SATYANARAYANA VEERABATHINI, MUMBAI V. ITO 21 (3)(2), MUMBAI

ITA 7523/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3851 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 06-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 7523 &7525 / / 2019 (%. 2010-11& 2011-12 ) ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) SATYANARAYANA NARSAIAH VEERABATHINI, ROOM NO.44, B.D.D. CHAWL, NO.112,WORLI, S.S.AMRUTWAR MARG, MUMBAI 400 018. PAN: ACVPV-3607-P ...... ' / APPELLANT % VS. INCOME TAX OFFICER 21(3)(2), ROOM NO.117, 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012 ..... ()/ RESPONDENT . 7524 / / 2019 (%. . 2011-12 ) ITA NO.75 24 /MUM/2019(A.Y 2011-12) SATYANARAYANA NARSAIAH VEERABATHINI(HUF), ROOM NO.44, B.D.D. CHAWL, NO.112,WORLI, S.S.AMRUTWAR MARG, MUMBAI 400 018. PAN: AADHV-6644-Q ...... ' / APPELLANT % VS. INCOME TAX OFFICER 21(3)(2), ROOM NO.117, 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012 ..... ()/ RESPONDENT '*/ APPELLANT BY : MS. NEHA PARANJPE ()*/ RESPONDENT BY : SHRI SANJAY J. SETHI %+) / DATE OF HEARING : 22/07/2021 ,-. +) / DATE OF PRONOUNCEMENT : 04/10/2021 2 ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) ITA NO.7524/MUM/2019(A.Y.2011-12) / ORDER ITA NO.7523 & 7525/MUM/2019 BY THE ASSESSEE (INDIV IDUAL) ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-33, MUMBAI [ IN SHORT THE CIT(A)] DATED 30/05/2019 COMMON FOR THE ASSESSMENT YEARS 2010- 11 AND 2011-12. APPEAL IN ITA NO.7524/MUM/2019 BY THE ASSESSEE (HUF) IS AGAINST THE ORDER OF CIT(A) -33, MUMBAI DATED 30/05 /2019 FOR THE ASSESSMENT YEAR 2011-12. SINCE, THE FACTS GERMANE TO ALL THES E THREE APPEALS AND THE GROUNDS RAISED BY THE ASSESSEES IN THEIR RESPECTI VE APPEALS ARE IDENTICAL, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATIO N AND ARE DECIDED BY THIS COMMON ORDER. 2. FOR THE SAKE OF CONVENIENCE, FACTS ARE EXTRACT ED FROM THE APPEAL IN ITA NO.7523/MUM/2019 FOR ASSESSMENT YEAR 2010-11. ITA NO.7523/MUM/2019, A.Y. 2010-11 : 3. MS. NEHA PARANJPE APPEARING ON BEHALF OF THE ASSESSEE NARRATING THE FACTS SUBMITTED, THAT THE ASSESSEE IS HAVING SOLE P ROPRIETARY BUSINESS IN THE NAME AND STYLE OF M/S. ARKEY TRADING COMPANY. THE ASSESSEE IS ENGAGED IN TRADING OF PHOTOCOPIER AND ITS PARTS, TONNER AND GE NERAL SUPPLIES. THE ASSESSMENT FOR ANY 2010-11 IN THE CASE OF ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM DGIT(INVESTIGATION), M UMBAI. AS PER THE INFORMATION RECEIVED THE ASSESSEE HAD OBTAINED BOGU S PURCHASE BILLS AGGREGATING TO RS.26,57,620/- FROM THE FOLLOWING DE ALERS DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL: 3 ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) ITA NO.7524/MUM/2019(A.Y.2011-12) S.NO. NAME OF THE PARTY WHO HAS ISSUED BOGUS BILLS TO THE ASSESSEE F.Y AMOUNT OF SUCH BOGUS BILL IN RS. 1. STHAPNA TRADE IMPEX PVT. LTD. 2009-10 2,41,925 2. LAXMAN SALES PVT. LTD. 2009-10 1,07,039 3. MIHIR SALES PVT. LTD. 2009-10 17, 01,296 4. KALPTARU TRADING CO. 2009-10 6, 07,360 TOTAL 26,57,620 AS PER THE CASE OF REVENUE THE AFORESAID DEALERS WE RE DECLARED AS HAWALA OPERATORS BY SALES TAX DEPARTMENT, GOVERNMENT OF MA HARASHTRA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNI SHED VARIOUS DOCUMENTS VIZ. BANK STATEMENT, COPIES OF LEDGER ACCOUNT OF SU SPICIOUS DEALERS, PURCHASE INVOICES, ETC. TO SUBSTANTIATE GENUINENESS OF THE P URCHASES. THE ASSESSEE HAD MADE PAYMENTS TO THE AFORESAID DEALERS THROUGH ACCO UNT PAYEE CHEQUES AND THE CHEQUES WERE DULY ENCHASED AND THE BANK ACCOUNT OF THE ASSESSEE WAS DEBITED. THIS FACT IS EVIDENT FROM THE BANK STATEM ENT FURNISHED BY THE ASSESSEE. FURTHER, THE ASSESSEE FURNISHED DETAILS OF CORRESPONDING SALES AS AGAINST THE ALLEGED BOGUS PURCHASES. THE ASSESSEE HAD ALSO FURNISHED DETAILS OF STOCK INDICATING INWARD AND OUTWARD MOVEMENT OF STOCK. THE SALES TURNOVER DECLARED BY THE ASSESSEE WAS ACCEPTED BY T HE ASSESSING OFFICER. THE ASSESSEE HAD DECLARED G.P OF 4.92% DURING THE PERIO D RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. DESPITE HAVING FURN ISHED SUFFICIENT EVIDENCE THE ASSESSING OFFICER HELD THE PURCHASES FROM THE A FORESAID DEALERS AS BOGUS AND MADE ADDITION OF RS.3,32,203/- BY ESTIMATING G. P ON ALLEGED BOGUS PURCHASES @ 12.5%. AGGRIEVED BY THE ASSESSMENT ORDER DATED 19/02/2016 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT,196 1 ( IN SHORT 'THE ACT'), THE 4 ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) ITA NO.7524/MUM/2019(A.Y.2011-12) ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A ) WITHOUT APPRECIATING THE DOCUMENTS ON RECORD AND SUBMISSIONS BY THE ASS ESSEE, CONFIRMED THE ADDITION MADE IN ASSESSMENT ORDER. THE LD.AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT SINCE ALL THE RELEVANT DO CUMENTS TO SUBSTANTIATE GENUINENESS OF PURCHASES WERE FURNISHED BEFORE THE ASSESSING OFFICER, THE ENTIRE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES SHOULD BE DELETED. 4. PER CONTRA, SHRI SANJAY J. SETHI REPRESENTING TH E DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSI NG THE APPEAL BY THE ASSESSEE. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMI TTED THAT ASSESSEE HAS FAILED TO PRODUCE DEALERS. THE ASSESSING OFFICER H AD ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THE DEALERS FROM WHOM THE ASSESSEE HAD MADE ALLEGED PURCHASES. THE SAID NOTICES WERE RETURNED BACK BY THE POSTAL AUTHORITIES UNSERVED. NO CONFIRMATIONS WERE EITHER FILED BY THE ASSESSEE FROM THE SAID DEALERS AND NO DOCUMENTS WERE FURNISHED B Y THE ASSESSEE TO PROVE TRANSPORTATION OF GOODS. THUS, THE ASSESSEE HAD MI SERABLY FAILED TO DISCHARGE HIS ONUS IN PROVING GENUINENESS OF THE TRANSACTIONS WITH THE DECLARED HAWALA OPERATORS. 5. SUBMISSIONS MADE BY RIVAL SIDES HEARD AND OR DERS OF THE AUTHORITIES BELOW EXAMINED . THE SOLITARY ISSUE IN THE PRESENT APPEAL BY THE ASSESSEE IS ADDITION OF RS.3,32,203/- ON ACCOUNT OF ALLEGED AC COMMODATION ENTRIES OBTAINED BY THE ASSESSEE FROM SUSPICIOUS DEALERS. UNDISPUTEDLY, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF THE DEALERS AND PURCHASES MADE FROM THEM. AT THE SAME TIME IT IS O BSERVED THAT THE SALES TURNOVER AND INVENTORY DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE. IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH LIKE TRANSACTIONS THAT 5 ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) ITA NO.7524/MUM/2019(A.Y.2011-12) CAN BE BROUGHT TO TAX. ESTIMATION OF SUPPRESSED PR OFIT MARGIN ON UNPROVED PURCHASES AT 12.5% BY THE AUTHORITIES BELOW APPEARS TO BE ON HIGHER SIDE. THE ASSESSEE HAS DECLARED G.P OF 4.92% DURING THE FINAN CIAL YEAR 2009-10 RELEVANT TO ASSESSMENT YEAR 2010-11. TAKING INTO CONSIDERAT ION ENTIRETY OF FACTS I AM OF THE CONSIDERED VIEW THAT ESTIMATION OF SUPPRESSED PROFIT MARGIN ON UNPROVED PURCHASES IF RESTRICTED TO 6.0% WOULD MEET THE END S OF JUSTICE. I HOLD AND DIRECT ACCORDINGLY. THIS APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.7525/MUM/2019,A.Y.2011-12: 6. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE STATED THAT THE FACTS IN ASSESSMENT YEAR 2011-12 ARE IDENTICAL TO ASSESSMENT YEAR 2010-11. THE NATURE OF TRANSACTIONS AND THE MANNER OF DISALLOWANCE IN ASSE SSMENT YEAR 2011-12 ARE ON SAME LINES AS WAS MADE IN ASSESSMENT YEAR 2010-11. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED THAT THE G. P DECLARED BY THE ASSESSEE IN ASSESSMENT YEAR 2011-12 IS 4.10%. 7. THE LD.DEPARTMENTAL REPRESENTATIVE CONCURRED WIT H THE STATEMENT MADE BY LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT T HE FACTS IN ASSESSMENT YEAR 2010- 11 AND 2011-12 ARE SIMILAR. 8. SINCE, THE FACTS GERMANE TO THE ISSUE RAISED IN THE PRESENT APPEAL AND THE GROUND OF APPEAL ARE IDENTICAL TO ASSESSMENT YEAR 2010-11, THE DETAILED FINDING GIVEN WHILE ADJUDICATING APPEAL OF THE ASSESSEE F OR ASSESSMENT YEAR 2010-11 WOULD MUTATIS MUTANDIS APPLY TO THE PRESENT APPEAL. FOR PARITY OF REASONS, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.7524/MUM/2019, A.Y.2011-12: 9. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE FACTS IN PRESENT APPEAL ARE SAME AS IN THE CASE OF ASSESSEE (INDIVIDUAL) EXCEPT THAT THE 6 ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) ITA NO.7524/MUM/2019(A.Y.2011-12) PRESENT APPEAL IS BY THE HUF. THE EARLIER TWO APPE ALS WERE FILED BY THE ASSESSEE IN INDIVIDUAL CAPACITY. THE NATURE OF BUSINESS AND TH E TRANSACTION INVOLVED IS IDENTICAL TO THE ONE IN ITA NO.7523 & 7525/MUM/2019. THE SUB MISSIONS MADE FOR THE EARLIER APPEALS WOULD EQUALLY APPLY TO THE PRESENT APPEAL. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED THAT THE G.P DECLARED BY THE ASSESSEE (HUF) FOR THE RELEVANT PERIOD IS 4%. 10. BOTH SIDES ARE UNANIMOUS IN STATING THAT THE FA CTS IN THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS IN THE APPEALS FILED BY THE ASSESSEE IN INDIVIDUAL CAPACITY. HERE THE ASSESSEE/APPELLANT IS HUF. IN THE PRESENT APPE AL ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE (HUF) ON ACCOUNT OF BOGUS PURCHAS ES DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AGGREGATING TO RS .12,98,401/- FROM FOUR DEALERS. ALL THE FOUR DEALERS WERE DECLARED AS HAWALA OPERAT ORS. THE ASSESSING OFFICER MADE ESTIMATED ADDITION OF 12.5%. THE CIT(A) SUSTAINED THE SAME. ON PARITY OF FACTS THE DETAILED FINDINGS GIVEN WHILE ADJUDICATING APPEAL I N ITA NO.7523/MUM/2019 WOULD MUTATIS MUTANDIS APPLY TO THE PRESENT APPEAL. IN T HE RESULT, APPEAL IS PARTLY ALLOWED. 11. TO SUM UP, THE THREE APPEALS, TWO BY THE ASSESS EE IN INDIVIDUAL CAPACITY AND ONE APPEAL BY THE ASSESSEE AS HUF ARE PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY THE 4 TH DAY OF OCTOBER, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 0%/ DATED 04/10/2021 VM , SR. PS (O/S) 7 ITA NO.7523& 7525/MUM/2019(A.Y 2010-11 &2011-12) ITA NO.7524/MUM/2019(A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. () / THE RESPONDENT. 3. 1) ( )/ THE CIT(A)- 4. 1) CIT 5. 23()% , . . . , / DR, ITAT, MUMBAI 6. 34567 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI