Appeal details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 0607 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-02-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2010-2011
Appeal Filed On
20-12-2016
Judgement Text
P A G E | 1 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI G.S.PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 7484/MUM/2016 ( / ASSESSMENT YEAR: 2010 - 11) PRAVEEN KUMAR GUPTA 9/41 SHAM NIWAS, BEHIND BENZER SHOWROOM, BHULABHAI DESAI ROAD MUMBAI - 400 026 / VS. ITO 20(2)(5) R. NO. 208, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI - 400 012 ./ ./ PAN/GIR NO. AACPG3961A ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI HARI S. RAHEJA, A .R / RESPONDENT BY : SHRI. M.V. RAJGURU, SR.D.R / DATE OF HEARING : 30/01 /201 8 / DATE OF PRONOUNCEMENT : 02 /02 /201 8 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 32, MUMBAI, DATED 28.11 .2016, WHICH IN ITSELF ARISES FROM THE ASSESSMENT FRAMED BY THE A.O U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED P A G E | 2 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) 29.02.2016. THE ASSESSEE AS SAILING THE ORDER PASSED BY THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN REOPENING THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT, 1961. THE APPELLANT SUBMITS THAT THE ASSESSMENT WAS NOT VALIDLY REOPENED UNDER SECTION 147. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE DISALLOWANCE BY ADOPTING 4.60% OF PURCHASES OF RS.9,02,71,220/ - AND THUS CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.41,52,476/ - . 3. YOUR AP PELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER DELETE AND/OR MODIFY THE ABOVE GROUND OF APPEAL ON OR BEFORE THE FINAL DATE OF HEARING OF THIS APPEAL PETITION. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF TRADING IN ALL KINDS OF IRON & STEEL SHEETS UNDER THE NAME AND STYLE OF M/S HARYANA STEEL INTERNATIONAL HAD E - FILED HIS RETURN OF INCOME FOR A.Y. 2010 - 11 ON 04.10.2010, DECLARING AN INCOME OF RS. 13,89,670/ - . THE DIRECTOR GENERAL OF INCOME TAX (INV.), MU MBAI, [ FOR SHORT DGIT(INV.) ] WHO WAS IN RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, MAHARASHTRA, IN RESPECT O F VARIOUS SUSPICIOUS PARTIES WHICH WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT DOING ANY ACTUAL BUSINESS , SHARED THE SAME WITH THE A.O . THE A.O WAS INFORMED BY THE DGIT(INV.) THAT THE DETAILS GATHERED BY THE SALES TAX DEPARTMENT REVEALED THAT THE ASSESSEE HAD CARRIED OUT BOGUS PURCHASES FROM THE FOLLOWING HAWALA PARTY: - THE A.O ON THE BASIS OF THE AFORESAID INFORMATION REOPENED THE CASE OF THE ASSESSEE AND ISSUED A NOTICE U/S 148 ON 07.03.2015 . THE SR. NO. NAME OF THE PARTY FINANCIAL YEAR AMOUNT (R S.) 1. M/S MAIRU ENTERPRISES 2009 - 10 9,02,71,220/ - P A G E | 3 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) ASSESSEE IN RESPONSE TO THE SAID NOTICE FILED A LETTER DATED. 04.06.2015 AND REQUESTED THAT HIS ORIGINAL RETURN OF INCOME FILED ON 04.10.2010 MAY BE TREATED AS A RETURN OF INCOME FILED IN COMPLIANCE TO THE NOTICE ISSUED U/S 148 OF THE ACT . THE A.O ACCE PTED THE REQUEST OF T HE ASSESSEE AND ISSUED NOTICES U /SS. 143(2)/142(1) TO THE ASSESSEE. 3. THE A.O IN THE COURSE OF THE ASSESSMENT PROCEEDINGS CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE PURCHAS ES MADE FROM M/S MAIRU ENTERPRI SE. THE AS SESSEE IN COMPLIANCE TO THE DIRECTIONS OF THE A.O FURNISHED THE COPIES OF BILLS IN RESPECT OF THE PURCHASES MADE FROM THE AFORESAID PARTY, COPY OF THE LEDGER ACCOUNT AND UNSIGNED DELIVERY CHALLANS. HOWEVER, THE ASSESSEE FAILED TO PLACE ON RECORD THE PURCHA SE REGISTER, LORRY RECEIPTS, TRANSPORTATION DETAILS ETC. TO PROVE THE GENUINENESS OF THE PURCHASE TRANSACTIONS. THE ASSESSEE FURTHER AVERRED BEFORE THE A.O THAT THE GENUINENESS OF THE PURCHASES MADE FROM THE AFORESAID PARTY COULD BE GATHERE D FROM THE VERY FACT THAT THE PAYMENT OF THE PURCHASE C ONSIDERATION WAS MADE TO THE SUPPLIER PA RTY, VIZ. M/S MAIRU ENTERPRISES ONLY VIDE CHEQUES. THE ASSESSEE FURTHER IN ORDER TO D RIVE HOME HIS CONTENTION THAT HE HAD MADE GENUINE PURCHASES FROM THE AFORESAID PARTY, PLACED ON RECORD AN AFFIDAVIT OF SH. RAMESH P. BAFNA, PROP. M/S MAIRU ENTERPRISES. IN THE AFFIDAVIT IT WAS DEPOSED BY THE SUPPLIER PARTY THAT THOUGH HE HAD ISSUED BILLS TO SOME PARTIES WITHOUT ACTUAL DELIVERY OF GOODS, HOWEVER, ALL THE TRANSACTIONS MADE WITH THE ASSESSEE WERE GENUINE. THE A.O IN ORDER TO VERIFY THE GENUINENESS OF THE AFFIDAVIT ISSUED A LETTER TO M/S MAIRU ENTERPRISES, CALLING UPON IT PRODUCE THE COPY AND THE ORIGINAL AFFIDAVIT. THOUGH INITIALLY NO COMPLIANCE WAS MADE BY THE AFORESAID PARTY, HOWEVER, WHEN THE A.O ISSUED SUMMONS U/S 131 OF THE ACT, SH. RAMESH P. BAFNA, PROPRIETOR OF THE SAID CONCERN, VIZ. M/S MAIRU ENTERPRISES APPEARED BEFORE THE A.O AND HIS STATEMENT WAS RECORDED P A G E | 4 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) ON OATH U/S 131 OF THE ACT. SH. RAMESH P. BAFNA THOUGH ACCEPTED THAT HE HAD G I VEN AN AFFIDAVIT TO THE ASSESSEE, HOWEVER, ON BEING DIRECTED TO PRODUCE THE ORIGINAL AFFIDAVIT, SUBMITTED THAT AS THE AFFIDAVIT WAS PREPARED BY THE ASSESSEE, THEREFORE, HE WAS NEITHER HAVING THE ORIGINAL COPY OR THE XEROX OF THE SAME. THAT ON BEING CONFRONTED WITH THE CONTENTS OF THE AFFIDAVIT SH. RAMESH P. BAFNA EXPRESSED HIS UNAWARENESS OF THE SAME, FOR THE REASON THAT THE SAME WAS PREPARED BY THE ASSESSEE. SH. RAMESH P. BAFNA SUBMIT TED BEFORE THE A.O THAT HE HAD MAD E PURCHASES FROM CERTAIN PARTIES THROUGH BROKERS AT A RATE LOWER THAN TH E PREVAILING MARKET PRICE, HOWEVER, SUBSEQUENTLY HE LEARNT THAT HIS PURCHASES WERE BACKED BY BOGUS BILLS AS THE SUPPLIER PARTIES HAD FAILED TO PAY THE DUES WITH THE SALES TAX DEPARTMENT. IT WAS SUBMITTED BY HIM THAT THOUGH HE HAD CARRIED OUT ACTUAL SALE OF THE GOODS TO VARIOUS PARTIES INCLUDING THE ASSESSEE, HOWEVER, THE SAME HAVING BEEN PROCURED FROM THE OPEN/GREY MARKET WERE SOLD AT A RATE LOWER THA N THAT MENTIONED IN BILLS. SH. RAMESH P. BAFNA FURTHER CONFIRMED THAT HE HAD ISSUED BOGUS BILLS TO ALL THE PARTIES INCLUDING THE ASSESSEE AND STATED THAT HE HAD ACTUALL Y SUPPLIED THE GOODS TO THE ASSESSEE CONCERN. THE A.O DELIBERATING ON THE AFORESAID FACTUAL POSITION CONCLUDED THAT THOUGH THE ASSESSEE HAD ACTUALLY MADE PURCHASES OF THE GOODS FROM THE AFORESAID PARTY, HOWEVER, THE SAME WERE BACKED BY BOGUS BILLS W H ICH WERE INFLATED AS AGAINST THE ACTUAL PURCHASE CONSIDERATION WHICH WAS PARTED BY THE ASSESSEE FOR PROCURING THE GOODS FROM THE AFORESAID CONCERN. THE A.O BEING OF THE VIEW THAT THE ASSESSEE HAD BENEFITED FROM MAKING THE PURCHASES AT A LOWER RATE AS AGAINST THAT SHOWN IN THE BILLS, THEREFORE, REJECTED THE BO O KS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT. THE A.O ESTIMATING THE BENEFIT FROM MAKING THE AFORESAID PURCHASES BY THE ASSESSEE AT 12.5%, THUS, SCALED DOWN THE PURCHASE CONSIDERATION BY AN AMOUNT OF RS. 1,12,83,903/ - (I.E 12.5% OF RS. P A G E | 5 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) 9,02,71,220/ - ) AND MADE A CONSEQ UENTIAL ADDITION OF THE SAID AMOUNT IN THE HANDS OF THE ASSESSEE. 4 . THE ASSESSEE ASSAILED THE ORDER OF THE A.O IN APPEAL BEFORE THE CIT(A). THE CIT(A) TAKING COGNIZANCE OF THE G.P RATE OF 4.60% AS STOOD R EFLECTED BY THE ASSESSEE, CONCLUDED THAT AN ADDIT ION TO THE SAID EXTENT, VIZ. 4.60% OF THE VALUE OF THE PURCHASES MADE BY THE ASSESSEE FROM THE AFORESAID CONCERN WOULD BE JUSTIFIED . THE CIT(A) ON THE BASIS OF HIS AFORESAID CONVICTION SUBSTITUTED THE DISALLOWANCE OF RS. 1,12,83,903/ - (I.E 12.5% OF RS. 9,0 2,71,220/ - ) MADE BY THE A.O BY AN AMOUNT OF RS. 41,52,476/ - (I.E 4.60% OF RS. 9,02,71,220/ - ) IN THE HANDS OF THE ASSESSEE. 5 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US . T HAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE THAT THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, WHICH WAS DISPOSED OFF BY THE TRIBUNAL VIDE ITS ORDER PASSED IN ITO - 20(2)(5), MUMBAI VS. PRAVEEN KUMAR GUPTA, ITA NO. 853/MUM/2017, DATED 30.08.2017 . THE LD. A.R SUBMITTED THAT THE APPEAL FILED BY THE REVENUE WAS DISMISSED BY THE TRIBUNAL AND THE ORDER PA SSED BY THE CIT(A) WAS UPHELD. THE LD. A.R PLACED ON RECORD THE COPY OF THE ORDER OF THE TRIBUNAL. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE REVENUE ASSAILING THE ORDER OF THE CIT(A) IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, WHICH WAS DISMISSED BY A COORDINATE BENCH OF THE TR IBUNAL, VIZ. ITAT I BENCH VIDE IT S P A G E | 6 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) ORDER PASSED IN ITA NO. 853/MUM/2017, DATED 30.08.2017 , OBSERVING AS UNDER: - 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE, AND AFTER PERUSING THE OBSERVATIONS RECORDED BY THE CIT (A) ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE BASIS OF ESTIMATION OF THE EXTENT OF THE INFLATION OF THE BOGUS BILLS PROCURED BY THE ASSESSEE FROM THE AFORESAID CONCERN, VIZ. M/S MAIRU ENTERPRISES, AS AGAINST THE ACTUAL CONSIDERATION THAT WOULD HAVE BE EN PARTED BY THE ASSESSEE FOR PURCHASING THE GOODS UNDER CONSIDERATION. WE ARE OF THE CONSIDERED VIEW THAT THE IN THE BACKDROP OF THE FACT THAT THE SUPPLIER PARTY, VIZ. M/S MAIRU ENTERPRISES HAD ITSELF ADMITTED THAT IT HAD PURCHASED GOODS FROM THE OPEN/GRE Y MARKET AT A LOWER RATES, WHICH THEREAFTER WAS SOLD BY IT TO VARIOUS PARTIES, INCLUDING THE ASSESSEE CONCERN AT A RATE LOWER THEN THAT AS STOOD REFLECTED IN THE BILLS, THEREFORE, THE FACT THAT THE ASSESSEE HAD AS A MATTER OF FACT BENEFITED FROM PURCHASING THE GOODS, THUS CANNOT BE RULED OUT. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION, THE QUANTIFICATION OF THE PROFIT/MARGIN INVOLVED IN PROCURING OF THE GOODS UNDER CONSIDERATION, IN THE ABSENCE OF ANY MATERIAL, IS T HUS LEFT TO A FAIR ESTIMATION ON THE PART OF THE A.O. WE ARE OF THE CONSIDERED VIEW THAT THE ELEMENT OF PROFIT EARNED BY AN ASSESSEE FROM MAKING OF PURCHASES FROM THE OPEN/GREY MARKET WOULD INTER ALIA BE IN THE FORM OF SAVING OF THE SALES TAX. WE ARE OF TH E CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACT, THE ESTIMATION OF THE PROFIT ELEMENT ON THE PURCHASE OF THE STEEL SHEETS BY THE ASSESSEE FROM THE OPEN/GREY MARKET WOULD FAIRLY BE COVERED BY THE RATE OF 4.60% ADOPTED BY THE CIT(A). WE THUS FIN D OURSELVES TO BE IN AGREEMENT WITH THE ADDITION SUSTAINED BY THE CIT(A), AND FIND NO REASON TO DISLODGE THE SAME. WE THUS UPHOLD THE ORDER OF THE CIT(A). WE FIND THAT THE TRIBUNAL AFTER DELIBERATING ON THE FACTS OF THE CASE HAD UPHELD THE ORDER OF THE CIT(A ) AND THUS SUSTAINED THE ADDITION IN RESPECT OF THE BOGUS PURCHASES TO THE EXTENT OF THE GP RATE OF 4.60% SHOWN BY THE ASSESSEE IN RESPECT OF ITS ACCOUNTED PURCHASE/SALE TRANSACTIONS . THOUGH THE ASSESSEE BY WAY OF THE PRESENT APPEAL HAD ASSAILED THE SUSTAINING OF THE ADDITION TO THE EXTENT OF 4.60% OF THE BOGUS PURCHASES OF RS.9,03,71,220/ - BY THE CIT(A), HOWEVER , NOTHING HAS BEEN AVERRED BEFORE US WHICH COULD PERSUADE US TO CONCLUDE THAT THE ORDER OF THE CIT(A) WAS EITHER PERV ERSE OR NOT SUSTAINABLE. PER CONTRA, THE LD. DEPARTMENTAL REPRESENT ATIVE (FOR SHORT D.R) RELIED O N THE ORDER OF THE CIT(A). WE THUS FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A), WHICH AS OBSERVED BY US P A G E | 7 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5) HEREINABOVE HAD BEEN APPROVED BY A COORDINATE BENCH OF THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL OF THE REVENUE, THEREFORE, UPHOLD HIS ORDER. 7. THE APPEAL FILED BY THE ASSESSEE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOU NCED ON THE OPEN COURT ON 02 .02.2018 SD/ - SD/ - ( G.S.PANNU ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 02 .02.2018 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 8 ITA NO. 7484/MUM/2016 AY: 2010 - 11 PRAVEEN KUMAR GUPTA VS. ITO - 20(2)(5)
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