ITO 33 (3)(2), MUMBAI V. TARUNA R DALAL , MUMBAI

ITA 7217/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2648 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , HON'BLE ACCOUNTANT MEMBER ITA NO. 7217 /MUM/201 8 ( A. Y : 20 1 0 - 11) INCOME TAX OFFICER - 33(3)(2 ) ROOM NO. 612, 6 TH FLOOR, C - 12 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI - 400 051 V. TARUNA R DALAL 4 - 503, CHALLENGER, TAKUR VILLAGE KANDIVALI(E), MUMBAI 400 101 PAN: AELPD2969N ( A PPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI KIRAN UNAVEKAR DATE OF HEARING : 25.02.2020 DATE OF PRONOUNCEMENT : 28 .02.2020 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 19.09.2018 FOR THE A.Y. 2010 - 11 IN RESTRICTING THE DISALLOWANCE TO 12.5 % OF THE PURCHASES OF . 21,57,748 / - AS AGAINST 25% OF PURCHASES DISALLOWED AS NON - GENUINE/BOGUS BY THE ASSESSING OFFICER. 2. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CORRUGATED BOXES FILED RETURN OF INCOME ON 29.09.2010 FOR THE A.Y. 2009 - 10 DECLARING INCOME OF . 8,01,992/ - AND THE 2 ITA NO. 7217/MUM/2018 (A.Y: 2010 - 11) TARUNA R DALAL RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT(INV.) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FR OM THOSE DEALERS. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DGIT(INV.) , MUMBAI, WHICH IN - TURN RECEIVED FROM SALES TAX DEPARTMENT OF STATE OF MAHARASHTRA THAT THE ASSESSEE HAS AVAI LED ACCOMMODATION ENTRIES FROM M/S. ARUN PAPER & IRON TRADERS WHO IS PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANSPORTATION OF ANY GOODS. IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES OF . 21,57,748 / - MADE FROM M/S. ARUN PAPER & IRON TRADERS . THE ASSESSEE SUBMITTED THAT PURCHASES MADE FROM THE ABOVE PARTY ARE GENUINE AND THE PAYMENTS WERE MADE THROUGH CHEQUES AND FURNISHED COPIES OF INVOICE BILLS, LEDGER EXTRACTS AND COPY OF BANK STATEMENT S ARE FILED TO SUBSTANTIATE ITS PURCHASES. HOWEVER, T HE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHAS ES IN THE GRAY MARKET. THEREFORE, ASSESSING OFFICER TREATED PURCHASES OF . 21,57,748 / - AS NON - GENUINE AND ESTIMATED THE G.P.@ 25% OF THE SAID PURCHASES AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE FACTS OF THE CASE AN D 3 ITA NO. 7217/MUM/2018 (A.Y: 2010 - 11) TARUNA R DALAL VARIOUS SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO 12.5 % OF THE NON - GENUINE PURCHASES. 3. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THEREFORE, WE PROCEED TO DISPOSE OFF TH IS APPEAL ON HEARING THE LD. DR ON MERITS 4. HEARD LD. DR ON MERITS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENTS IN THE ASSESSMENT ORDER AND FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF THE CIT V. SIMIT P. SHETH [356 ITR 451] RESTRICTED THE DISALLOWANCE TO 12.5 % OF THE NON - GENUINE PURCHASES, WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - 4. GROUND NO. 1 RELATES TO THE ADDITION OF RS.5,39,437 (BEING 25% OF THE PURCHASES OF RS.21,57,748) AS NON - GENUINE PURCHASES FROM ARUN PAPER & IRON TRADERS. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED COPIES OF INVOICE BILLS, LEDGER EXTRACTS AND COPY OF BANK ACCOUNT STATEMENT AND SUBMITTED THAT THE PURCHASES WERE GENUINE. TO FIND OUT GENUINENESS, THE AO ISSUED NOTICE U/S 133(6) TO THE ABOVE MENTIONED PARTIES CALLING FOR T HE DETAILS. HOWEVER, ALL THE NOTICES WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES WITH THE REMARK 'NOT KNOWN'. FURTHER, THE AO HAS NOT ACCEPTED THE CONTENTION OF ASSESSEE BY GIVING CERTAIN REASONS MENTIONED IN PARA 8 OF ASSESSMENT ORDER. CONSIDERING T HE FACT THAT THE SALES WERE ACTUALLY MADE BY THE ASSESSEE BUT THE PURCHASES HAVE NOT BEEN CONFIRMED BY THE PARTIES CONCERNED. SO THERE IS A POSSIBILITY THAT SUCH PURCHASES ARE MADE FROM OPEN MARKET AT LOWER RATE AND BILL 4 ITA NO. 7217/MUM/2018 (A.Y: 2010 - 11) TARUNA R DALAL IS TAKEN FROM SUCH HAWALA CONCERNS WHICH ARE OVER INVOICED TO REDUCE THE PROFITS OF PURCHASERS. FURTHER, RELYING UPON OF GUJARAT HIGH COURT IN THE CASE OF CIT - 1 VS SIMIT P. SHETH AND M/S BHOLANATH POLY FAB P. LTD., THE AO ESTIMATED THE G.P. @25% OF THE SAID PURCHASES AND ADDED RS.5,39,437 ( BEING 25% OF THE PURCHASES OF RS.21,57,748) TO THE TOTAL INCOME OF THE ASSESSEE AS NON - GENUINE PURCHASES. 4.1 I HAVE CONSIDERED THE ASSESSMENT ORDER AND AVAILABLE MATERIALS. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE APPELLANT HAS PRODUCED COPY OF PU RCHASE BILLS, COPY OF BANK ACCOUNT STATEMENT BUT NOTHING REGARDING THE DELIVERY OF GOODS LIKE DELIVERY CHALLANS, TRANSPORTATION DETAILS, LORRY RECEIPT ETC. AS WELL AS STOCK REGISTER. HE DID NOT EITHER PRODUCE THE PARTIES FOR CROSS VERIFICATION OR PROVIDE T HE LATEST WHEREABOUTS OF THE PARTIES. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ESTIMATION MADE BY THE AO AT 25% IS ON HIGHER SIDE AND RESTRICTED TO 12.5%. THE AO IS DIRECTED TO MODIFY THE ADDITION ACCORDINGLY. GROUND NO .1 IS PAR TLY ALLOWED. 5. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, WE DO NOT FIND ANY GOOD REASON TO DISTURB THE FINDINGS OF LD.CIT(A). THUS WE CONFIRM THE ORDER PASSED BY THE LD.CIT(A) IN SUSTAINING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 12.5 % OF THE PURCHASES. GROUNDS RAISED BY THE R EVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 28 TH FEBRUARY , 20 20 SD/ - SD/ - ( S. RIFAUR RAHMAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 28 / 02/2020 GIRIDHAR , S R. PS 5 ITA NO. 7217/MUM/2018 (A.Y: 2010 - 11) TARUNA R DALAL COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM