JITENDRA V. SHAH, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 14(2), MUMBAI

ITA 7359/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4979 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYAN RAJU
• Keywords: Bogus purchase; Cost of acquisition; Accommodation entries; Onus to prove
• Section: 143(3); 142(1); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI JOGINDER SINGH (VICE PRESIDENT) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7359/MUM/2017 ASSESSMENT YEAR: 2010 - 11 & ITA NO. 7360/MUM/2017 ASSESSMENT YEAR: 2011 - 12 SHRI JITENDRA V. SHAH , PROP. M/S VISHAL MEGA PAPEREX, SHOP NO. 11, HIRA MANEK CHS, 32 NAVIWADI DADISETH AGIARY LANE, MUMBAI - 400002. VS. ASST. COMMISSIONER OF INCOME TAX - 14(2), MUMBAI, 3 RD FLOOR, EARNEST HOUSE NARIMAN POINT, MUMBAI - 400021. PAN NO. AADPS4740E APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : M R. B. SATYANARAYAN RAJ U , DR DATE OF HEARING : 14 /01/2019 DATE OF PRONOUNCEMENT : 22/01/2019 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) - 29, MUMBAI [IN SHORT CIT(A) ] AND ARISE OUT OF ORDER PASSED U/S 143(3) R.W.S . 147 OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. SHRI JITENDRA V. SHAH ITA NOS. 7359 & 7360/MUM/2017 2 2. THOUGH THE CASE WAS FIXED FOR HEARING ON 14.01.2019, NEITHER THE ASSESSEE NOR H IS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATE. THE ASSESSEE HAS NOT FILED ANY ADJOURNMENT PETITION. THUS WE PROCEED TO DECIDE THE ISSUE ON MERIT. FACTS BEING IDENTICAL, WE BEGIN WITH THE ASSESSMENT YEAR (AY) 2010 - 11 . ITA NO. 7 359/MUM/2017 ASSESSMENT YEAR: 2010 - 11 3 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 09.10.2010 DECLARING TOTAL INCOME OF RS. 5,04,050/ - . THE RETURN WAS PROCESSED U/S 143( 1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM THE DIRECTOR GENERAL OF INCOME TAX (INV.) , MUMBAI THAT THE ASSESSEE WAS A BENEFICIARY OF HAWALA TRANSACTION AS PER THE DETAILS FURNISHED BY THE SALES TAX DEPARTMENT, GOVERNME NT OF MAHARASHTRA. AS PER THE SAID DETAILS, ASSESSEE WAS A BENEFICIARY OF TRANSACTION WITH 14 HAWALA DEALERS WHO INDULGED IN THE PRACTICE OF PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF ISSUING BOGUS SALES BILLS/TAX INVOICES ; THE MODUS OPERANDI BEING NOT SUPPLYING THE GOODS PHYSICALLY BUT PROVIDING SALES BILLS ONLY. THE SAID DETAILS/INFORMATION WERE BASED ON THE ADMISSION OF THE HAWALA DEALERS IN THE FORM OF STATEMENTS/DEPOSITIONS/AFFIDAVITS FILED BEFORE THE SALES TAX AUTHORITIES. DURING THE AY 2010 - 11, T HE ASSESSEE HAD OBTAINED BOGUS ENTRIES AMOUNTING TO RS.1,63,62,829/ - FROM THE SAID 14 HAWALA DEALERS. ON THE BASIS OF ABOVE INFORMATION, THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 DATED 19.06.2014 TO THE ASSESSEE . SHRI JITENDRA V. SHAH ITA NOS. 7359 & 7360/MUM/2017 3 IN THE REASSESSMENT PROCEE DINGS, THE AO ISSUED NOTICE U/S 133(6) DATED 03.11.2015 TO THE SAID 14 PARTIES. THE AO FOUND THAT THESE NOTICES WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THE AO ALSO NOTED THAT THE ASSESSEE DID NOT PRODUCE EXTRACT OF STOCK, PURCHASE AND SALES REGIS TERS, THE PROOF OF TRANSACTION, DELIVERY CHALLAN, TRANSPORTATION DETAILS, BANK DETAILS OF PURCHASES. THE ASSESSEE ALSO FAILED TO PRODUCE THE ABOVE PARTIES BEFORE THE AO FOR VERIFICATION. THE AO THUS OBSERVED THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS TO PROVE THE GENUINENESS OF TRANSACTION. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM SOME OTHER SUPPLIERS AND THE BILLS HAVE BEEN ISSUED BY THE ABOVE HAWALA TRADERS. AS PER THE AO, THE OBVIOUS REASON WAS THAT THE ASSESSEE MADE PURCHASES B UT AT A LOWER PRICE SO AS TO INCREASE ITS OVERALL PROFITS AND BY RECORDING THE BOGUS PURCHASES AT A HIGHER LEVEL, THE ASSESSEE MANAGED TO SIPHON OF F THE PROFITS TO THE EXTENT OF THE DIFFERENCE BETWEEN THE ACTUAL PURCHASES AND THE BOGUS PURCHASES. THEREAFTE R, THE AO REFERRED TO THE ORDER OF THE ITAT, AHMADABAD IN THE CASE OF VIJAY PROTEINS LTD. V. ACIT 58 ITD 428 AND THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN CIT V. SIMIT P. SHETH 356 ITR 451. FINALL Y, THE AO, CONSIDERING THE POSSIBILITIES OF I NFLATED PURCHASE COST, CLAIM OF 4% MVAT AND GP @ 6.4%, MADE A DISALLOWANCE @ 10.84% OF THE INFLATED PURCHASE COST MADE FROM THE SAID 14 DEALERS WHICH WORKS OUT TO RS.17,73,730/ - , WHICH WAS VOLUNTARILY AGREED BY THE ASSESSEE VIDE SUBMISSION DATED 10.02.2016, WHERE IN HE HAS STATED THAT TO BUY PEACE OF MIND AND TO AVOID FURTHER LITIGATION, HE IS READY TO OFFER INCOME ON GROSS SHRI JITENDRA V. SHAH ITA NOS. 7359 & 7360/MUM/2017 4 PROFIT + VAT ON ALLEGED PURCHASE. THUS THE AO MADE A DISALLOWANCE OF RS.17,73,730/ - ON ACCOUNT OF BOGUS PURCHASES. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THERE WAS NON - COMPLIANCE BY THE ASSESSEE BEFORE THE LD. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS. WE MAY REFER HERE TO PARA 5 OF THE ORDER DATED 26.10.2017 PASSED BY THE LD. CIT(A). BECA USE OF SUCH NON - COMPLIANCE, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. DR SUBMITS THAT THE AO HAS RESTRICTED THE DISALLOWANCE TO 10.84% OF THE INFLATED PURCHASE COST MADE FROM SUSPICIOUS DEALERS WHICH IS ALSO BASED ON THE ADMISSION OF THE ASSESSEE VIDE SUBMISSION DATED 10.02.2016, WHEREIN THE ASSESSEE AGREED TO OFFER INCOME ON GROSS P ROFIT + VAT ON ALLEGED PURCHASE TO BUY PEACE OF MIND AND TO AVOID FURTHER LITIGATION. THE LD. DR THUS SUBMITS THAT THE DISALLOWANCE OF RS .17,73,730/ - AGREED BY THE ASSESSEE AND MADE BY THE AO SHOULD BE UPHELD. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE AO HAD ISSUED NOTICE U/S 142(1) DATED 03.11.2015 TO THE ASSESSEE TO PRODUCE VARIOUS DETAILS. HOWEVER, THE ASSESSEE FAILED TO PRODUCE EXTRACT OF STOCK, PURCHASE AND SALE S REGISTERS, DELIVERY CHALLAN, TRANSPORTATION DETAILS, BANK DETAILS OF PURCHASES. ALSO THE ASSESSEE FAILED TO PRODUCE THE SAID PARTIES FOR VERIFICATION BEFORE THE AO. WE FURTHER FIND THAT THE AO HAS RIGHTLY RELIED ON THE DECISION IN SIMIT P. SHETH (SUPRA) AND CONSIDERED THE VOLUNTARY ADMISSION FILED BY THE ASSESSEE VIDE SUBMISSION DATED 10.02.2016, OFFERING INCOME ON GROSS SHRI JITENDRA V. SHAH ITA NOS. 7359 & 7360/MUM/2017 5 PROFIT + VAT ON THE ALLEGED PURCHASE TO BUY PEACE OF MIND AND TO AVOID FURTHER LITIGATION. THUS THE DISALLOWANCE @ 10.84% OF TH E INFLATED PURCHASED COST MADE FROM SUSPICIOUS DEALERS WHICH COMES TO RS.17,73,730/ - IS BASED ON THE SAID ADMISSION MADE BY THE ASSESSEE. WE FIND THE DISALLOWANCE OF RS.17,73,730/ - MADE BY THE AO AS REASONABLE AND UPHOLD IT. ITA NO. 7360/MUM/2017 ASSESSME NT YEAR: 2011 - 12 7. IN AY 2011 - 12, THE FACTS ARE IDENTICAL TO AY 2010 - 11. THE DIFFERENCE IS THAT THE ASSESSEE MADE BOGUS PURCHASES OF RS.35,61,825/ - FROM 10 HAWALA DEALERS. THE OTHER DIFFERENCE IS THE AO MADE A DISALLOWANCE @ 13.60% OF THE INFLATED PURCHAS E COST MADE FROM THE SUSPICIOUS DEALERS, CONSIDERING THE VOLUNTARY ADMISSION MADE BY THE ASSESSEE VIDE SUBMISSION DATED 19.02.2016, WHEREIN HE HAD AGREED TO OFFER INCOME ON GROSS PROFIT + VAT ON ALLEGED PURCHASE. FACTS BEING IDENTICAL, AND ALSO CONSIDERI NG THE FACT THAT THE DISALLOWANCE OF RS.4,84,408/ - MADE BY THE AO IS BASED ON THE ADMISSION MADE VOLUNTARILY BY THE ASSESSEE, WE UPHOLD THE ORDER OF THE AO. 8. IN THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/01/2019. SD / - SD/ - (JOGINDER SINGH) (N.K. PRADHAN) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED: 22/01/2019 RAHUL SHARMA, SR. P.S. SHRI JITENDRA V. SHAH ITA NOS. 7359 & 7360/MUM/2017 6 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// (SR. PRIVATE SECRETARY) ITAT, MUMBAI