ITO 22(2)(3), MUMBAI V. SMT. LAVINA S GWALANI, MUMBAI

ITA 7046/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9955 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY (JM) ITA NO. 7046 /MUM/2019 ASSESSMENT Y EAR: 2007 - 08 & ITA NO. 7048 /MUM/2019 ASSESSMENT Y EAR: 2008 - 09 ITO - 22(2)(3), MUMBAI VS. SMT. L AVINA S. GWALANI, FLAT NO. 2, 2 ND FLOOR, POONAM BUILDING, 67 - A, LINKING ROAD, KHAR (WEST), MUMBAI - 400052 PAN: AAKPG2410J (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAURABH KUMAR RAI (DR) ASSESSEE BY : NONE DATE OF HEARING : 25 /05 /202 1 DATE OF PRONOUNCEMENT: 09 / 0 7 /202 1 O R D E R THESE ARE APPEALS BY T HE REVENUE AGAINST A COMMON ORDER DATED 06.08.2019 OF LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) - 34 , MUM BAI FOR THE A SSESSMENT YEAR S 2007 - 08 AND 2008 - 09 . 2. THE ONLY COMMON D ISPUTE IN BOTH THESE APPEALS IS CONCERNING P ARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE BECAUSE OF ALLEGED NON - GENUINE PURCHASES. 3. BRIEFLY TH E FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL AND STATED TO BE AN EXPORTER OF JEWELLERY. FOR THE ASSESSMENT YEARS UNDER DISPUTE, THE ASSESSEE HAD FILED RETURNS OF INCOME IN REGULAR COURSE . ASSESSMENT S IN CASE OF THE ASSESS EE WERE ORIGINALLY COMPLETED UNDER S ECTION 143 (3) OF THE INCOME TAX ACT , 1961 . SUBSEQUENTLY, THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM THE 2 ITA NO S . 7046 & 7048 / MUM/2019 ASSESSMENT YEAR S : 20 07 - 08 & 2008 - 09 DGIT (INV.) , MUMBAI THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY WAY OF BOGUS PUR CHASES FROM ONE OF THE CONCERNS RE LATED TO BHANWARLAL JAIN GROUP, A LEADING ENTRY PROVIDER. BASED ON SUCH INFORMATION, THE AO REOPEN ED THE ASSESSMENT S FOR BOTH THE ASSESSMENT YEARS. IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO PRODUCE SUPPORTING EVIDENCE TO PROVE THE PURCHASES. IN RESPONSE , THE ASSESSEEE FURNISHED PURCHASE BILLS, LEDGER ACCOUNT COPY, BANK STATEMENT COPY ETC. TO PROVE THE PURCHASES. THE ASSESSEE ALSO FURNISHED THE SALES BILLS CONTAINING STAMP OF CUSTOM AUTHORITIES IN SUPPORT OF EXPORT OF GOODS. TH E AO , HOWEVER, RAISED DOUBT WITH R EGARD TO THE SOURCE OF PURCHASE. HE WAS OF THE VIEW THAT THE ASSESSEE MUST HAVE PURCHASE THE GOODS FROM GREY MARKET OR UNVERIFIED SOURCES AND TO REGULARISE SUCH TRANSACTION HAS OBTAINED ACCOMMODATION BILLS FROM THE CONCERN ED PARTIES. THEREFORE, AFTER REJECTING THE BOOKS OF ACCOUNT THE AO PR OCEEDED TO DISALLOW 25%, BEING THE PROFIT ELEMENT ON THE ALLEGED NON - GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. THE ASSESSEE CONTESTED THE AFORES AID DISALLOWANCES BEFOR E LEARNED COMMISSIONER (APPEALS). PARTLY ACCEPTING THE SUBMISSIONS OF THE ASSESSEE , LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE ALLEGED NON - GENUINE PURCHASES IN BOTH THE YEARS. 4. WHEN THE APPEAL S WERE CALLED FOR HEARING, NO NE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OF THE APPEAL EX - PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND BASED ON MATERIALS ON RECORD. 5. I HAVE CONSIDERED TH E SUBMISSION OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEE N, THE AO HAS ACCEPTED THE FACT THAT THE ASSESSEE IS A N EXPORTER OF JEWELLERY AND IN FACT HAD PURCHASED THE GOODS WHICH ARE SUBJECT MATTER OF DISPUTE. HE HAS ONLY DOUBTED THE SOURCE OF SUCH PURCHASES. F OR THIS REASON ALONE , INSTEAD OF DIS ALLOWING THE ENTIRE PURCHASES, T HE AO HAS RESTRICTED THE DISALLOWANCE TO 25% , BEING THE PROFIT ELEMENT EMBE DDED IN SUCH PURCHASES. LEARNED COMMISSIONER (APPEALS) HAS REDUC ED SUCH DISALLOWANCE TO 12.5%. CONSIDERING 3 ITA NO S . 7046 & 7048 / MUM/2019 ASSESSMENT YEAR S : 20 07 - 08 & 2008 - 09 THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE AND ALL OTHER RELEVANT FACT ORS , I AM OF THE CONSIDERED OPINION THAT DISALLOWANCE MADE AT 12.5% ON THE ALLEGED NON - GENUINE PURCHASES IS FAIR AND REASONABLE, HENCE , DESERVES TO BE UPHELD. ACCORDINGLY, I DO SO. GROUNDS ARE DISMISSED. 6 . IN THE RESULT, APPEAL S ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY , 2021 . SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI ; DATED: 09 / 07 /2021 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI