ITO ,WARD- 1 (5), MUMBAI V. HANSRAJ KHIYASHI BHANUSHALI, THANE

ITA 7161/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4515 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 7161 /MUM/ 2018 : A.Y : 2009 - 10 INCOME TAX OFFICER WARD 1(5), ROOM NO.14 6 TH FLOOR, B - WING WAGALE INDUSTRIAL ESTATE THANE WEST 400 604 VS. SHRI HANSRAJ KHIYASHI BHANUSHALI AB - 11/17, HIRA MOTI NAGAR ROAD NO.3, KISAN NAGAR WAGLE ESTATE THANE - 400 604 PAN NO: ABJPB7274M REVENUE BY : SHRI SATISHCHANDRA RAJORE ASSESSEE BY : NONE DATE OF HEARING : 25/02 /2020 DATE OF PRONOUNCEMENT : 26 /02/2020 O R D E R PER R.C. SHARMA , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 1, MUMBAI DATED 08/10/2018 FOR A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 1 47 OF THE I NCOME TAX ACT , 1961 . 2. NOBODY APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF ISSUANCE OF SERVICE OF NOTICE. EVEN NO ADJOURNMENT PETITION WAS FILED BY THE ASSESSEE , A CCORDINGLY, BENCH DECIDED TO DISPOSE THE APPEAL AFTER CONSIDERING THE ARGUMENT OF LD. AR AND THE MATERIAL PLACED ON RECORD. 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT ASSESSEE IS A DEALER IN CHEMICAL ITEMS. AO GOT INFORMATION FROM SALES TAX DEPARTMENT REGARDING ASSESSEE TAKING BOGUS PURCHASE ITA NO. 7161/MUM/2018 SHRI HANSRAJ KHIYASHI BHANUSHALI 2 BILL, A CCORDINGLY, HE ADDED 100% OF SUCH PURCHASES IN ASSESSEES INCOME BY TREATING THE SAME AS BOGUS. 4. BY THE IMPUGNED ORDER, CIT(A) RESTRICTED ADDITION TO THE EXTENT OF 25% AFTER HAVING THE FOLLOWING OBSERVATION: - 6.9. CONSIDERING THE ABOVE FACTS AND IN VIE W OF THE DECISION OF THE HON. DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING AND MARKETING (P) LTD, IT IS ALSO AN OBLIGATION ON THE PART OF THE FIRST APPELLATE AUTHORITY TO ENSURE THAT THE EFFECTIVE ENQUIRY IS CARRIED OUT, TO ARRIVE AT LOGI CAL CONCLUSION. THEREFORE, TO UNDERSTAND THE IMPACT OF BOOKING OF HAWALA PURCHASES ON THE PROFIT OF THE YEAR, THE APPELLANT WAS REQUIRED TO FURNISH THE COMPARATIVE DETAILS OF GP/NP AND GP/NP RATES FOR HAWALA YEARS, PRECEDING TWO YEARS AND SUBSEQUENT TWO YE ARS. IN COMPLIANCE, THE APPELLANT HAS SUBMITTED THE DETAILS, AS UNDER: - A.YR. 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 SALES 83,74,108 97,80,321 49,34,296 53,02,899 47,12,843 GP 9,62,753 11,88,848 7,51,365 7,70,430 7,22,152 GP RATE 11. 50% 12.16% 15.23% 14.53% 15.32% GP AFTER ADD. OF BP - - 10,87,729 - GP RATE - - 22.04% - NP 2,64,693 3,10,422 2,90,768 3,03,792 2,50,477 NP RATE 3.16% 3.17% 5.89% 5.73% 5.31% NP AFTER ADD. OF BP 2,64,693 3,10, 422 6,27,132 - NP RATE 3.16% 3.17% 12.71% ~ 6.10 FROM THE ABOVE DETAILS IT IS SEEN THAT IN THE YEAR UNDER APPEAL I.E. A.Y. 2009 - 10, THE APPELLANT HAD DECLARED GP OF 15.23%. THE DISALLOWANCES OF HAWALA PURCHASES WILL LEAD TO ABNORMAL GP @ 22.04%, WHICH IS MUCH HIGHER THAN THAT OF NON - HAWALA YEARS. CONSIDERING THE FACTS IN ENTIRETY, IN MY CONSIDERED VIEW, THIS IS NOT A CASE WHERE THE ENTIRE AMOUNT HAS BEEN SIPHONED OFF BY BOOKING HAWALA PURCHASES. KEEPING IN MIND THE RATIO LAID : DOWN IN THE CASE OF M/S VIJAY PROTEINS, BY THE HON'BLE GUJARAT HIGH COURT AND ALSO UPHELD BY THE HON'BLE S. C., IN THIS CASE THE DISALLOWANCE @25% OF HAWALA PURCHASES WILL BE REASONABLE. ACCORDINGLY THE DISALLOWANCE TO THE EXTENT OF 25% I.E. RS. 84,091/ - OUT OF TOTAL DISALLOWANCE OF RS.3,36,364/ - MADE BY THE AO, IS ITA NO. 7161/MUM/2018 SHRI HANSRAJ KHIYASHI BHANUSHALI 3 HEREBY SUSTAINED AND THE BALANCE AMOUNT OF RS.2,52,273/ - (RS.3,36,364 RS.84,091/ - ) IS DELETED. THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE PARTLY ALLOWED. IN RESULT, THE APPEAL IS PARTLY ALLOWED. 4. IT I S CLEAR FROM THE ORDER OF CIT(A) THAT HE HAS DEALT WITH THE ISSUE THREADBARE AND AFTER CONSIDERING THE EARLIER ASSESSMENT YEAR, SALES, GP, NP RATE SHOWN BY THE ASSESSEE CONFIRMED ADDITION TO THE EXTENT OF 25%. THE DETAILED FIN D ING SO RECORDED BY CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR RESTRICTING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF 25%. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 02 /20 20 SD/ - ( PAWAN SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 26 / 02 /20 20 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) I TAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//