / GUARD FILE # / BY ORDER, ' //TRUE COPY// /# (DY./ASST. REGISTRAR) #-*+#., / ITAT, MUMBAI