ITO 17(2)(4), MUMBAI V. MUKESH DALICHAND SHETH, MUMBAI

ITA 7467/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7398 (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: 2011-2012
• Appeal Filed On: 28-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ATTENDING HEARING NO R ANY
• 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.7467 /M UM /20 18 ASSESSMENT YEAR: 2011 - 12 ITO - 1 7(2)( 4 ), MUMBAI VS. MUKESH DALICHAND SHETH 7/12 , 1 ST FLOOR, NAGDEVI STREET, MUMBAI, PIN - 400003 . PAN: ADCPP6636J (APPELLANT) (RESPONDENT) PRESENT FOR: APPELLANT BY :R. BHOOPATHI, CIT RESPONDENT BY : NONE DATE OF HEARING : 06 .01.2020 DATE OF PRONOUNCEM ENT : 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 11.10.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011 - 12 . 2. THE ONLY ISSUE RAISED BY THE REVENUE IN GROUNDS OF APPEAL IS AGAINST THE ORDER OF CIT(A) RESTRICTING THE ADDITION TO 6% AS AGAINST 12.50% DONE BY THE AO. 3. AT THE TIME OF HEARING NEITHER ASSESSEE NOR HIS AUTHORIZED REPRESENT ATIVE APPEARED FOR ATTENDING THE HEARING NO R ANY ITA NO.7467/MUM/2018 MUKESH DALICHAND SHETH 2 ADJOURNMENT APPLICATION WAS RECEIVED DESPITE SERV I CE OF NOTICE THROUGH RPAD . WE, THEREFORE, ARE PROCEEDING TO DECIDE THIS APPEAL ON MERITS AFTER HEARING THE LD. DR. 3. THE FACTS IN BRIEF ARE THAT THE ASSE SSEE FILED HIS RETURN OF INCOME ON 27.09.2011 DECLARING TOTAL INCOME OF RS.2,82,681/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER THE AO RECEIVED DGIT (INV.), MUMBAI THAT THE ASSESSEE IS BENEFICIARY OF HAWALA PURCHASE ENTRIES TO THE TUNE OF RS.13 ,40,412/ - AND ACCORDINGLY REASONS WERE RECORDED AND NOTICE U/S 148 DATED 13.03.2015 WAS ISSUED . THE AO ISSUED SHOW - CAUSE NOTICE TO THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASE FAILING WHICH WHY THE SAME SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY THE ASSESSEE FILED A COP IES OF BILLS, VOUCHERS AND OTHER EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHASES. HOWEVER THE REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO. ULTIMATELY, THE AO OBSERVED THAT THE ASSESSEE HAS MA DE RESPECTIVE SALES AND THEREFORE THE ONLY PRESUMPTION TO TH IS EFFECT WAS THAT THE ASSESSEE HAS MADE PURCHASE S FROM GREY MARKET AT LOWER RATES AND 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 12.5% ON THE SAID BOGUS PURCHASES BY MAKING AN ADDITION OF RS.1,67,552/ - BY FRAMING ASSESSMENT U/S 143(3) R.W.S. 147 DATED 27.11.2015. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE BY RESTRICTING THE ADDITION @ 6% ON THE BOGUS PURCHASES AFTER TAKING INTO ACCOUNT THE CONTENTIONS AND SUBMISSIONS AS MADE BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. 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 ITA NO.7467/MUM/2018 MUKESH DALICHAND SHETH 3 RS.13,40,412/ - . THOUGH THE ASSESSEE HAS TRIED TO SUBSTANTIATE AND PROVE THE GENUINENESS OF THE PURCHASES , YET 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 12.5% ON THE BOGUS PURCHASES THEREBY MAKING AN ADD ITION OF RS.1,76,384/ - BY FOLLOWING THE DECISION OF M/S BHOLANATH POLY FAB. P. LTD. (SUPRA) BY NOT DOUBTING THE GENUINENESS OF THE SALES . T HE LD. CIT(A) REDUCED THE ADDITION TO 13,40,412/ - BY APPLYING 6 % ON BOGUS PURCHASES AFTER TAKING INTO ACCOUNT THE C ONTENTIONS OF THE ASSESSEE WHICH APPEARS TO BE CORRECT AND REASONABLE . WE ARE THEREFORE INCLINED TO UPHOLD THE ORDER 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 COURT ON 31 .01 . 20 20 . SD/ - SD/ - ( SAKTIJIT DEY) (RAJESH KUMAR) JUDICIA L MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31 .01 . 2020 . RS , SR. P.S. 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