ITO 22 (2)(3), MUMBAI V. M/S LIVING GEMS, MUMBAI

ITA 7047/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9956 (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: 2008-2009
• Appeal Filed On: 15-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIDDARAMAPPA K
• Keywords: Corroborative evidences; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY (JM) ITA NO. 704 7 /MUM/2019 ASSESSMENT Y EAR: 2008 - 09 ITO - 22(2)(3), MUMBAI VS. M/S LIVING GEMS, SHOP NO. F - 35, THE GRAND HYATT PLAZA, V AKOLA, SANTACRUZ (EAST), MUMBAI - 400055 PAN: AABFL0252G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHIDDARAMAPPA K. (DR) ASSESSEE BY : NONE DATE OF HEARING : 25 /05 /202 1 D ATE OF PRONOUNCEMENT: 09 / 0 7 /202 1 O R D E R THIS IS AN APPEAL BY T HE REVENUE AGAINST THE ORDER DATED 01.08.2019 OF LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) - 34 , MUMBAI FOR THE A SSESSMENT YEAR 2008 - 09. 2. WHEN THE APPEAL WAS CALLED FOR HEARING, NONE 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. 3. THE DISPU TE IN THE PRESENT APPEAL IS CONFINED TO P ARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE BECAUSE OF ALLEGED NON - GENUINE PURCHASES. 4 . BRIEFLY THE FACTS ARE, THE ASSESSEE IS ENGAGED IN BUSINESS OF TRADING & MANUFACTUR ING O F J EWELLERY AND INDIAN H ANDICRAFTS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD FILED RETURN OF INCOME IN REGULAR COURSE . ASSESSM ENT IN CASE OF THE ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTIO N 143 (3) OF THE INCOME TAX ACT , 1961 . SUBSEQ UENTLY, THE ASSESSING OFFICER ( AO ) 2 ITA NO. 7047 / MUM/2019 ASSESSMENT YEAR: 20 0 8 - 09 RECEIVED INFORMATION FROM THE DGIT (INV.) , MUMBAI THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY WAY OF BOGUS PUR CHASES FROM ONE OF THE CONCERNS RELATED TO GAUTAM JAIN AND OTHERS . BASED ON SUCH IN FO RMATION, THE AO REOPEN ED THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR . IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO PRODUCE SUPPORTING EVIDENCE TO PROVE THE PURCHASES. I N RESPONSE , THE ASSESSEEE FURNISHED PURCHASE BILLS, LED GER ACCOUNT COPY, BANK STATEMENT COPY ETC. TO PROVE THE PURCHASES. THE ASSESSEE ALSO FURNISHED THE SALES BILLS CONTAINING STAMP OF CUSTOM S AUTHORITIES IN SUPPORT OF EXPORT OF GOODS. THE AO HOWEVER, RAISED DOUBT WITH R EGARD TO THE SOURCE OF PURCHASE. HE WA S OF THE VIEW THAT THE ASSESSEE MUST HAVE PURCHASE D THE GOODS FROM GREY MARKET OR UNVERIFIED SOURCES AND TO REGULARISE SUCH TRANSACTION HAS OBTAINED ACCOMMODATION BILLS FROM THE CONCERNED PARTIES. THEREFORE, AFTER REJECTING THE BOOKS OF ACCOUNT , THE AO PRO CEEDED 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 BEFORE LEARNED COMMISSIONER (APPEALS). PARTLY ACCEPTING THE SUB MISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE ALLEGED NON - GENUINE PURCHASES IN BOTH THE YEAR S . 5. I HAVE CONSIDERED THE SUBMISSION S OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS CO ULD BE SEE N, THE AO HAS ACCEPTED THE FACT THAT THE ASSESSEE IS A 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. FO R THIS REASON ALONE , INSTEAD OF DISALLOW ING THE ENTIRE PURCHASES HE HAS RESTRICTED THE DISALLOWANCE TO 25% , BEING THE PROFIT ELEMENT EMB EDDED IN SUCH PURCHASES. LEARNED COMMISSIONER (APPEALS) HAS REDUCED SUCH DISALLOWANCE TO 12.5%. CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE AND AL L 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. 3 ITA NO. 7047 / MUM/2019 ASSESSMENT YEAR: 20 0 8 - 09 6 . IN THE RESULT, APPEAL IS DI SMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY , 2021 . (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