ITO 29 (3)(5), MUMBAI V. VIKRANT VADILAL SHAH, MUMBAI

ITA 7020/MUM/2018

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9170 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Reason to believe
• Section: 142(1); 148

Judgement Text

ITO - 29(3)(5) VS.SHRI VIKRANT VADILAL SHAH ITA NOS. 7020 & 7021/MUM/2018 A.YS. 2010 - 11 - 2011 - 12 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY , JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO S.7020 & 7021/MUM/2018 (ASSESSMENT YEARS: 2010 - 11 & 2011 - 12 ) ITO - 29(3)(5), ROOM NO. 211, C - 10, 2 ND FLOOR, PRATHASHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 VS. SHRI VIKRANT VADILAL SHAH 403, 4 TH FLOOR, NEELKANTH NIR, TRIDEV TULIP, BPX ROAD, MULUND (W), MUMBAI 400080 PAN ANDPS9819B (APPELLANT) (RESPONDENT) APPELLANT BY: MS. USHA GAIKWAD, D.R RESPONDENT BY: NONE DATE OF HEARING: 18.11 .2020 DATE OF PRONOUNCEMENT: 08 .12 .2020 O R D E R PER S.R IFAUR RAHMAN , A M : THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A) - 40, DATED 08.06.2016 FOR A.Y. 2010 - 11 AND A.Y. 2011 - 12. AS THE ISSUE INVOLVED IN THE CAPTIONED APPEALS ARE INEXTRICABLY INTERLINKE D OR IN FACT INTERWOVEN, THE SAME ARE THEREFORE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2010 - 11, WHEREIN THE REVENUE HAS BEEN ASSAILED BEFORE US THE FOLLOWING GROUNDS OF APPE AL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.47,96,932/ - BEING 100% TO RS.5,99,616/ - BEING 12.5% OF THE AFORESAID BOGUS PURCHASES FROM HAWALA PARTIES IGNORING THE FACT THAT THE ASSESSEE HAD F AILED TO PRODUCE THE PARTIES. ITO - 29(3)(5) VS.SHRI VIKRANT VADILAL SHAH ITA NOS. 7020 & 7021/MUM/2018 A.YS. 2010 - 11 - 2011 - 12 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S DEV ISPAT UDYOG ENGAGING IN THE BUSINESS OF TRADING IN M.S. STEEL ITEMS. THE ORIGINAL RETURN OF INCOME WAS FILED ON 13.10.2010 DECLARING TOTAL INCOME OF RS.2,37,790/ - AND THE SAME WAS PROCESSED AS SUCH UNDER SEC.143(1). SUBSEQUENTLY, THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT AND DGIT(INV.) MUMBAI, TH AT THE ASSESSEE HAS MADE BOGUS/NON - GENUINE PURCHASES TO THE TUNE OF RS.47,96,932/ - FROM THE FOLLOWING PARTIES DURING THIS ASSESSMENT YEAR: SR. NO. NAME OF THE PARTY AMOUNT (RS.) 1. V.M. UDYOG 14,45,860 2. SHRADHHA TRADING CO. 1,61,408 3. SOMNATH INTERNATIONAL 3,90,156 4. SAJ ENTERPRISES 10,04,302 5. BHUMI SALES CORPORATION 17,95,206 BASED ON THE ABOVE INFORMATION ASSESSING OFFICER HAD A REASON TO BELIEVE THAT THE ASSESSEE CONCEALED/FURNISHED INACCURATE PARTICULARS OF INCOME, ACCORDINGLY HE REOPENED ASSESSMENT BY ISSUING A NOTICE UNDER SEC. 148 DATED 26.06.2014. SUBSEQUENTLY, ANOTHER N OTICE UNDER SEC. 148 DATED 04.08.2014 WAS ISSUED AND SERVED ON THE ASSESSEE ON 08 .08.2014. THE A.O ISSUED NOTICE UNDER SEC. 142(1), DATED 14.07.2015 AND SERVED ON THE ASSESSEE. SUBSEQUENTLY, SEVERAL NOTICES UNDER SEC. 142(1) WERE ISSUED AND SERVED ON THE A SSESSEE AND IN RESPONSE TO THE ASSESSEE AND LD. A.R ATTENDED THE PROCEEDINGS, BUT EVEN THOUGH ASSESSEE WAS GIVEN SEVERAL OPPORTUNITIES , ASSESSEE COULD NOT SUBMIT THE INFORMATION AS CALLED FOR IN THE NOTICE UNDER SEC. 142(1) OF THE ACT. DUE TO TIME LIMITATI ON, ASSESSMENT HAS TO BE COMPLETED, ACCORDINGLY, ASSES SMENT WAS COMPLETED UNDER SEC.14 4 EX - PARTE ASSESSMENT. AFTER CONSIDERING THE FINANCIAL STATE MENTS SUBMITTED BY THE ASSESSEE, A.O OBSERVED THAT ASSESSEE HAS DECLARED G.P AND NP OF 4.87% AND 1.41% AS AGAINS T 3.37% AND 0.95% OF LAST YEAR RESPECTIVELY. SINCE, ASSESSEE COULD NOT SUBMIT ANY DETAIL AND DOCUMENTARY EVIDENCE IN SUPPORT OF THE GENUINENESS OF THE PURCHASES, ASSESSING OFFICER TREATED THE WHOLE PURCHASE VALUE OF RS.47,96,932/ - AS SUPPRESSED PROFI T BY INFLATING AND ITO - 29(3)(5) VS.SHRI VIKRANT VADILAL SHAH ITA NOS. 7020 & 7021/MUM/2018 A.YS. 2010 - 11 - 2011 - 12 3 INTRODUCING HAWALA PURCHASES, ACCORDINGLY, HE MADE THE ADDITION. SINCE THE REVENUE IS IN APPEAL AGAINST THE RESTRICTION OF ADDITION OF VALUE OF BOGUS PURCHASES @ 12.5%, THEREFORE, WE AR E RESTRICTING OURSELVES TO THIS FACTS. 3. AGGRIEVED WITH THE ABOVE ORDER ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE LD. CIT(A) CONCLUDED BY OBSERVING THAT ASSESSEE HAS FILED DETAILS OF SALES CORRESPONDING PURCHASES FROM HAWALA PARTIES AND A.O ALSO N OTED IN PARA 11 OF THE ASSESSMENT ORDER THAT QUANTITATIVE DETAILS OF GOODS PURCHASED, SOLD AND IN STOCK ARE GIVEN IN ANNEXURE G OF TAX AUDIT REPORT. THERE IS EVIDENCE OF SALE OF GOODS AGAINST PURCHASES FROM HAWALA PARTIES AND 100% DISALLOWANCE OF PURCHASES WOULD NOT BE JUSTIFIED. THEREFORE, BY REFERRING TO THE ORDER PASSED BY LD. CIT(A) IN ASSESSMENT YEAR 2009 - 10 IN THE ASSESSEES OWN CASE HE RESTRICTED THE DISALLOWANCE OF PURCHASES @ 12.5% WITH THE OBSERVATION THAT THE ELEMENT OF PROFIT EMBEDDED IN SUCH PU RCHASES FROM THE HAWALA PARTIES SHOULD BE DISALLOWED. 4. AGGRIEVED WITH THE ABOVE ORDER, THE R E VENUE IS IN APPEAL BEFORE US WITH THE PLEA TO SUSTAIN THE 100% DISALLOWANCE OF PURCHASE FROM HAWALA PARTIES. 5. THE LD. D.R BROUGHT TO OUR NOTICE FACTS OF THE C ASE AND FINDING OF BOTH THE AUTHORITIES WE NOTICE THAT ASSESSING OFFICER HAD CONSIDERED 100% OF THE DISPUTED PURCHASES AS SUPPRESSED PROFIT BY INFLATING AND INTRODUCING HAWALA PURCHASE WHEREAS LD. CIT(A) RESTRICTED THE DISALLOWANCE @ 12.5% OF THE DISPUTED PURCHASES IN ORDER TO DISALLOW ONLY THE ELEMENT OF PROFIT EMBEDDED IN SUCH DISPUTED PURCHASES . WE ARE IN AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) WHICH ARE IN LINE WITH THE HONBL E BOMBAY HIGH COURT IN THE DECISION OF PR.CIT VRS. M/S MOHOMMAD HAJI ADAM & CO. IN ITA NO. 1004 OF 2016. ACCORDINGLY, WE ARE INCLINED TO ACCEPT THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITO - 29(3)(5) VS.SHRI VIKRANT VADILAL SHAH ITA NOS. 7020 & 7021/MUM/2018 A.YS. 2010 - 11 - 2011 - 12 4 6 . SINCE, THE ISSUE INVOLVED IN THE ASSESSMENT YEAR 2011 - 12 ARE SIMILAR TO A.Y. 2010 - 11, THEREFORE, WE DISMISS THE GROUNDS RAISED BY THE REVENU E IN THIS ASSESSMENT YEAR ALSO FOR PARITY OF REASONS. 7 . IN SHORT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 08 . 12.2020 SD/ - SD/ - VIKAS AWASTHY S.RIFUAR RAHMAN ( JUDICIAL MEMBER ) ( ACCOUNTANT MEMBER) MUMBAI, DATE: 08 .12 .2020 PS: ROHIT COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI