ITO 33(1)(4), MUMBAI V. DEEPAK R. BANSODE, MUMBAI

ITA 7427/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7402 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 7427 /M UM /20 18 ASSESSMENT YEAR: 2011 - 12 ITO - 33(1)(4 ), MUMBAI VS. SHRI DEEPAK R . BANSODE 17/2 19, SHUBHAM KAROTI CHS, SECTOR - 2, CHARKOP, KANDIVALI(WEST), MUMBAI, PIN - 400067 . PAN: AELPB5151N (APPELLANT) (RESPONDENT) PRESENT FOR: APPELLANT BY : R. BHOOPATI, CIT - DR RESPONDENT BY : NONE DATE OF HEARING : 06 .01.2020 DATE OF PRONOUNCEMENT : 31 .01 . 20 20 O R D E R PER RAJESH KUMAR , ACCOUNTANT MEMBER: THE PRESENT APPE AL H AS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 10.09.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFER RED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011 - 12 . 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS AGAINST THE ORDER OF LD. CIT(A) RESTRICTING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF RS. 12.05% OF THE TOTAL BOGUS PURCHASES AS AGAINST 25% ADDED BY THE AO . ITA NO.7427/MUM/2018 SHRI DEEPAK R. BANSODE 2 3. AT THE TIME OF HEARING NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED FOR ATTENDING HEARING NO R ANY ADJOURNMENT APPLICATION WAS RECEIVED DESPITE OF SERVING OF NOTICE THROUGH RPAD . T HEREFORE, WE ARE PROCEEDING TO DECIDE THIS APPEAL ON MERITS AFTER HEARING THE LD. DR. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 22.08.2011 DECLARING TOTAL INCOME OF RS.10,29,510/ - . THEREAFTER, THE AO DURING THE COURSE OF ASS ESSMENT P ROCEEDINGS RECEIVED INFORMATION FROM DGIT(INVESTIGATION), MUMBAI THAT THE ASSESSEE HAS MADE SOME PURCHASES FROM HAWLA/ BOGUS PART Y M/S MATOSHREE TRADERS DURING THE FINANCIAL Y E AR 2010 - 11 AMOUNTING TO RS.7,05,536/ - WHICH WAS DECLARED A HAWALA DEALER BY THE SALES TAX DEPARTMENT, MUMBAI, GOVT. OF MAHARASHTRA. THE C ASE WAS REOPENED U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 DATED 02.01.16. DURING THE COURSE OF HEARING, THE ASSESSEE WAS CALLED UPON TO PROVE THE GENUINENESS OF THE PURCHASES THROUGH SHOW - CAUSE NOTICE DATED 24.10.2016 WHICH WAS REPLIED BY THE ASSESSEE BY FILING THE COPIES OF BILLS, VOUCHERS, PAYMENT DETAILS ETC. THE AO HOWEVER WAS NOT FINDING THE CONTENTIONS OF THE ASSESSEE AS TENABLE AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO PRO VE THE GENUINENESS OF THE PURCHASES AND THUS FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH REPORTED IN 356 ITR 451 AND IN THE CASE OF M/S BHOLANATH POLY FAB. P. LTD. REPORTED IN 355 ITR 290, THE AO APPLIED T HE GP RATE @25% ON THE SAID BOGUS PURCHASES TO BRING THE PROFIT ELEMENT TO TAX BY FRAMING ASSESSMENT U/S 143(3) R.W.S. 147 DATED 29.11.2016. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5 0 % WHICH COMES TO RS.88,317/ - A FTER CONSIDERING ITA NO.7427/MUM/2018 SHRI DEEPAK R. BANSODE 3 THE SUBMISSIONS AND CONTEN TIONS OF THE ASSESSEE AND THUS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AFTER HEARING THE LD. DR AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE UNDISPUT ED FACTS ARE THAT THE ASSESSEE W AS BENEFICIARY OF HAWALA PURCHASE ENTRIES TO THE TUNE OF RS.7,06,536/ - . THOUGH THE ASSESSEE HAS TRIED TO SUBSTANTIATE AND PROVE THE GENUINENESS OF THE PURCHASES BUT THE AO NOT BEING CONVINCED SOUGHT TO ASSESS THE PROFIT ELEMENT ON THE SAID BOGUS PURCHASES ON T HE GROUND THAT THESE PURCHASES WE RE MADE FROM HAWALA DEALER WHO ARE ENGAGED IN ISSUING BOGUS PURCHASE BILLS ONLY WITHOUT DOING ANY ACTUAL BUSINESS AND THUS APPLIED A RATE OF 25% ON THE BOGUS PURCHASES THEREBY MAKING AN ADDITION OF RS.1,76,384/ - BY FOL LOWING THE DECISION OF CIT VS. SIMIT P. SHETH AND M/S BHOLANATH POLY FAB. P. LTD. (SUPRA) . PERTINENT TO NOTE THAT THE CORRESPONDING SALE WERE NOT DOUBT ED. T HE LD. CIT(A) REDUCED THE SAID ADDITION TO 88,317/ - BY APPLYING 12.5% BOGUS PURCHASES AFTER TAKING INTO ACCOUNT THE CONTENTIONS OF THE ASSESSEE. WE DO NOT FIND A N Y REASON TO INTERFERE THE APPELLATE ORDER AS LD CIT(A) HAS ONLY APPLIED REASONABLE RATE. WE ARE , THEREFORE , INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE WHICH IS PURSUANT TO T HE DECISION OF THE VARIOUS HIGH COURTS AND TRIBUNALS BY DISMISSING THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01 . 20 20 . SD/ - SD/ - ( SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31 .01 . 2020 . RS , SR. P.S. ITA NO.7427/MUM/2018 SHRI DEEPAK R. BANSODE 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED , MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.