RAJIV I. GANDHI, MUMBAI V. ITO 25(3)(3), MUMBAI

ITA 7418/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1007 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: RAJESH B GUPTE
• Keywords: Bogus purchase

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL IBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAVISH SOOD, JUDICIAL MEMBER ./I.T.A./7418 & 7419/MUM/2016 , /ASSESSMENT YEAR: 2009-10 &2010-11 RAJIV I. GANDHI 4, BAJAJ SOCIETY, BAJAJ ROAD VILE PARLE (W),MUMBAI-400 057. PAN:AADPG 3967 F VS. INCOME TAX OFFICER-25(3)(3) MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI V. VIDHYADHAR -DR ASSESSEE BY: SHRI RAJESH B. GUPTE / DATE OF HEARING: 09/11/2017 / DATE OF PRONOUNCEMENT: 03/01/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA, AM - CHALLENGING THE ORDERS,DATED 29/04/2016 OF CIT(A)-3 7,MUMBAI THE ASSESSEE HAS FILED THE APPEALS FOR THE ABOVE MENTIONED ASSESSMENT YEARS (A Y.S). ASSESSEE,AN INDIVIDUAL,IS ENGAGED IN THE BUSINESS OF RESELLING IN PHARMACEUTICALS, BU LK DRUGS, CHEMICAL, SOLVENTS, POULTRY FEEDS ETC.UNDER A PROPRIETARY CONCERN M/S.CHEMIPACK CORP ORATION. HE FILED HIS RETURN OF INCOME ON 23/09/2009 AND 25/09/2010 DECLARING TOTAL INCOME AT RS.14,60,130/- AND AT RS.16.07 LAKHS FOR AY.S 2009-10 AND 2010-11 RESPECTIVELY. THE AO C OMPLETED THE ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT,ON 31/03/2015 AND ON 21/03/20 16 DETERMINING HIS INCOME AT RS.1.43 CRORES AND RS.2.31 CRORES FOR THE AY.S 2009-10 AND 2010-11 RESPECTIVELY. 2. EFFECTIVE GROUND OF APPEAL,FOR BOTH THE YEARS,IS AB OUT DISALLOWANCE CONFIRMED BY THE FIRST APPELLATE AUTHORITY(FAA)ON ACCOUNT OF BOGUS PURCHAS ES @ 12.5%.IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE WAS DEALT BY THE TRIBUN AL WHILE DECIDING THE APPEAL FOR THE AY. 2008-09(ITA/7417/MUM/2016,DTD.09/06/2017).WE ARE RE PRODUCING THE RELEVANT PORTION OF THE SAID ORDER OF THE TRIBUNAL AND IT READS AS UNDE R: 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER OF CIT(A) RESTRICTING THE ADDITION AT 12.5% OF BOGUS PURCHASE BEING CROSS PRO FIT ESTIMATED ON BOGUS PURCHASE. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF RETAIL TRADING OF PHARMACEUTICALS. THE AO RECEIVED INFORMATION FROM D GIT (INVESTIGATION) MUMBAI, WHO IN TURN RECEIVED INFORMATION FROM SALES TAX DEPARTMENT , MAHARASHTRA THAT ASSESSEE IS RECEIVING THE ACCOMMODATION ENTRY / BOGUS PURCHASE / BOGUS BI LLS OF PURCHASE FROM CERTAIN PARTIES, WHO ARE INDULGING IN ISSUE OF BOGUS BILLS WITHOUT DELIV ERY OF ACTUAL GOODS. THE ASSESSEE TO PROVE THESE PURCHASE AS GENUINE, PRODUCES COPIES OF THE L EDGER ACCOUNT OF THE PARITIES, COPIES OF 7418 & 19/M/16 RAJIV I. GANDHI 2 SALES AND PURCHASE REGISTER, COPIES OF BANK STATEME NT HIGHLIGHTING THE PAYMENTS MADE TO THESE PURCHASE PARTIES. THE AO NOTED THAT THE ASSESSEE HA S NOT SUBMITTED THE STOCK REGISTER, DELIVERY CHALLAN, TRANSPORT RECEIPTS MENTIONING TRU CK NO/ LORRY NO, OCTOROI RECEIPT ETC., TO SUBSTANTIATE THE CLAIM OF PURCHASE AS GENUINE. FINA LLY, THE AO HELD THAT THE PURCHASE MADE FROM APPLAUSE CHEMICALS AT RS. 4,38,490/- AND AJANT A ENTERPRISES AT RS. 15,85,168/- AS BOGUS PURCHASES. ACCORDINGLY, HE DISALLOWED THE SAME AND ADDED TO THE RETURN OF INCOME OF THE ASSESSEE. THE TOTAL BOGUS PURCHASE COMES TO RS. 25, 23,658/-. AGGRIEVED, ASSESSEE PREFERRED THE APPEAL BEFORE CIT(A), WHO CONSIDERING THE ISSUE RESTRICTED THE DISALLOWANCE BY APPLYING GROSS PROFIT RATE @ 12.5% BY OBSERVING IN PARA 6.7 AS UNDER: - XXXXX 4. THE CIT(A) RESTRICTED THE ADDITION AT RS. 2,52,957/ -. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 5. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. NOW, BEFORE ME, ASSESSEE CONTENDED THAT ONLY PROFIT ELEMENT APPLIED BY CIT(A) IS HIGHER AS THE ASSESSEE DEALS IN THE BUSINESS OF RETAIL TRADIN G OF PHARMACEUTICALS. THE LEARNED COUNSEL BEFORE ME, MADE SUBMISSIONS THAT WHATEVER GP HAS BE EN DECLARED AND HAS ALREADY BEEN INCLUDED AS GP IN BOOKS OF ACCOUNT ON THE SALES OF THE BOGUS PURCHASE IS TO BE REDUCED. ACCORDINGLY, HE REQUESTED FOR REDUCTION IN PROFIT R ATE. I HAVE CONSIDERED THE ISSUE AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND REASONABLE PROFIT RATE OF 10% WILL MEET THE END OF JUSTICE FOR THE REASON THAT THE ASSESSEE HAS ALREADY DECLARED PROFIT ELEMENT ON THE SALE MADE OUT OF BOGUS PURCHASES. ACCORDINGLY, I DI RECT THE AO TO RE-COMPUTE INCOME AFTER APPLYING PROFIT RATE @ 10% OF THE BOGUS PURCHASE AN D APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. RESPECTFULLY,FOLLOWING THE ABOVE ORDER WE DIRECT TH E AO TO RESTRICT THE PROFIT RATE AT 10% OF THE BOGUS PURCHASES FOR BOTH THE YEARS.EFFECTIVE GR OUNDS OF APPEAL FOR BOTH THE AY.S.STAND DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,BOTH THE APPEALS,FILED BY THE AS SESSEE,STAND PARTLY ALLOWED. !' !#$ . ORDER PRONOUNCED I N THE OPEN COURT ON 3 RD JANUARY, 2018. % & 03 , 2018 SD/- SD/- ( (( ( /RAVISH SOOD) ( !'%( / RAJENDRA) % )* / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 03.01.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR I BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.