MOHAN P GOKULKAR, BHIWANDI V. DCIT 1, KALYAN

ITA 7037/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9744 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 18-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: BHUPENDRA SHAH LD
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

ITA NO.7238 &7037/M/2014 MOHAN PANDITRAO GOKULKAR ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.7238 &7037/MUM/2014 ( / ASSESSMENT YEARS: 2010-11) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 1 ST FLOOR, MOHAN PLAZA WAYALE NAGAR KHADAKPADA KALYAN / VS. MOHAN PANDITRAO GOKULKAR C/O 104 B-WING SHREE SWAMI SAMARTH COMPLEX BEHIND SENAPATI HOSPITAL KANERI DHAMANKAR NAKA BHIWANDI 421 302 ! ./ ./PAN/GIR NO. AAZPG-8856-B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : BHUPENDRA SHAH, LD. AR RE VENUE BY : SUMAN KUMAR , LD. D R / DATE OF HEARING : 24/07/2017 / DATE OF PRONOUNCEMENT : 28/07/2017 ITA NO.7238 &7037/M/2014 MOHAN PANDITRAO GOKULKAR ASSESSMENT YEAR-2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR [AY ] 2010-11 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1 [CIT(A)], MUMBAI DATED 05/08/2014. THE ONLY ISSUE I NVOLVED IN THE APPEAL IS QUANTUM ADDITION AGAINST CERTAIN BOGUS PURCHASES. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED AS ELECTRICAL CONTRACTOR, WAS ASSESSED U/S 143(3) FOR IMPUGNED AY ON 18/03/2013 WHERE THE INCOME WAS ASSESSED AT RS.90,9 1,790/- AFTER SOLE ADDITION OF RS.79,01,610/- TOWARDS NON-GENUINE PURC HASES AS AGAINST RETURNED INCOME OF RS.11,90,180/- E-FILED BY THE ASSESSEE ON 15/10/2010. 2.1 DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS FOUND TO BE MADE PURCHASE FROM 7 PARTIES AGGREGATING RS.79,01,6 10/- WHICH WERE LISTED AS NON-GENUINE PARTIES AS PER INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT . THE STATEMENT RECORDED BY THE SALES TAX DEPARTMEN T WAS CONFRONTED TO THE ASSESSEE WHO, ALTHOUGH SUBMIT TED THE PURCHASE BILLS RECEIVED FROM THE SAID PARTIES, EXPRESSED INA BILITY TO PRODUCE ANY CONFIRMATION FROM THE SAID PARTIES TO PROVE THE PUR CHASES. THE ASSESSEE CONTENDED THAT THE PAYMENTS WERE THROUGH BANKING CH ANNEL. HOWEVER, NOT CONVINCED THE LD. AO TREATED THE SAME AS NON-GE NUINE PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 2.2 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/08/2 014 WHO ITA NO.7238 &7037/M/2014 MOHAN PANDITRAO GOKULKAR ASSESSMENT YEAR-2010-11 3 APPRECIATED THE RATE OF GP/NP RATE EARNED BY THE AS SESSEE AND FURTHER NOTED THAT THE SALES FIGURE OF RS.3.86 CRORES ACHIE VED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE AND THERE COULD BE NO SALE WITHOUT ANY PURCHASE. HOWEVER, THE LD. CIT(A) ALSO NOTED TH AT THE ASSESSEE COULD NOT FULLY DISCHARGE THE ONUS OF SUBSTANTIATIN G THE PURCHASES AND THEREFORE, RESTRICTED THE IMPUGNED ADDITIONS TO 25% OF NON-GENUINE PURCHASES WHICH CAME TO RS.19,75,402/-. AGGRIEVED, BOTH ASSESSEE AND REVENUE IS IN APPEAL BEFORE US. 3. THE LD. REPRESENTATIVE FOR ASSESSEE [AR] MADE A SHORT SUBMISSION TO CONTEND THAT THE ASSESSEE SUFFERED SI MILAR ADDITION IN IMMEDIATELY PRECEDING AY AND THIS TRIBUNAL HAS REST RICTED THE ADDITION TO 12.5% WITH BENEFIT OF NET PROFIT RATE ALREADY DECLA RED BY THE ASSESSEE. IT WAS ALSO POINTED OUT THAT THE ACCOUNTS WERE SUBJECT ED TO TAX AUDIT AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE AND THE A SSESSEE WAS IN POSSESSION OF PURCHASES BILLS AND PAYMENTS WERE THR OUGH BANKING CHANNELS AND THEREFORE, FULL DISALLOWANCE WAS NOT J USTIFIED. 3.1 PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTENDED THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVIN G THE PURCHASES AND THEREFORE, FULL ADDITION WAS JUSTIFIED PARTICULARLY WHEN THE ASSESSEE COULD NOT PRODUCE EVEN A SINGLE CONFIRMATION. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUM ENTS OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS OF PROVING THE PURCHASES AS IT COULD NOT PRODUCE EVIDENCES TO SHOW ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFIRMATORY LE TTERS FROM THE ALLEGED BOGUS SUPPLIERS AND THUS FAILED TO SUBSTANTIATE THE PURCHASES. HOWEVER, ITA NO.7238 &7037/M/2014 MOHAN PANDITRAO GOKULKAR ASSESSMENT YEAR-2010-11 4 AT THE SAME TIME, THE ASSESSEE IS IN POSSESSION OF PURCHASE INVOICES, PAYMENTS ARE THROUGH BANKING CHANNELS, ACCOUNTS ARE SUBJECTED TO AUDIT WHICH HAS BEEN ACCEPTED BY THE REVENUE AND WH OLE ADDITION WOULD RESULT INTO UNACCEPTABLE NET PROFIT RATE. THE REFORE, EVEN IF ALL THE PURCHASES ARE FOUND TO BE BOGUS, THE SALES TURNOVER HAS NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, IN SUCH A SITUA TION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEM ENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE PROFIT EAR NED BY ASSESSEE AGAINST PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES. THEREFORE, WE RESTRICT THE SAID DISALLOWANCE TO 12.50% WITH BENEFIT OF NET PROFIT O F 3.47% ALREADY DECLARED BY THE ASSESSEE. RESULTANTLY, THE NET ADD ITION SUSTAINED BY US WOULD BE 9.03% OF PURCHASES IN DISPUTE I.E. RS. 79, 01,610/- WHICH COMES TO RS.7,13,515/-. WE DIRECT SO. 5. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED WHEREAS THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JULY, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28.07.2017 SR.PS:- THIRUMALESH ITA NO.7238 &7037/M/2014 MOHAN PANDITRAO GOKULKAR ASSESSMENT YEAR-2010-11 5 / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI