ITO 20 (3)(2), MUMBAI V. ABDUL MAJID CHOUDHARY ,L/H OF LATE SAIFULLAH MOHD. RAZA CHUDHARY, MUMBAI

ITA 6934/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5466 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , A MUMBAI BEFORE : SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM ITA NO. 6934/MUM/2019 ( ASSESSMENT YEAR : 2009 - 10 ) ITO 20(3)(2) ROOM NO.612, 6 TH FLOOR PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI - 400 012 VS. SHRI ABDUL MAJID CHOUDHARY L/H. OF LATE SAIFULLAH MOHD. RAZA CHOUDHARY MUMBAI 400 010 PAN/GIR NO. ABNPG9664N (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI BRAJENDRA KUMAR ASSESSEE BY NONE DATE OF HEARING 10 / 05 /202 1 DATE OF PRONOUNCE MENT 17 / 05 /202 1 / O R D E R PER C.N. PRASAD (J.M): THIS APPEAL IN ITA NO. 6934/MUM/2019 FOR A.Y. 2009 - 10 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 32 , MUMBAI IN APPEAL NO. CIT(A) - 32, MUMBAI/10347/2015 - 16 DA TED 28/08/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 23/03/2015 BY THE LD. ITO 20(3)(2), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE O NLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION MADE ON ITA NO . 6934/MUM/2019 SHRI ABDUL MAJID CHOUDHARY . 2 ACCOUNT OF BOGUS PURCHASES OF 5% OF VALUE THEREON AS AGAINST 12.5% MADE BY THE LD. AO IN THE FACTS AND CIRCUMSTANCES OF THE I NSTANT CASE. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS A PROPRIETOR OF M/S. CHOUDHARY STEEL ENGAGED IN THE BUSINESS OF DEALING IN IRON AND STEEL. THE ASSESS EE FILED HIS RETURN OF INCOME ON 29/09/2009 FOR THE A.Y.2009 - 10 DECLARING TOTAL INCOME OF RS.1,80,859/ - . THE ASSESSEE HAD MADE PURCHASES FROM SIX PARTIES LISTED IN PAGE 2 OF THE ASSESSMENT ORDER TOTALLING TO RS.66,68,422/ - . THE LD. AO OBSERVED THAT THESE P ARTIES NAMES APPEAR IN THE WEBSITE OF GOVERNMENT OF MAHARASHTRA, SALES TAX DEPARTMENT AS TAINTED DEALERS, WHICH INFORMATION WAS PASSED ON BY THE SALES TAX DEPARTMENT TO THE INVESTIGATION WING , WHICH EVENTUALLY TRIGGERED THE RE OPENING OF ASSESSMENT IN THE CASE OF THE ASSESSEE. THE LD. AO OBSERVED THAT THE SALES MADE BY THE ASSESSEE OUT OF PURCHASES MADE FROM THE AFORESAID PARTIES WERE GENUINE AND ACCORDINGLY, PROCEEDED TO ESTIMATE THE PROFIT ELEMENT EMBEDDED IN THE SAID PURCHASE TRANSACTIONS @12.5% AND COMP LETED THE ASSESSMENT. THIS PROFIT ELEMENT WAS REDUCED TO 5% BY THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAD RESORTED TO ESTIMATE PROFIT PERCENTAGE AT 5% CONSIDERING THE PREVAILING INDUSTRY PRACTI C E AND ALSO PLACING RELIANCE ON THE CO - ORDINATE BENCH DECI SION OF THIS TRIBUNAL IN THE CASE OF PRASHANT ENTERPRISES IN ITA NO.5117/MUM/2013 DATED 24/02/2016. WE FIND THAT THE SALES MADE BY THE ASSESSEE OUT OF THE AFORESAID PURCHASES ARE NOT DOUBTED BY THE LD. AO. IT COULD BE SAFELY CONCLUDED THAT ASSESSEE COULD HAVE MADE PURCHASES ONLY FROM THE GREY MARKET IN ORDER TO HAVE SAVINGS IN VAT. THE VAT RATE PREVAILING FOR IRON AND STEEL IS 4%, THE INCIDENTAL PROFIT THAT SHOULD HAVE BEEN EARNED BY THE ASSESSEE DUE TO CASH PURCHASES COULD BE REASONABLY EST IMATED AT 1%. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ITA NO . 6934/MUM/2019 SHRI ABDUL MAJID CHOUDHARY . 3 ORDER OF THE LD. CIT(A) ESTIMATING THE PROFIT PERCENTAGE AT 5% ON THE VALUE OF INGENUINE PURCHASES. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT, APPEAL OF THE REVE NUE IS DISMISSED. ORDER PRONOUNCED ON 17 /05/2021 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( M.BALAGANESH ) SD/ - ( C.N.PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED 17 / 05/ 20 2 1 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//