INCOME TAX OFFICER 19(2)(5), MUMBAI V. PURARAM G. MODI, MUMBAI

ITA 6939/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9339 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHIR S RIFAUR RAHMAN, ACCOUNTANT MEMBER ./ I.T.A. NO.6939/MUM/2018 ( / ASSESSMENT YEARS : 2009-10 THE ITO 19(2)(5) ROOM NO. 210, MATRU MANDIR, TARDEO ROAD, MUMBAI. / VS. SHRI PURARAM G. MODI M/S. ENERCON PIPE & FITTINGS IND., 67/71/, 3 RD KUMBHARWADA, MUMBAI. ./ ./ PAN/GIR NO. : ARLPM5879R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KUMAR PADMAPANI BORA / RESPONDENT BY : NONE / DATE OF HEARING 19/12/2019 !'# / DATE OF PRONOUNCEMENT 10 /01/2020 / O R D E R PER SHRI S RIFAUR RAHMAN- AM: THIS IS AN APPEAL PREFERRED BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING 12.5% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES FOR THE A.Y 2009-10. ITA NO .6939/MUM/2018. SHRI PURARAM G. MODI., MUMBAI. - 2 - 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN TRADING OF FERROUS AND NON-FE RROUS METALS UNDER THE PROPRIETARY CONCERN BY NAME M/S. ENERCON PIPES & FITTINGS INDUSTRIES. INFORMATION WA S RECEIVED FROM THE SALES TAX DEPARTMENT THAT ASSESSE E HAS INDULGED IN BOGUS PURCHASES. THE ASSESSMENT WAS ACCORDINGLY REOPENED. 3. THE AO IN THIS CASE HAS MADE 25% ADDITION ON ACCOUNT OF BOGUS PURCHASE RESULTING IN FOLLOWING DISALLOWANCE:- A.Y 2009-10 : RS. 50,01,852/- 4. UPON ASSESSEES APPEALS LD. CIT(A) RESTRICTED TH E SAME TO 12.5%. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION WE FIND TH AT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR ITA NO .6939/MUM/2018. SHRI PURARAM G. MODI., MUMBAI. - 3 - THE PURCHASE. BUT, THE ASSESSEE COULD NOT BRING THE SUPPLIERS BEFORE THE TAX AUTHORITIES AND WERE NOTIC ES SERVED BY THE A.O WERE RETURNED UN-SERVED. ON CAREFUL READING OF THE ORDER OF CIT(A) IT IS CLEAR THAT A.O FAILED TO LINK THE PURCHASES WITH CORRESPONDING SALES. SINCE, THE REVENUE ACCEPTED THE SALES, THER E HAS TO BE CORRESPONDING PURCHASES TO MEET THE SALES . THE TAX AUTHORITIES HAS EARLY BROUGHT ON RECORD THA T ASSESSEE HAS RECORDED THE PURCHASES FROM NON- EXISTING SUPPLIERS, HOWEVER SALES WERE NOT DOUBTED. THEREFORE A.O DISALLOWED 25% OF THE BOGUS PURCHASES , WHERE AS LD. CIT(A) HAS RESTRICTED TO 12.5% BY RELY ING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS. SIMIT P. SNETH, 356 ITR 451 (SUPRA) , THE HONBLE GUJARAT HIGH COURT ESTIMATED THE PROFIT EMBEDDED IN THE PURCHASES AND IT IS RESTRICTED TO 12.5% AND THAT MEETS THE END OF JUSTICE. THEREFORE , WE ARE INCLINED TO ACCEPT THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO .6939/MUM/2018. SHRI PURARAM G. MODI., MUMBAI. - 4 - 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 10/01/20 20 SD/- SD/- (SAKTIJIT DEY) ( S. RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10/01/2020 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / ( ASST. REGISTRAR) $%, / ITAT, MUMBAI ITA NO .6939/MUM/2018. SHRI PURARAM G. MODI., MUMBAI. - 5 - DATE INITIAL 1. DRAFT DICTATED ON 26.11.2019 PS 2. DRAFT PLACED BEFORE AUTHOR 27.11.2019 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 27.11.2019 PS 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 27.11.2019 PS 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27.11.2019 PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 11. DICTATION PAD IS ENCLOSED 1. DATE OF DICTATION .. 16.1.18 (DICTATION-PAD 2-P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.1.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.18.1.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.1.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER