NADEEM YUSUF SARA, MUMBAI V. INCOME TAX OFFICER 21(2)(4), MUMBAI

ITA 6937/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2953 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Bogus purchase; Principle of natural justice

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN , J M & HONBLE SH. G. MANJUNATHA , A M ./ I.T.A. NO . 6937 /MUM/201 7 ( / ASSESSMENT YEAR: 2011 - 12 ) NADEEM YUSUF SARA FLAT NO. 101, NIGHAHE KARAM CHS LTD. S. V. SAVARKAR MARG, MAHIM, MUMBAI / VS. ITO 21(2)(4 ), 1 ST FLOOR, PIRAMAL CHAMBER, LALBAUG, MUMBAI - 400 012 ./ ./ PAN NO. BLFPS0265L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI DHIRENDRA M. SHAH , A R / RESPONDENTBY : SHRI ARVIND KUMAR , DR / DATE OF HEARING : 10 .01 .201 9 / DATE OF PRONOUNCEMENT : 01.03.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 33, MUMBAI DATED 12 .09 .17 F OR AY 20 11 - 12 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA 1. LD. CIT APPEAL ERRED IN CONFIRMING THE ADDITION OF LEARNED ASSESSING OFFICER WHEREIN AO HAS ERRED IN ADDING 12.5% OF THE TOTAL PURCHASE VALUE AMOUNTING OF RS.21202455/ - I.E RS. 2650307/ - IGNORING THE DETAILED EVIDENCES BROUGHT ON RECORD & FURTHER ERRED IN LEVYING INTEREST THEREON AND IGNORING THE JUDICIAL PRECEDE NTS BROUGHT TO HIS KNOWLEDGE. 2. LD. CIT APPEAL ERRED IN CONFIRMING THE ADDITION OF LEARNED ASSESSING OFFICER WHEREIN AO HAS ERRED IN RELYING OF JUDGMENT OF GUJARAT HIGH COURT, IGNORING THE LATEST JUDGMENT OF MUMBAI IT AT AND OUR OWN JURISDICTIONAL COURT IN THE MATTER OF NIKUNJ EXIM EXPORT. 3. LD. CIT APPEAL ERRED IN CONFIRMING THE ADDITION OF LEARNED ASSESSING O FFICER AMOUNTING TO RS. 2527679/ - , THOUGH ASSESSEE HAS BROUGHT DETAILS OF PAN AND CONFIRMATION PARTIES DURING APPEAL PROCEEDINGS 4. THE ASSES SEE CRAVES LEAVE TO AMEND, ALTER OR MODIFY OF THE ABOVE GROUNDS OF APPEAL. PRAYER THE PRESENT APPEAL MAY BE ALLOWED AND ADDITIONS MADE BY AO AND CONFIRMED BY THE LD. CIT (A) MAY BE TREATED AS WRONG, UNJUST & ILLEGAL AND THE ORDER TO THAT EXTENT MAY BE ANN ULLED OR IN ALTERNATE THE 3 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA MATTER MAY BE REMANDED BACK TO AO FOR FRESH PROCEEDINGS. GROUND NO. 1 & 2 2 . THE ABOVE GROUND S RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT (A) IN CONFIRMING THE ADDITION MADE BY AO, WHEREIN AO HAD ERRED IN ADDING 12.5% OF THE TOTAL PURCHASE VALUE AMOUNTING OF RS.21202455/ - I.E RS. 2650307/ - , THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 3 . LD. AR APPEARING ON BEHALF OF THE ASSES S EE SUBMITTED BEFORE US THAT THIS GROUND IS COVERED BY THE ORDER OF HONBLE ITAT IN ITA NO. 6935, 6936 & 6938/MUM/17 (FOR AY 2009 - 10, 2010 - 11 & 2012 - 13 ) IN ASSESSEES OWN CASE , WHEREIN THE IDENTICAL GROUND RA ISED IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED ON MERITS. 