ITO 22(3)(6) , MUMBAI V. RAMNIKLAL K VORA (HUF) , MUMBAI

ITA 741/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8286 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 139(1); 147

Judgement Text

INTHEINCOMETAX APPELLATETRIBUNAL MUMBAI BENCHSMCMUMBAI BEFORE SHRI S. RIFAURRAHMAN(ACCOUNTANT MEMBER)AND SHRI RAVISHSOOD (JUDICIAL MEMBER) ITANO.741/MUM/2020 ASSESSMENT YEAR:2009-10 & ITANO.740/MUM/2020 ASSESSMENT YEAR:2010-11 ITO-22(3)(6), 206, 2 ND FLOOR, PIRAMAL CHAMBERS, LAL BAUGH, PAREL, MUMBAI-400012. VS. RAMNIKLAL K. BORA(HUF), PLOT 357, RN19/19, 1 ST FLOOR, SHAMJILADHA, BLDG. BHANDARKAR ROAD, MATUNGA, MUMBAI - 400019. PANNO.AAAHV 3842 H APPELLANT RESPONDENT REVENUE BY : MR. SANJAYJ. SETHI, DR ASSESSEEBY : NONE DATE OF HEARING : 02/08/2021 DATE OF PRONOUNCEMENT : 05/08/2021 ORDER PER S. RIFAURRAHMAN,A.M. THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A)-33, MUMBAI DATED 28.11.2019 FOR AYS 2009-10 & 2010-11. AS THE ISSUE INVOLVED IN THE CAPTIONED APPEALS ARE INEXTRICABLY INTERLINKED OR IN FACT INTERWOVEN AND HAVING COMMON ISSUE, THE SAME ARE THEREFORE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER.FACTSBEINGIDENTICAL WE BEGIN WITH THE AY 2009-10. RAMNIKLALK. VORA ITA NOS. 741& 740/M/2020 2 2. AT THE OUTSET, IT IS NOTICED THAT NONE APPEARED ON BEHALF OF ASSESSEE IN SPITEOFCALLSANDEVENNOAPPLICATIONFORADJOURNMENTWASMOVED.ONTHEOTHER HAND,LD.DRISPRESENTINTHECOURTANDISREADYWITHARGUMENTS.THEREFORE,WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX-PARTE WITH THE ASSISTANCEOFTHELD.DRANDTHEMATERIAL PLACEDON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURER OF READYMADE GARMENTS UNDER THE NAME AND STYLE UNIQUE CREATIONS. THE ASSESSEE FILEDHIS RETURN OF INCOME ON 15.10.2010 U/S 139(1) OF THE INCOME TAX ACT, 1961 DECLARING TOTAL INCOME OF RS.8,52,093/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) AND SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147 OF THE ACT. ACCORDINGLY, ASSESSMENT WAS COMPLETED U/S 143(3)R.W.S147OFTHEACTBYTHEAOTHEREBYMAKING100%ADDITIONONACCOUNT OF BOGUS PURCHASES. ON THE BASIS OF INFORMATION FROM THE INVESTIGATION WING REGARDINGBOGUSPURCHASESMADE BYTHE ASSESSEEFROMTHE FOLLOWINGPARTIES: SR. NO. NAMEOFTHEPARTLY AMOUNT (RS.) 1. TRICHIPURAMTRADINGP. LTD. 10,400/- 2. POOJATRADERS 3,00,062/- 3. AADESHWARENTERPRISES 3,76,475/- 4. MAYURTRADINGCO. 4,18,882/ - 5. AMIT TRADINGCO. 5,99,737/ - 6. TRADE LINK 7,28,342/- TOTAL 24,34,798/- 4. AGGRIEVEDBYTHEABOVEORDEROFAO,ASSESSEEPREFERREDAPPEALBEFORELD. CIT(A)ANDLD.CIT(A)AFTERCONSIDERINGTHE SUBMISSIONOFASSESSEE. HOWEVER, THE LD. CIT(A) AGREED WITH THE AO THAT THE ABOVE PARTIES FIGURED IN THE SALES TAX DEPARTMENTS LIST OF SUSPICIOUS DEALERS WHO ISSUE ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GOODS. HOWEVER, THE ASSESSEE HAS SHOWN ONWARDS SALES WHICH HAS NOT BEEN DOUBTED BY THE AO. BY RAMNIKLALK. VORA ITA NOS. 741& 740/M/2020 3 RELYING ON VARIOUS CASE LAW, HE REDUCED THE DISALLOWANCE @ 25% OF BOGUS PURCHASESANDPARTLYALLOWEDTHE APPEAL OFTHEASSESSEE. 5. NOW BEFORE US, THE REVENUE HAS PREFERRED APPEAL BY RAISING THE GROUNDS OF APPEALASUNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING ADDITION MADE BY THE A.O AMOUNTING RS.17,19,761/-100% OF TOTAL PURCHASE TO 25%, IGNORING THE FACT THAT THE ACTION OF THE ASSESSING OFFICER WAS BASED CREDIBLE INFORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX DEPARTMENT AND THAT THESEE,DURINGTHECOURSEOFASSESSMENTPROCEEDINGS,FAILEDTOPROVETHEGENUINENESS OFTHE PURCHASETRANSACTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ESTIMATING ADDITION ON ACCOUNT OF BOGUS PURCHASE TO 25% OF SUCH PURCHASES AS AGAINST THE ESTIMATION THE AO OF 100% OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE ALLEGED PARTIES WHOM PURCHASES ISCLAIMEDTOHAVE BEENMADEDURINGTHEYEAR. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ESTIMATING ADDITION ON ACCOUNT OF BOGUS PURCHASE TO 25% OF SUCH PURCHASES AS AGAINSTTHE ESTIMATION THEAO OF 100%OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COULD NEITHER PRODUCE THE DELIVERY CHALLANS OR THE TRANSPORT BILLS/INVOICES NOR COULD PRODUCE THE ALLEGED PARTIES FROM WHOM PURCHASESISCLAIMEDTOHAVE BEEN MADEDURING THEYEAR. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE AND IN LAW, THE ID. CIT(A) HAS ERRED INESTIMATINGADDITIONONACCOUNTOFBOGUSPURCHASE25%OFSUCHPURCHASESASAGAINST THE ESTIMATION THE AO OF 100% OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT THE SALES TAX DEPARTMENT WELL AS THE DGIT (INV.) MUMBAI DURING THEIR COURSE OF INVESTIGATIONS FOUND THE ALLEGED PARTIES BE PROVIDING ONLY ACCOMMODATION/BOGUS PURCHASE BILLS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ESTIMATING ADDITION ON ACCOUNT OF BOGUS PURCHASE TO 25% OF SUCH PURCHASES AS RAMNIKLALK. VORA ITA NOS. 741& 740/M/2020 4 AGAINST THE ESTIMATION THE AO OF 100% OF BOGUS PURCHASES WITHOUT APPRECIATING THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF N.K. PROTEINS LTD., WHEREINTHECOURTHASHELD THAT WHEN THEPURCHASESAREFROMBOGUSSUPPLIERS,THE ENTIRE PURCHASES ARE LIABLETOBE DISALLOWED. 6. THISCASE ISFILED BECAUSE ITIS COVEREDUNDERTHEEXCEPTIONPROVIDEDINPARA10(E) OF THE 'S CIRCULAR NO. 3 OF 2018 DATED 11.07.2018 AS AMENDED VIDE F.NO.279/MISC.142/2007-ITJ(PT)DATED20.08.2018. 6. CONSIDERED THE SUBMISSION OF LD. DR AND MATERIAL PLACED ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT NO DOUBT THE PURCHASES MADE FROM THE SUSPECTED PARTIES ARE NOT GENUINE. HOWEVER, THE PURCHASES ITSELF CANNOT BE DOUBTED AS RIGHTLY ADJUDICATED BY LD. CIT(A) THAT AO HAS NOT DOUBTED SALES DECLARED BY THE ASSESSEE, ONLY HE SUSPECTS THE PURCHASES. EVEN THE REVENUE RAISEDGROUNDSOFAPPEALMAINLYONTHEPURCHASESNOTBEINGGENUINE.LD.CIT(A) HAS CONSIDERED THE CORRESPONDING ONWARD SALES AND CAME TO THE DECISION. BY RESPECTFULLY FOLLOWING THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VRS. SMITH P. SHETH 356 ITR 451 (GUJ), WE ARE INCLINED TO AGREE WITH THE FINDINGSOFLD.CIT(A).THEREFORE,GROUNDSRAISEDBYTHEREVENUEARE DISMISSED. FACTS BEING IDENTICAL, OUR DECISION FOR AY 2009-10 APPLIES MUTATIS MUTANDIS TO AY2010-11. 7. IN THE RESULT,THE APPEALSFILED BYTHE REVENUE ARE DISMISSED. ORDER PRONOUNCEDINTHEOPENCOURTON 05/08/2021. SD/- SD/- ( RAVISHSOOOD ) ( S. RIFAURRAHMAN ) JUDICIALMEMBER ACCOUNTANTMEMBER MUMBAI; DATED:05/08/2021. RAMNIKLALK. VORA ITA NOS. 741& 740/M/2020 5 RAHUL SHARMA,SR. P.S. COPYOFTHEORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT,MUMBAI 6. GUARDFILE. BY ORDER, //TRUE COPY// (DY./ASSISTANTREGISTRAR) ITAT,MUMBAI