ITO 32(3)(1), MUMBAI V. RAMESH K. SOLANKI, MUMBAI

ITA 7440/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7405 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 143(1); 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. 7440 /M UM /20 18 ASSESSMENT YEAR: 2009 - 10 ITO - 32(3 )(1), MUMBAI VS. RAMESH K. SOLANKI B - 2/1/2, DEVKI NAGAR CHS LTD. EKSAR ROAD, BORIVALI WEST, MUMBAI, PIN - 400092 . PAN: AGGPD6265J (APPELLANT) (RESPONDENT) PRESENT FOR: APPELLANT BY : R. BHOOPATI, CIT - DR RESPONDENT BY : NONE DATE OF HEARING : 06 .01.2 020 DATE OF PRONOUNCEMENT : 31 .01 . 20 20 O R D E R PER RAJESH KUMAR , ACCOUNTANT MEMBER: THE PRESENT APPE AL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 18.09.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS T HE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009 - 10 . 2. THE ONLY ISSUE RAISED BY THE REVENUE IN GROUNDS OF APPEAL IS AGAINST THE ORDER OF CIT(A) RESTRICTING THE ADDITION TO RS. 2,87,584/ - BEING 12.50% THE BOGUS PURCHASES AS AGAINST 15 % I.E. 3,45,100 / - BY THE A O . ITA NO.7440/MUM/2018 RAMESH K. SOLANKI 2 3. AT THE TIME OF HEARING NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED FOR ATTENDING THE HEARING NO R ANY ADJOURNMENT APPLICATION WAS RECEIVED DESPITE SERVI CE OF NOTICE THROUGH RPAD . T HEREFORE, WE ARE PROCEEDING TO DECIDE THIS APPE AL ON MERITS AFTER HEARING THE LD. DR. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 22.09.2009 DECLARING TOTAL INCOME OF RS.2,37,370/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER THE AO RECEIVED INFORMATION FROM DGIT (INV.), MUMBAI THAT THE ASSESSEE IS BENEFICIARY OF HAWALA PURCHASE ENTRIES TO THE TUNE OF RS.23,00,670/ - AND ACCORDINGLY REASONS WERE RECORDED AND NOTICE U/S 148 DATED 11.03.2014 WAS ISSUED . THE AO ISSUED SHOW - CAUSE NOTICE TO THE ASSESSEE TO PROVE THE GEN UINENESS OF THE PURCHASE S AND AS TO WHY THE SAME SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE FAILING TO PROVE THE GENUINENESS . ACCORDINGLY THE ASSESSEE FILED COP IES OF BILLS, VOUCHERS AND OTHER EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHAS ES. HOWEVER THE REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO. THE AO OBSERVED THAT THE ASSESSEE HAS MADE RESPECTIVE SALES AND THEREFORE THE ONLY PRESUMPTION TO THIS EFFECT WAS T HAT THE ASSESSEE HAS MADE PURCHASE FROM GREY MARKET AT LOWER RATES A ND THUS AFTER RELYING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOLANATH PLY FAB PVT. LTD. (2013) 355 ITR 290 APPLIED THE RATE OF 15% ON THE SAID BOGUS PURCHASES THERE BY MAKING AN ADDITION OF RS.3,45,100/ - BY FRAMING ASSESSMENT U/S 143(3) R.W.S. 147 DATED 07.11.2014. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION @12.5% ON THE BOGUS PURCHASES AFTER TAKING INTO ACCOUNT THE CONTENTIONS AND ITA NO.7440/MUM/2018 RAMESH K. SOLANKI 3 SUBMISSIONS AS MADE BY TH E ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. HENCE THE REVENUE IS IN APPEAL BEFORE US. 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 HAW ALA PURCHASE ENTRIES TO THE TUNE OF RS.23,00,670/ - . THOUGH THE ASSESSEE HAS TRIED TO SUBSTANTIATE AND PROVE THE GENUINENESS OF THE PURCHASES BUT THE AO SOUGHT TO ASSESS THE PROFIT ELEMENT ON THE SAID BOGUS PURCHASES ON T HE GROUND THAT THESE PURCHASES WE RE MADE FROM HAWALA DEALER S WHO WE RE ENGAGED IN ISSUING BOGUS PURCHASE BILLS AND THUS APPLIED A RATE OF 15% ON THE BOGUS PURCHASES THEREBY MAKING AN ADDITION OF RS. 3,45,100 / - BY FOLLOWING THE DECISION OF M/S BHOLANATH POLY FAB. P. LTD. (SUPRA) WITHOUT DOUBT ING THE GENUINENESS OF THE SALES . THE LD. CIT(A) REDUCED THE SAID ADDITION TO 2,87,584/ - BY APPLYING 12.5% BOGUS PURCHASES AFTER TAKING INTO ACCOUNT THE CONTENTIONS OF THE ASSESSEE WHICH APPEAR TO BE REASONABLE . WE ARE , THEREFORE , INCLINED TO UPHOLD THE OR DER OF THE LD. CIT(A) ON THIS ISSUE WHICH IS IN CONSONANCE WITH THE 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 COUR T 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.7440/MUM/2018 RAMESH K. SOLANKI 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.