SHRI CHANDAN JANGID, Mumbai V. A.C.I.T. - 31(1), Mumbai

ITA 722/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9222 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKEYAN
• Assessee Lawyers: S C AGARWAL
• Keywords: Bogus purchase; Corroborative evidences
• Section: 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJEET SINGH, JUDICIAL MEMBER ITA NOS.722 & 723/M/2018 ASSESSMENT YEARS: 2009-10 & 2011-12 SHRI CHANDAN JANGID, PROP. WELLDONE CONCEPT, 702, MEGHRAJ SARSWATI BAUG SOCIETY, JOGESHWARI (E), MUMBAI 400 060 PAN: AABPJ8158K VS. ACIT 31(1), C-13, 1 ST FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI S.C. AGARWAL, A.R. REVENUE BY : SHRI ABI RAMA KARTIKEYAN, D.R. DATE OF HEARING : 27.02.2019 DATE OF PRONOUNCEMENT : 29.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE ASSESSEE AGAINST THE COMMON ORDER DATED 27.09.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2009-10 & 2011-12. ITA NO.722/M/2018 (A.Y. 2009-10) 2. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.89,981/- BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES FROM ROOPAM IMPEX. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 30.09.2009 DECLARING AN INCOME OF RS.77,4 7,530/-. ITA NOS.722 & 723/M/2018 SHRI CHANDAN JANGID 2 THEREAFTER, THE AO RECEIVED INFORMATION FROM THE OF FICE OF DGIT(INV.), MUMBAI THAT ASSESSEE IS A BENEFICIARY O F HAWALA PURCHASE ENTRIES AND ACCORDINGLY THE CASE OF THE AS SESSEE WAS REOPENED UNDER SECTION 147 AND THE NOTICE UNDER SEC TION 148 OF THE ACT WAS ISSUED ON 18.11.2013 WHICH WAS SERVED UPON THE ASSESSEE ON 19.12.2013. DURING THE COURSE OF RE-AS SESSMENT PROCEEDINGS, THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PURCHASES MADE FROM HAWALA PARTY M/S. RO OPAM IMPEX TO THE TUNE OF RS.89,981/- SHOULD NOT BE TREA TED AS NON GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE WHI CH WAS REPLIED BY THE ASSESSEE BY SUBMITTING THAT THE ASSE SSEE HAS IN FACT PURCHASED GOODS AND MATERIAL FROM THE SAID PAR TY AND THE SAME WAS USED IN THE ANDHERI AND GOREGAON SITES. T HE ASSESSEE ALSO FILED COPY OF BANK STATEMENT EVIDENCING THE PA YMENT THROUGH BANKING CHANNEL BESIDES FILING COPIES OF BI LLS, VOUCHERS ETC. THE AO ALSO ISSUED NOTICE UNDER SECTION 133(6) WHICH WAS RETURNED BY THE POSTAL AUTHORITY WITH THE REMARK TH AT NON KNOWN. FINALLY, THE AO ADDED THE SAME TO THE INCOM E OF THE ASSESSEE BY HOLDING THAT THE SAID PURCHASES ARE NOT GENUINE IN VIEW OF THE FACT THAT NO STOCK REGISTER HAS BEEN MA INTAINED SHOWING RECEIPT OF MATERIAL, DAY TO DAY CONSUMPTION AND PRODUCTION OF MATERIAL ETC. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALS O DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER O F AO AFTER CONSIDERING THE CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE MADE DURING THE APPELLATE PROCEEDINGS. THE LD. CIT (A) HELD THAT ASSESSEE HAS FAILED TO PROVE THAT GOODS WERE RECEIV ED FROM THE SAID PARTY AND ALSO FAILED TO PRODUCE THE CONSUMPTI ON OF RECORDS WITH THE SUPPORTING EVIDENCES AND CONSUMPTION DETAI LS AND ITA NOS.722 & 723/M/2018 SHRI CHANDAN JANGID 3 THUS UPHELD THE ORDER OF AO THAT THE SAID PURCHASE WAS A NON GENUINE PURCHASES. THE LD. A.R. THEREFORE SUBMITTE D BEFORE THE BENCH THAT THE DISALLOWANCE OF THE TOTAL PURCHASES EQUAL TO 100% AMOUNTING TO RS.89,981/- WAS CONFIRMED BY LD. CIT(A) BY IGNORING THE FACT THAT THE VAT APPLICABLE TO THE ASS ESSEE IS ONLY 4% AND THE MATERIAL PURCHASED IN FACT USED IN THE S ITES AT ANDHERI AND GOREGAON. THE LD. A.R. ALSO SUBMITTED BEFORE THE BENCH THAT ASSESSEE HAS FILED ALL THE NECESSARY BIL LS AND VOUCHERS IN THE FORM OF INVOICES, COPY OF LEDGER AC COUNTS, BANK STATEMENTS ETC. AND IN ANY CASE THE DISALLOWANCE CA N NOT BE MADE @ 100% AS THE MATERIAL WAS PURCHASED AND UTILI SED ON THE SITES OF THE ASSESSEE. THE LD. A.R. THEREFORE PRAY ED BEFORE THE BENCH THAT A REASONABLE DISALLOWANCE MAY BE MADE TO BRING SO CALLED PURCHASES TO TAX. 5. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF LD. CIT(A). 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE AO HAS DIS ALLOWED 100% OF PURCHASES FROM ROOPAM IMPEX WHICH WAS A HAWALA P ARTY AS ASSESSEE COULD NOT PRODUCE BEFORE THE AO THE SUPPLI ER IN PERSON OR ANY CONFIRMATION FROM THE SAID SUPPLIER. MOREOV ER, THE NOTICES ISSUED UNDER SECTION 133(6) WERE NOT SERVED AND RETURNED BY THE POSTAL AUTHORITY WITH THE REMARK N OT KNOWN. UNDER THESE CIRCUMSTANCES THOUGH THE ASSESSEE WAS I NDULGED IN BOGUS PURCHASES SAME CAN NOT BE BROUGHT TO TAX @ 10 0%. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT WOULD BE REASONABLE AND FAIR THAT THE SAID PURCHASES ARE BRO UGHT TO TAX @20%. THE AO IS DIRECTED ACCORDINGLY. ITA NOS.722 & 723/M/2018 SHRI CHANDAN JANGID 4 7. THE ISSUE RAISED IN 2 ND GROUND OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE DISALLOWANCE TO T HE TUNE OF RS.21,085/- UNDER THREE HEADS OF EXPENSES. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO C ALLED UPON THE ASSESSEE TO FURNISH THE LOG BOOKS OF THE V EHICLE, DETAILS OF TELEPHONE CALLS BESIDES OTHER EVIDENCES TO PROVE THE GENUINENESS OF THE EXPENSES. HOWEVER, THE ASSESSEE FAILED TO FURNISH NECESSARY DETAILS TO PROVE SUCH EXPENSES. THEREFORE, AO CAME TO THE CONCLUSION THAT THERE IS A PERSONAL ELEMENT IN THE SAID EXPENSES AND ACCORDINGLY DISALLOWED A SUM OF RS.21,085/- BEING 10% OF THE TOTAL EXPENSES OF RS.2 ,10,855/- COMPRISING TELEPHONE EXP RS. 89,143/-, VEHICLE EXP RS. 42,383/- AND VEHICLE DEP. RS. 79,329/-AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 9. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALS O DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT IN A.Y . 2012-13 IN WHICH THE ASSESSMENT PROCEEDINGS WERE CONCLUDED ON 25 TH MARCH WHEREIN THE ASSESSEE COULD NOT FURNISH THE DE TAILS OF SUCH EXPENSES AND SUMMARILY DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT GIVING ANY COGENT REASONS FOR SUCH DISALLOWANCE WHICH WAS MADE ON THE ADHOC BASIS. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE DISALLOWANCE OF 10% OF THE TOTAL EXPENSES IS BASED UPON PRESUMPTIONS THAT SOME PART OF THE TOTAL EXPENSES RELATED TO PERSONAL USE OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE FEEL THAT IT WOULD BE PROPER IF T HE EXPENSES ARE DISALLOWED TO THE EXTENT OF 5% TO THE TOTAL EXP ENSES IN PLACE ITA NOS.722 & 723/M/2018 SHRI CHANDAN JANGID 5 OF 10%. THE AO IS DIRECTED ACCORDINGLY AND THE APP EAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.723/M/2018 (A.Y. 2011-12) 11. THE ISSUE RAISED IN THIS APPEAL BY WAY OF GROUN D NO.1 & 2 ARE IDENTICAL TO ONE AS DECIDED BY US IN ITA NO.722 /M/2018 WHEREIN THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. ACCORDINGLY, OUR DECISION IN ITA NO.722/M/2018 FOR A.Y. 2009- 10, WOULD MUTATIS MUTANDIS APPLY TO BOTH THE GROUND S IN THIS APPEAL AS WELL AND THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.03.2019. SD/- SD/- ( AMARJEET SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 29.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.