CHHABILKUMAR P. ADANI, MUMBAI V. INCOME TAX OFFICER 19(1)(3), MUMBAI

ITA 691/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4973 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 07-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice
• Section: 69C; 142(1); 234B; 143(1); 201; 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 691 /MUM/20 1 9 ( / ASSESSMENT YEAR: 201 1 - 12 ) CHHABILKUMAR P. ADANI 238, 2 ND KUMBHARWADA LANE, SAN T SENA MAHARAJ MARG, MUMBAI - 400004 . / VS. ITO - 19(1)(3) ROOM NO.220, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400007. ./ ./ PAN/GIR NO. : ABSPC8423A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 18 / 0 2 / 20 2 1 / DATE OF PRONOUNCEMENT : 07 /0 4 / 2021 / O R D E R PER AMARJIT S INGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 16 .0 5 .201 8 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 53 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 12 . 2 . THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 53, MUMBAI (HEREINAFTER REFERRED TO AS 'LD. CIT(A) ERRED IN PASSING THE ORDER DATED 16.05.2018 WITHOUT PROVIDING THE APPELLANT AN APPROPRIATE OPPORTUNITY OF BEING HEARD. THUS, THE ORDE R PASSED BY LD. CIT(A) IS AGAINST THE PRINCIPALS OF NATURAL JUSTICE AND THE SAME MAY BE QUASHED. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. A.0. IN MAKING THE ADDITION OF RS.1,05,13,876/ - TREATING THE SAME AS ASSESSEE BY : SHRI JITE NDRA SINGH (AR) REVENUE BY: MS. SHREEKALA PARDESHI (DR) ITA. NO .691 / M UM /201 9 A.Y. 201 1 - 1 2 2 BOGUS PURCHASES WITHOUT APP RECIATING THE FACT THAT THE PURCHASES WAS DULY ACCOUNTED IN THE BOOKS OF THE APPELLANT. HENCE, TREATING THE PURCHASES AS BOGUS AND THEREBY MAKING ADDITION OF RS.1,05,13,876/ - UNDER SECTION 69C OF THE ACT IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 3. T HE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE ACTION OF THE LD. A. 0. IN MAKING THE ADDITION OF RS.1,05,13,876/ - INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT WITHOUT APPRECIATING THAT THE APPELLANT HAS ALL THE SUPPORTING DOCUMENTARY EVIDENCES IN HI S POSSESSION TO PROVE THE PURCHASES MADE DURING THE IMPUGNED ASSESSMENT YEAR. HENCE, THE ADDITION OF RS.1,05,13,876/ - UNDER SECTION 69C OF THE ACT IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 4. WITHOUT PREJUDICE TO THE ABOVE THE LD. A. 0. ERRED IN MAKI NG ADDITION OF RS. 1,05,13,875/ - UNDER SECTION 69C OF THE ACT MERELY ON THE BASIS OF CERTAIN INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTMENT WITHOUT PROVIDING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE DEPARTMENT'S WITNESSES. THUS, THE ADD ITION OF RS. 1,05,13,876/ - IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 5. THE APPELLANT DENIES ANY LIABILITY TO PAY INTEREST UNDER SECTION 234B AND 234C OF THE ACT. THEREFORE, THE SAME ARE NOT LEVIABLE. 6. THE APPELLANT CRAVES LEAVE TO ADD, AME ND OR ALTER ANY OF THE GROUNDS MENTIONED ABOVE. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 .0 9 .20 11 DECLARING TOTAL INCO ME TO THE TUNE OF RS. 9,41,153 / - FOR THE A.Y.2011 - 12 . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 14.04.2010. THE CASE OF THE ASSESSEE WAS REOPENED UPON THE INFORMATION RECEIVED FROM THE DGIT(INV.) WING MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRY FROM THE FOLLOWING PARTIES READ AS UNDER.: - NAME OF THE HAWALA PARTIES AMOUNT IN RS. VIRAJ STEEL & ALLOYS 5,00,000 ITA. NO .691 / M UM /201 9 A.Y. 201 1 - 1 2 3 MONTEX INDUSTRIES 10,00,000 STELCO STEEL INDUSTRIES 10,04,087 ROLEX TRADING COMPANY 26,06,198 SIDDHIVINAYAK STEEL 150,30,375 CHANCHAL TUBE CORPORATION 22,99,999 UJJWAL SALES CORPORATION 59, 68,391 SURAT TUBE CORPORATION 52,00,474 ASIAN STEEL 95,50,003 ATLAS INTERNATIONAL (I) 3,17,637 JAGDISH ENTERPRISES 53,00,006 NANDKISHOR SALES AGENCY P. LTD. 2,12,562 REMI TRADING CO. LTD. 7,00,391 NIRMA METAL INDUSTRIES 3,00,009 RISHABH STEEL INDUS TRIES 5,06,183 KEY STONE TUBES P. LTD. 12,35,881 RAJ IMPEX 28,35,684 BP SHAH AND CO. 1,50,001 BAJARANGI STEEL & METAL P. LT. 5,04,438 PINAKING METAL INDUSTRIES 10,69,952 VIDHI METAL INDUS. 