4 . ON THE OTHER HAND, LD. DR FAIRLY AGREED TO THE CONTENTION OF LD. AR THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE. 4 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA 5 . WE HAVE HEARD BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 6935, 6936 & 6938/MUM/17 (FOR AY 2009 - 10, 2010 - 11 & 2012 - 13) IN ASSESSEES OWN CASE . THE OPERATIVE PORTION OF THE ORDER OF HONBLE ITAT PASSED IN I T A NO. CONTAINED IN PARA NO. 5 TO 8 , WHICH IS REPRODUCED BELOW: - 5. THE FIRST ISSUE RELATES TO THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES. I NOTICED THAT THE ASSESSEE HAS PLACED RELIANCE ON THE PURCHASE INVOICES AVAILABLE WITH IT AND PAYMENTS MADE TO THE PARTIES. THE ASSESSEE COULD NOT OBTAIN THE CONFIRMATION LETTERS FROM THOSE SUPPLIERS N OR COULD IT PRODUCE THE SUPPLIERS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOTICED THAT THE SALES TAX DEPARTMENT HAS CONSIDERED THEM TO BE HAWALA DEALERS, I.E., THEY DID NOT SUPPLY ANY MATERIAL ON THE STRENGTH OF BILLS GIVEN BY THEM. HOWEVER, THE ASSESSEE APPEARS TO HAVE RECONCILED THE PURCHASES MADE FROM THE ABOVE SAID SUPPLIERS WITH SALES. UNDER THESE SET OF FACTS, THE ASSESSING OFFICER HAS TAKEN THE VIEW THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM SOME OTHER SOURCES AND COULD HAVE OBTAIN BILLS FROM THESE PARTIES. THE AO 5 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA ALSO TOOK THE VIEW THAT THE ASSESSEE MIGHT HAVE MADE PROFITS BY WAY OF SAVINGS IN VAT TAX AND LOWER RATES. ACCORDINGLY HE ESTIMATED THE PROFIT FROM THESE PURCHASES @ 12.50%. 6. LEARNED AR SUBMITTED THAT THE VAT RATE APPLICABLE TO THE PRODUCTS PURCHASED FROM THESE DEALERS STOOD AT 4% AND 12.5%. ACCORDINGLY SHE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADOPTING A COMMON RATE OF 12.5% ON ALL PURCHASES MADE BY THE ASSESSEE. SHE FURTHER SUBMITTED THAT THE ASSESSEE HAS RECONCILED PURCHASES AND SALES AND HENCE NO ADDITION SHOULD HAVE BEEN MADE MERELY FOR THE REASON THAT THE ASSESSEE COULD NOT PRODUCE THE PARTIES. 7. ON THE CONTRARY, LEARNED DR SUBMITTED THAT THE RESPONSIBILITY TO PROVE THE GENUINENESS OF PURCHASES IS PLACED UPON THE ASSESSEE AND IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF PURCHASES BY OBTAINING CONFIRMATION LETTERS FROM T HEM OR BY PRODUCING THEM BEFORE THE ASSESSING OFFICER. 8. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. ADMITTEDLY, THE ASSESSEE COULD NOT CONCLUSIVELY PROVE THE PURCHASES BY FURNISHING CONFIRMATION LETTERS OBTAINED FROM THE IMPUGNED SUPPERS. THE NOTICES ISSUED BY THE AO TO THE SUPPLIERS HAVE NOT BEEN RESPONDED BY THEM. THESE FACTS SHOW THAT THE IDENTITY 6 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA OF THE SUPPLIERS HAS NOT BEEN ESTABLISHED BY THE ASSESSEE. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIE D IN PRESUMING THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM SOME OTHER SOURCES. WHEN PURCHASES ARE MADE FROM THE GREY MARKET, NORMALLY APPLICABLE VAT WILL BE SAVED AND THERE IS A POSSIBILITY THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS AT A LOWER RATE ALSO. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE PROFIT FROM PURCHASES. HOWEVER, I NOTICED THAT THE VAT RATE APPLICABLE TO THE GOODS PURCHASED BY THE ASSESSEE WAS 4% AND 12.5%. PROFIT THAT MIGHT H AVE BEEN MADE BY THE ASSESSEE BY WAY OF LOWER RATES SHOULD ALSO BE CONSIDERED. HENCE, IT MAY NOT BE PROPER TO APPLY RATE OF 12.5% ON ALL PURCHASES. ACCORDINGLY, I MODIFY THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE PROFIT FROM IMPUGNED BOGUS PURCHASES @ 10% ON THE ALLEGED BOGUS PURCHASES, WHICH WILL TAKE CARE OF REVENUE LEAKAGES, IF ANY. WE ORDER ACCORDINGLY. 6. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND HONBLE ITAT AS MENTIONED ABOVE IN ASSESSEES OWN CASE , W E 7 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ITA NO. 6935, 6936 & 6938/MUM/17 (FOR AY 2009 - 10, 2010 - 11 & 2012 - 13) IN ASSESSEES OWN CASE . T HEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS IN THE PRESENT CASE WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RESULT ANTLY, THESE GROUNDS RAISED BY THE ASSESSEE STANDS PARTLY A LLOWED. GROUND NO. 3 7 . THE OTHER GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION MADE BY AO AMOUNTING TO RS. 2527679/ - . 8 . LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED BEFORE US THAT THIS GROUND IS COVERED BY THE ORDER OF HONBLE ITAT IN M A NO. 338 & 339/MUM/18 (FOR AY 2010 - 11 & 2012 - 13) IN ASSESSEES OWN CASE, WHEREIN THE IDENTICAL GROUND RAISED IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED ON MERITS. 8 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA 9 . ON THE OTHER HAND, LD. DR FAIRLY AGREED TO THE CONTENTION OF LD. AR THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE. 10 . WE HAVE HE ARD BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE ITAT IN MA NO. 338 & 339/MUM/18 (FOR AY 2010 - 11 & 2012 - 13) IN ASSESSEES OWN CASE . THE OPERATIVE PORTION OF THE ORDER OF HONBLE ITAT PASSED IN ITA NO. CONTAINED IN PARA NO. 5 , WHICH IS REPRODUCED BELOW: - 5. IN VIEW OF THE ABOVE, I REPLACE PARAGRAPH 10 OF THE ORDER WITH THE FOLLOWING PAR AGRAPH: - 10. I HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. ADMITTEDLY THE ASSESSEE DID NOT DISCLOSE THIS BANK ACCOUNT IN ITS BOOKS OF ACCOUNT AS WELL AS IN THE RETURN OF INCOME FILED BEFORE THE ASSESSING OFFICER. THOUGH THE ASSESSEE DID NOT EXPLAIN SOURCES OF DEPOSITS BEFORE THE AO, YET HE FILED CERTAIN DETAILS BY WAY OF CONFIRMATION LETTERS OBTAINED FROM PARTIES ALONG WITH THEIR PAN 9 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA NUMBER. WE NOTICE THAT THE LD CIT(A) DID NOT EXAMINE THOSE DETAILS NOR DID HE CON FRONT THE SAME WITH THE AO. HENCE, IN THE INTEREST OF NATURAL JUSTICE, I AM OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION IN BOTH THE YEARS AT THE END OF AO. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING IT AFRESH IN BOTH THE YEARS. 11 . AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND HONBLE ITAT AS MENTIONED AB OVE IN ASSESSEES OWN CASE , WE FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE HONBLE ITAT IN MA NO. 338 & 339/MUM/18 (FOR AY 2010 - 11 & 2012 - 13) IN ASSESSEES OWN CASE. T HEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH O F HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS IN THE PRESENT CASE WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RESULTANTLY, THESE GROUNDS RAISED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE S . 10 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA 12 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY A LLOWED FOR STATISTICAL PURPOSES WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MARCH , 2019. SD/ - SD/ - ( G. MANJUNATHA ) ( SANDEEP GOSAIN) / A COUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 1.03 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ ASSTT.REGISTRAR) , / ITAT, MUMBAI 11 I.T.A. NO. 6937/MUM/2017 SHRI NADEEM YUSUF SARA