ITO 27(1)(3), MUMBAI V. HEMAL MAGANLAL SHAH, MUMBAI

ITA 7137/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4049 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R KAVITHA
• Assessee Lawyers: NEMISH RAJ ESH SHAH; RAJESH G SHAH
• Keywords: Bogus purchase; Condonation of delay; Reassessment proceedings
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ITA NO.7137/MUM/2018(A.Y.2009-10) ITO 27(1)(3), ROOM NO.409, 4 TH FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI 400 703 ...... APPELLANT VS. SHRI HEMAL MAGANLAL SHAH, 78, 4 TH FLOOR, PANNKAJ B, LBS MARG, GHATKOPAR (W), MUMBAI 400 086 PAN: AMFPS 8271G ..... RESPONDENT C.O. NO.24/MUM/2020 (ARISING OUT OF ITA NO.7137/MUM/2018(A.Y.2009-10) SHRI HEMAL MAGANLAL SHAH, 78, 4 TH FLOOR, PANNKAJ B, LBS MARG, GHATKOPAR (W), MUMBAI 400 086 PAN: AMFPS 8271G .. ... CROSS OBJECTOR VS. ITO 27(1)(3), ROOM NO.409, 4 TH FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI 400 703 .... APPELLANT IN APPEAL 2 ITA NO.7137/MUM/2018(A.Y.2009-10) C.O. NO.24/MUM/2020 APPELLANT BY : MS. R.KAVITHA RESPONDENT BY : S/SHRI NEMISH RAJ ESH SHAH & RAJESH G. SHAH DATE OF HEARING : 18/02/2020 DATE OF PRONOUNCEMENT : 20/02/2020 ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-26,MUMBAI (IN S HORT CIT(A)) DATED 27/09/2018 FOR THE ASSESSMENT YEAR 2009-10. THE A SSESSEE FILED CROSS OBJECTIONS IN THE APPEAL FILED BY THE REVENUE. 2. THE CROSS OBJECTIONS ARE TIME BARRED BY 133 DAYS . THE ASSESSEE HAS FILED AN APPLICATION SEEKING CONDONATION OF DELAY I N FILING OF CROSS OBJECTIONS. THE PRIMARY REASON FOR DELAY IN FILING OF THE CROSS OBJECTIONS IS THE ILL HEALTH OF THE MOTHER OF THE ASSESSEE. TAKING A LIBERAL VIEW ON THE REASONS EXPLAINED BY THE ASSESSEE I.E. MEDICAL EXIGENCY, THE DELAY OF 13 3 DAYS IN FILING OF THE CROSS OBJECTIONS ARE CONDONED AND THE SAME IS ADMITTED TO BE HEAD ON MERITS. 3. SHRI NEMISH RAJESH SHAH, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A TRADER OF BUILDING MATERIAL. IN THE REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HELD THAT THE ASS ESSEE HAD MADE BOGUS PURCHASES AGGREGATING TO RS. RS.35,81,045/- FROM VA RIOUS HAWALA DEALERS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBM ITTED THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED BANK STATEMENT TO 3 ITA NO.7137/MUM/2018(A.Y.2009-10) C.O. NO.24/MUM/2020 SUBSTANTIATE GENUINENESS OF THE PURCHASES. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED THAT ALL PAYMENTS FOR PURC HASE OF THE GOODS WERE MADE THROUGH BANKING CHANNEL. HOWEVER, THE ASSESSI NG OFFICER MADE ADDITION ONLY FOR THE REASON THAT THE ASSESSEE HAD FAILED TO PRODUCE THE PARTIES. THE ASSESSING OFFICER MADE ADDITION ON THE BASIS OF PEA K PURCHASES FROM THE SUSPECTED PARTIES. AGGRIEVED AGAINST THE ASSESSMEN T ORDER DATED 11/03/2015 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE CIT(A). THE CIT(A) AFTER EXAMINING THE FACT S ESTIMATED GP @ 12.5% OF THE ALLEGED BOGUS PURCHASES. THE LD. AUTHORIZED RE PRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ESTIMATION MADE BY THE CIT(A) IS ON THE HIGHER SIDE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE PRAYED FOR REDUCING THE GP ON THE ALLEGED BOGUS PURCHASES TO 3%. 4. ON THE OTHER HAND, MS. R. KAVITH, REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. THE LD. D EPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAD MADE FAIR AND REASONABLE ADDITION IN RESPECT OF BOGUS PURCHASES . THE CIT(A) FURTHER REDUCED THE SAME TO 12.5% WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IS A LLEGEDLY INVOLVED IN OBTAINING BOGUS PURCHASE BILLS FROM HAWALA OPERATORS. THE AS SESSEE PURPORTEDLY OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS.35,8 1,045/- FROM VARIOUS DEALERS. THE ASSESSING OFFICER MADE ADDITION ON AC COUNT OF BOGUS PURCHASES ON THE BASIS OF PEAK PURCHASES FROM HAWALA DEALERS I.E. RS.8,48,115/- . IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH, REPORTED AS 356 ITR 4 ITA NO.7137/MUM/2018(A.Y.2009-10) C.O. NO.24/MUM/2020 451 (GUJ) ESTIMATED GP @ 12.5% ON THE BOGUS PURCH ASES. THE ASSESSEE IS SEEKING FURTHER REDUCTION IN GP RATE ON THE GROUND THAT THE GP DECLARED BY THE ASSESSEE ON NORMAL PURCHASES IS AROUND 2%. ON THE CONTRARY, THE REVENUE IN ITS APPEAL HAS PRA YED FOR RESTORING THE FINDING OF ASSESSING OFFICER. AFTER TAKING INTO CO NSIDERATION ENTIRETY OF FACTS INCLUDING THE ASSESSEES NATURE OF BUSINESS, THE Q UANTUM OF TOTAL PURCHASES MADE BY THE ASSESSEE VIS--VIS ALLEGED BOGUS PURCHA SES AND THE GP DECLARED BY THE ASSESSEE ON UNDISPUTED PURCHASES, WE ARE OF C ONSIDERED OPINION THAT TO MEET THE ENDS OF JUSTICE GP @ 8% OF THE ALLEGED BOG US PURCHASES WOULD BE FAIR AND REASONABLE. THUS, IN VIEW OF OUR ABOVE FINDIN G, THE APPEAL OF REVENUE IS DISMISSED AND THE CROSS OBJECTIONS OF ASSESSEE AR E PARTLY ALLOWED IN THE TERMS AFORESAID. 6. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISSE D AND CROSS OBJECTIONS BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY THE 20 TH DAY OF FEBRUARY, 2020. SD/- SD/- (G.MANJUNATHA) (VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20/02/2020 VM , SR. PS(O/S) 5 ITA NO.7137/MUM/2018(A.Y.2009-10) C.O. NO.24/MUM/2020 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