16,31,109 STAINLESS IMPEX P. LTD. 13,50,272 KANAK STEEL (IN DIA) 5,50,007 GOODLUCK METAL 20,00,004 MAHAVEER METAL CORPORATION 3,99,999 PM TRADING COM. 1,85,198 KANAK METAL COR. 1,88,476 VASUDEV TRADING CO. P. LTD. 2,73,286 ITA. NO .691 / M UM /201 9 A.Y. 201 1 - 1 2 4 MAHADEV METAL 5,50,001 VINAYAK SALES COR. 5,99,999 ABHISHEK TRADING AND CO. 7,99,999 PRIYA STEEL COR. 10,00,096 POWER TECH TRADING. CO. 15,00,096 RAJRATAN METAL (INDIA) 34,99,002 RAJESHWARI METAL INDUS. 132,92,002 TOTAL 841,11,007 4. NOTICE U/S 148 OF THE ACT WAS GIVEN . THEREAFTER, THE NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSU E D AND SERVED UPON THE ASSESSEE AND AFTER THE REPLY OF THE ASSESSEE , THE AO RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASES OF RS. 8,41,11,007. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.1,14,55,030 / - . FEELING AGGR IEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE BY CONFIRMING THE ORDER OF THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL. 5 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES A ND PERUSED THE RECORD CAREFULLY . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ISSUE HAS DULY BEEN COVERED BY THE DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE BEARING ITA. NO. 2211/MUM/2018 FOR THE A.Y.2010 - 11 AND ITA. NO.2212/MUM/2018 FOR THE A.Y.2009 - 10 DATED 14.12.2018, THEREFORE, ACCORDINGLY, THE ISSUE IS REQUIRED TO BE DECIDED IN FAVOUR OF THE ASSESSEE. THE COPY OF ORDER IS ON THE FILE. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 6 WHICH IS HEREBY RE PRODUCED AS UNDER.: - ITA. NO .691 / M UM /201 9 A.Y. 201 1 - 1 2 5 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT IS EVIDENT, THE ASSESSING OFFICER HAD SPECIFIC INFORMATION IN HIS POSSESSION TO INDICATE THAT CERTAIN PURCHASES MADE BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEARS ARE NOT GENUINE. IT IS ALSO EVIDENT, THE ASSESSEE COULD NOT CONCLUSIVELY PROVE THAT THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE DECLARED SOURCE ARE GENUINE. HOWEVER, THE DEPARTMENTAL AUTHORITIES HAVE NOT DISPUTED THE SALES EFFECTED BY THE ASSES SEE, MEANING THEREBY, THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM SOME UNKNOWN PARTIES/SOURCE. FOR THIS REASON ALONE THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT AT 12.5% OF THE NONGENUINE PURCHASES. THEREFORE, THE DISPUTE NOW IS ONLY WITH REGARD TO THE PROFIT RATE TO BE APPLIED FOR ESTIMATING THE INCOME ON NON GENUINE PURCHASES. AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THIS PARTICULAR CASE WE ARE OF THE CONSIDERED OPINION THAT ESTIMATION OF PROFIT @ 5% OF THE ALLEGED NON GENUINE PURC HASES WOULD BE REASONABLE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION IN BOTH THE ASSESSMENT YEARS UNDER APPEAL TO 5% OF THE NON GENUINE PURCHASES. WE MAKE IT CLEAR, OUR AFORESAID DECISION IS PURELY ON THE BASIS OF FACTS INVOLVED IN THE PRESENT APPEALS. GROUNDS ARE PARTLY ALLOWED. 6. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE HONBLE ITAT HAS RESTRICTED THE ADDITION TO THE EXTENT OF 5% OF THE BOGUS PURCHASES IN THE A.YS. 2009 - 10 & 2010 - 11 . THE PRESENT A.Y. 2 011 - 12 IS HAVING IDENTICAL FACTS. THE FACTS ARE NOT DISTINGUISHABLE IN THIS YEAR ALSO. THE ISSUE IS COVERED BY THE ORDER OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE MENTIONED ABOVE. BY HONORING THE ORDER PASSED BY HONBLE ITAT, WE RESTRICT THE ADDITION TO THE EXTENT OF 5% OF THE BOGUS PURCHASE. ACCORDINGLY, WE DECIDE THESE ISSUE S ARE FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA. NO .691 / M UM /201 9 A.Y. 201 1 - 1 2 6 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 0 4 / 20 21 SD/ - SD / - / ( SHAMIM YAHYA ) (AMARJIT SINGH / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 07 / 0 4 / 20 2 1 V IJAY PAL SINGH/SR. PS / 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 CO PY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI