ITO 27(1)(4), NAVI MUMBAI V. DHAVAL ANAND SHAH, MUMBAI

ITA 732/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7918 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO . 732 /MUM. /2017 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 27(1)(4), MUMBAI . APPELLANT V/S SHRI DHAVAL ANAND SHAH F WING, FLAT NO.702, KUKREJA PALACE VALLABH BAUG EXTENSION LANE LAGE GHATKOPAR (E), MUMBAI 400 077 PAN ALLPS2650J . RESPONDENT ITA NO .415/MUM./2017 ( ASSESSMENT YEAR : 2009 10 ) SHRI DHAVAL ANAND SHAH F WING, FLAT NO.702, KUKREJA PALACE VALLABH BAUG EXTENSION LANE LAGE GHATKOPAR (E), MUMBAI 400 077 PAN ALLPS2650J . APPELLANT V/S INCOME TAX OFFICER WARD 27(1)(4), MUMBAI . RESPONDENT ASSESSE E BY : SHRI RAM TIWARI REVENUE BY : NONE DATE OF HEARING 29.11.2017 DATE OF ORDER 13.12.2017 2 SHRI DHAVAL ANAND SHAH O R D E R PER SAKTIJIT DEY, J.M. AFORESAID CROSS APPEAL S ARISE OUT OF THE ORDER DATED 29 TH NOVEMBER 201 6 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 25 , MUMBAI,FOR THE ASSESSMENT YEAR 20 09 10 . 2. BRIEF FACTS ARE, THE ASSESSEE AN INDIVIDUAL IS ENGAGED IN MANUFACTURING AND SALE OF LPG GAS STOVE THROUGH HIS PROPRIETARY CONCERN APEX HOME APPLIANCES. THAT BESIDES, THE ASSESSEE IS ALSO ENGAGED IN TRADING OF HOME APPLIANCE PRODUCTS LIKE PRESSURE COOKER, NON STICK ITEMS AND FURNITURE. FOR THE ASSESSMENT YEAR UNDER DISPUTE, AS SESSEE FILED HIS RETURN OF INCOME ON 1 ST OCTOBER 2009, DECLARING TOTAL INCOME OF RS. 15,21,390. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS OBTAIN ED TOWARDS PURCHASE FROM SOME PARTIES WHO ARE IDENTIFIED AS HAWALA OPERATORS BY THE MAHARASHTRA SALES TAX DEPARTMENT ,T HE ASSESSMENT WAS RE OPENED UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, ON THE BASIS OF INFORMATION AVAILABLE ON RECO RD, THE ASSESSING OFFICER FOUND THAT OUT OF THE TOTAL PURCHASES OF RS. 7,97,16,166, CLAIMED TO HAVE BEEN MADE DURING THE YEAR BY THE ASSESSEE , PURCHASES 3 SHRI DHAVAL ANAND SHAH AMOUNTING TO RS. 5,31,60,448 EFFECTED FROM 19 PARTIES ARE NOT GENUINE AS THEY HAVE BEEN IDENTIFIED AS HAW ALA OPERATORS. THE ASSESSING OFFICER, THEREFORE , TO ASCERTAIN THE GENUINENESS OF PURCHASES MADE BY THE ASSESSEE CONDUCTED INDEPENDENT ENQUIRY BY ISSUING NOTICE S UNDER SECTION 133(6) TO THE CONCERNED PARTIES . HOWEVER, ALL SUCH NOTICES WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT . FURTHER, THE INSPECTOR OF INCOME TAX WHO WAS DEPUTED TO MAKE LOCAL ENQUIRY COULD NOT FIND THE WHEREABOUTS OF THE PARTIES. THUS, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHEN CONFRONTE D THE RESULT OF ENQUIRY MADE BY HIM TO THE ASSESSEE AND CALLED UPON HIM TO PROVE THE GENUINENESS OF PURCHASES BY PRODUCING TRANSPORT RECEIPTS, DELIVERY CHALLANS AND ALSO THE CONCERNED PARTIES, THE ASSESSEE COULD NOT DO SO. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE PURCHASES MADE BY THE CONCERNED PARTIES WERE BOGUS. HAVING HELD SO, HE PROCEEDED TO MAKE ADDITION OF RS. 2,29,06,654, ON PEAK BASIS TOWARDS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. BEING AGGRIEVED OF THE ADDITION SO MADE, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPHELD THE RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. AS FAR AS THE MERITS OF THE ADDITION MAD E 4 SHRI DHAVAL ANAND SHAH ON PEAK BASIS, THE LEARNED COMMISSIONER (APPEALS) RELYING UPON CERTAIN JUDICIAL PRECEDEN TS SUSTAINED ADDITION TO THE EXTENT OF 12.5% OF THE ALLEGED BOGUS PURCHASE. BEING AGGRIEVED OF THE AFORESAID ORDER OF THE LEARNED COMMISSIONER (APPEALS) BOTH THE ASSE SSEE AND THE REVENUE ARE IN APPEAL BEFORE US. 4. WHEN THE APPEALS WERE CALLED FOR HEARING, NO ONE WAS PRESENT FOR THE ASSESSEE IN SPITE OF ISSUANCE OF NOTICE OF HEARING THROUGH RPAD. THEREFORE, WE PROCEED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 5. HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS FAR AS RE OPENING OF THE ASSESSMENT IS CONCERNED, WE DO NOT FIND ANY INFIRMITY IN EXERCISE OF POWER UNDER SECTION 147 , S INCE , SPECIFIC INFORMATION CAME TO THE POSSESSION OF THE ASSESSING OFFICER REVEALING ESCAPEMENT OF INCOME .T HEREFORE, WE UPHOLD THE RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. AS FAR AS THE ISSUE OF QUANTUM OF ADDITION TO BE MADE ON ACCOUNT OF AL LEGED BOGUS PURCHASE, WE FIND TH E DISALLOWANCE OF 12.5% OUT OF ALLEGED BOGUS PURCHASE AS MADE BY THE FIRST APPELLATE AUTHORITY TO BE IN CONSONANCE WITH THE VIEW EXPRESSED IN JUDICIAL PRECEDEN TS REFERRED TO BY HIM AS WELL AS THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL IN SIMILAR TYPE OF CASES. THEREFORE, WE ARE INCLINED TO UPHOLD THE ORDER OF 5 SHRI DHAVAL ANAND SHAH THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE. GROUNDS RAISED BY BOTH THE PARTIES ARE DISMISSED. 6. IN THE RESULT, ASSESSEES APPEAL AND REVENUES APPEAL ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2017 SD / - SD/ - SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI