SUNIL PRAVINCHANDRA JOSHI, MUMBAI V. ITO 25(1)(2), MUMBAI

ITA 7412/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9837 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: U C BOTHRALD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.7412/MUM/2016 SUNIL PRAVINCHANDRA JOSHI ASSESSMENT YEAR: 2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.7412/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) SUNIL PRAVI N CHANDRA JOSHI B-71,BUILDING NO.4 7 TH FLOOR, RUSTOM JEE REGENCY DAHISAR (W) MUMBAI-400 068 / VS. INCOME TAX OFFICER 25(1)(2) PRATYAKSHKAR BHAVAN BANDRA-KURLA COMPLEX MUMBAI-400 051 ./ ./ PAN/GIR NO. ABXPJ-1406-D ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) REVENUE BY : N.HEMALATHA, LD. DR ASSESSEE BY : U.C.BOTHRA,LD.AR / DATE OF HEARING : 20/03/2018 / DATE OF PRONOUNCEMENT : 23/03/2018 /ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-44 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-44/ITO32(3)(4)/ITA-05/14-15 DATED 2 ITA NO.7412/MUM/2016 SUNIL PRAVINCHANDRA JOSHI ASSESSMENT YEAR: 2009-10 10/10/2016 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF AL LEGED BOGUS PURCHASES. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER-25(1)(2), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 31/10/2014 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.7.25 LACS AFTER ADDITION OF RS.2.70 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.4.55 LACS FILED BY THE ASSESSEE ON 26/09/2009. T HIS QUANTUM ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS THE SOLE SUBJECT MATTER OF THIS APPEAL. THE ORIGINAL RETURN FILED BY THE ASSESSEE W AS PROCESSED U/S 143(1) WHERE THE ASSESSEE HAS REFLECTED PURCHASE AND SALES OF RS.80.74 LACS AND RS.96.65 LACS RESPECTIVELY DURING THE IMPUGNED AY. THE LEGAL GROUNDS RAISED BEFORE US HAS NOT BEEN PRESSED BEFORE US AND THEREFORE, THE SAME STANDS DISMISSED IN LIMINE. THE LD. AUTHORIZED COUNSEL FOR ASSESSEE [AR] HAS CONTESTED THE QUANTUM ADDITIONS ONLY ON THE MER ITS. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSE E BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF CONSUMABLE GOODS UNDER PROPRIETORSHIP CONCERN NAMELY YASH TRADING COMPANY WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR IMPUGNED AY. THE REASS ESSMENT PROCEEDINGS WERE INITIATED PURSUANT TO RECEIPT OF C ERTAIN INFORMATION FROM SALES TAX DEPARTMENT AND DGIT (INVESTIGATION) REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS WITHOUT DOING ANY ACTUAL BUSINESS AN D IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS P URCHASE BILLS TO THE TUNE OF RS.21,61,172/- FROM SIX SUCH DEALERS AS PER THE FOLLOWING DETAILS:- 3 ITA NO.7412/MUM/2016 SUNIL PRAVINCHANDRA JOSHI ASSESSMENT YEAR: 2009-10 SL. NO. TIN NO. NAME OF THE PARTY AMOUNT(RS.) 1 27710363744V ATLAS ENTERPRISE 5,91,902 2 27280504194V MANAV IMPEX 2,54,592 3 27490507134V CARBON ENTERPRISES 2,53,094 4 27410583032V TARA ENTERPRISES 1,52,942 5 27500537441V SKAND INDUSTIRES 44,491 6 27790554111V YASH IMPEX 8,64,151 TOTAL 21,61,172 CONSEQUENTLY, STATUTORY NOTICE U/S 148 DATED 01/03/ 2014 WAS ISSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY NOTICES U/S 143(2) A ND 142(1). 2.2 THE ASSESSEE IN SUPPORT OF THE TRANSACTIONS, SU BMITTED PURCHASE REGISTER, SALE REGISTER AND INVOICE CUM CHALLANS AND SUBMITTED THAT THE PAYMENTS WERE MADE BY THE ASSESSEE TO THE SAID SUPP LIERS THROUGH BANKING CHANNELS. HOWEVER, NOTICES U/S 133(6) ISSUE D BY LD. AO TO CONFIRM THE TRANSACTIONS REMAINED UN-SERVED AND RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT . FINALLY, NOT CONVINCED, LD. AO, RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN SIMIT P. SHETH [356 ITR 451], MADE ESTIMATED ADDITIONS @ 12.5% OF ALLEGED BOGUS PURCHASES WHICH CAME TO RS.2,70,147/-. THE SAME, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY, IS BEING CONTESTED BEFORE US. 3. THE LD. AR REITERATING THE SUBMISSIONS CONTENDED THAT THE GOODS PURCHASED BY THE ASSESSEE HAS SUBSEQUENTLY BEEN SOL D TO THE SOLE CUSTOMER OF THE ASSESSEE AND THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF GOODS AND THEREFORE, THE IMPUGNED ADDIT IONS WERE NOT JUSTIFIED. OUR ATTENTION IS FURTHER DRAWN TO GROSS PROFIT RATE REFLECTED BY THE ASSESSEE OVER PAST SEVERAL YEARS. RELIANCE HAS BEEN PLACED ON SEVERAL 4 ITA NO.7412/MUM/2016 SUNIL PRAVINCHANDRA JOSHI ASSESSMENT YEAR: 2009-10 JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE CONTENTIO N THAT THE ADDITIONS COULD NOT BE MADE MERELY DUE TO NON-SERVICE OF NOTI CE U/S 133(6). PER CONTRA , LD. DR SUBMITTED THAT A FAIR ESTIMATION OF THE AD DITION HAS ALREADY BEEN MADE BY THE LOWER AUTHORITIES AND THEREFORE, T HE SAME WAS QUITE REASONABLE AND JUSTIFIED. 4. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF ACTUAL MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITY. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY PARTY FOR CONFIRMATION OF THE ACCOUNT AND NOTICES SENT U/S 13 3(6) ELICITED NO RESPONSE. THE PERUSAL OF TAX AUDIT REPORT REVEALS THAT THE ASSESSEE WAS NOT MAINTAINING ADEQUATE STOCK RECORDS. ALL THESE F ACTORS CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SIT UATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEM ENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LOWER AUTHORITI ES HAVE RIGHTLY DONE SO. 5. SO FAR AS THE SUBMISSIONS OF LD. AR ARE CONCERNE D, WE FIND THAT COMPLETE ONUS TO SUBSTANTIATE THE IMPUGNED PURCHASE S WITH COGENT 5 ITA NO.7412/MUM/2016 SUNIL PRAVINCHANDRA JOSHI ASSESSMENT YEAR: 2009-10 EVIDENCES RESTED ON THE ASSESSEE. THE LD. AR ALSO S TRESSED THE POINT THAT THERE WAS NO ATTEMPT TO INFLATE THE PURCHASES SINCE THE GOODS WERE PROCURED AT MORE OR LESS AT THE SAME RATE AS PURCHA SED FROM OTHER PARTIES. WE DO NOT AGREE WITH THE SAME SINCE IT IS NOT THE C ASE THAT RATE OF GOODS ARE IN DISPUTE RATHER HERE THE PURCHASES, ITSELF, A RE UNDER DISPUTE. SIMILARLY, WE FIND THAT THE CASE LAWS BEING RELIED UPON BY LD. AR HAS BEEN RENDERED ON FACTUAL MATRIX OF THE PARTICULAR CASE AND HAVE N O UNIVERSAL APPLICATION AND THEREFORE, COULD NOT HELP ASSESSEE IN ANY MANNE R. 6. COMING TO FACTUAL MATRIX OF THE CASE, IT IS EVID ENT FROM PURCHASE SUMMARY FILED BY THE ASSESSEE THAT IT HAS NOT MADE ANY PUR CHASES FROM THE ENTITY NAMELY MANAV IMPEX AND THEREFORE, THE ADDITIONS WITH RESPECT TO THIS PARTY COULD NOT BE SUSTAINED. FURTHER, THE GRO SS PROFIT RATE OF 12.5% AS ESTIMATED BY LOWER AUTHORITIES, IN OUR OPINION, IS QUITE REASONABLE ON FACTUAL MATRIX AND DO NOT REQUIRE ANY INTERFERENCE ON OUR PART. THEREFORE, THE IMPUGNED ADDITIONS ARE WORKED OUT @12.5% OF RS. 19,06,580/-, BEING PURCHASES MADE FROM THE REMAINING FIVE PARTIES. THE SAME COMES TO RS.2,38,322/-. THE STAND OF LD. FIRST APPELLATE AUT HORITY STANDS MODIFIED TO THAT EXTENT. 6 ITA NO.7412/MUM/2016 SUNIL PRAVINCHANDRA JOSHI ASSESSMENT YEAR: 2009-10 7. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH , 2018. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23.03.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. $, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI