ACIT CIR 27(1), NAVI MUMBAI V. AMIT RAJENDRA SHETH, MUMBAI

ITA 753/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5514 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAVLD
• Assessee Lawyers: KIRIT SANGHVI LD AR
• Keywords: Bogus purchase; Peak credit; Reassessment proceedings
• Section: 143(3); 133A; 133(6); 147; 68; 148

Judgement Text

AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.5835/MUM/2015 ( ASSESSMENT YEAR: 2009-10) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-27(1) ROOM NO.415, 4 TH FLOOR TOWER NO.6, VASHI STATION COMPLEX MUMBAI-400 703 VS. AMIT RAJENDRA SHETH 1130/4, NILGIRI NEELKANTH VIHAR II KURLA TERMINUS ROAD VIDYAVIHAR(E) MUMBAI-400 077 !' # PAN/GIR NO.AVZPS-0920-P ( '$ APPELLANT ) : ( %'$ RESPONDENT ) & I.T.A. NO.753/MUM/2016 ( ASSESSMENT YEAR: 2010-11) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-27(1) ROOM NO.415, 4 TH FLOOR TOWER NO.6, VASHI STATION COMPLEX MUMBAI-400 703 VS. AMIT RAJENDRA SHETH 1130/4, NILGIRI NEELKANTH VIHAR II KURLA TERMINUS ROAD VIDYAVIHAR(E) MUMBAI-400 077 !' # PAN/GIR NO.AVZPS-0920-P ( '$ APPELLANT ) : ( %'$ RESPONDENT ) & I.T.A. NO.755/MUM/2016 ( ASSESSMENT YEAR: 2011-12) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-27(1) ROOM NO.415, 4 TH FLOOR TOWER NO.6, VASHI STATION COMPLEX MUMBAI-400 703 VS. AMIT RAJENDRA SHETH 1130/4, NILGIRI NEELKANTH VIHAR II KURLA TERMINUS ROAD VIDYAVIHAR(E) MUMBAI-400 077 !' # PAN/GIR NO.AVZPS-0920-P 2 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 ( '$ APPELLANT ) : ( %'$ RESPONDENT ) REVENUE BY : RAJESH KUMAR YADAV, LD.DR ASSESSEE BY : KIRIT SANGHVI, LD.AR &' DATE OF HEARING : 04/07/2018 ()*' / DATE OF PRONOUNCEMENT : 13 / 07/2018 O R D E R PER BENCH 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEARS [ AY] 2009-10 TO 2011-12 CONTEST SEPARATE ORDERS OF LD. FIRST APPELL ATE AUTHORITY. SINCE COMMON ISSUES ARE INVOLVED, WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST, WE TAKE UP APPEAL FOR AY 2009-10. ITA NO.5853/MUM/2015, AY 2009-10 2. THE REVENUE IS AGAINST THE ORDER OF LD. COMMISSI ONER OF INCOME-TAX (APPEALS)-25 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-25/IT/159/13-14 DATED 09/10/2015 QUA RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ENGAGED IN TRADING OF IRON & STEEL UNDER PROPRIETORSHIP CONCERN NAMELY ARHAM EMPIRES. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-22(1), MUMBAI [AO] U/S 143 READ WITH SEC TION 147 OF THE INCOME TAX ACT, 1961 ON 18/03/2013 WHEREIN THE INCO ME OF THE ASSESSEE 3 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 HAS BEEN ASSESSED AT RS.248.48 LACS AFTER CERTAIN A DDITIONS AS AGAINST RETURNED INCOME OF RS.11.67 LACS FILED BY THE ASSESSEE ON 30/09/2009. AS EVIDENT FROM GROUNDS OF APPEAL, THE ONLY GRIEVANCE OF THE REVENUE IS AGAINST THE RELIEF PROVIDED BY LD. CIT(A) TO THE AS SESSEE ON ACCOUNT OF CERTAIN ALLEGED BOGUS PURCHASES. 3. THE ASSESSEE WAS SUBJECTED TO SURVEY PROCEEDINGS U/S 133A ON 24/01/2012. THE REASSESSMENT PROCEEDINGS WERE INITI ATED VIDE ISSUANCE OF STATUTORY NOTICE U/S 148 DATED 19/03/2012 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). THE REASONS RECORDED FOR REOPENING WERE DULY PROVIDED TO THE ASSESSEE AS PER HIS REQUEST. T HE ASSESSEE RAISED OBJECTIONS AGAINST REOPENING WHICH WAS REJECTED. 4.1 DURING REASSESSMENT PROCEEDINGS, TO CONFIRM THE PURCHASES TRANSACTIONS, NOTICES U/S 133(6) WERE ISSUED TO FEW PARTIES. HOWEVER, THE SAME ELICITED NO SATISFACTORY RESPONSE WITH RESPECT TO TWELVE SUCH PARTIES AGGREGATING TO RS.3,82,93,388/-, THE DETAILS OF WHI CH HAS BEEN EXTRACTED IN PARA-9 OF THE QUANTUM ASSESSMENT ORDER. THE ASSESSEE DEFEN DED THE PURCHASES MADE BY CONTENDING THAT THE PURCHASED GOO DS WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND THE PAYME NTS WERE THROUGH BANKING CHANNELS. HOWEVER, IT WAS NOTED THAT AS PER INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, MAHARASHTRA, THE AFORESAID PARTIES WERE HAWALA DEALERS AND FURTHER, THE ASSESSEE FAILED TO SUBSTANTIATE T HE DELIVERY OF MATERIAL WITH COGENT EVIDENCES. FINALLY, NOT CON VINCED, LD. AO ADDED PEAK CREDIT OF RS.2,20,31,053/- TO THE INCOME OF THE ASSESSEE. AT THE SAME TIME, LD. AO ENHANCED GROSS PROFIT RATE AGAINST GROSS ALLEGED BOGUS 4 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 PURCHASES FROM 1.77% TO 3.5%, WHICH HAS LED TO ANOTHER ADDITI ON OF RS.6,62,475/- IN THE HANDS OF THE ASSESSEE. 4.2 APART FROM ABOVE ADDITION, THE ASSESSEE, IN SIM ILAR MANNER, WAS SADDLED WITH ANOTHER ADDITION OF RS.3,04,980/- ON A CCOUNT OF PURCHASES MADE FROM AN ENTITY NAMELY AMEE ENTERPRISES SINCE THE TRANSACTIONS WITH THIS ENTITY ALSO REMAINED UNSUBSTANTIATED AND NOTIC E ISSUED U/S 133(6) WAS RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES. 5. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 09/10/2 015 WHEREIN LD. CIT(A), PLACING ONUS ON LD. AO TO ASCERTAIN FACTUAL POSITION, ESTIMATED ADDITIONS OF 1.77% AGAINST ALLEGED BOGUS PURCHASES FROM TWELVE SUSPICIOUS ENTRIES, WHICH CAME TO RS.6,77,792/-. THE ESTIMATED RATE OF 1.77% WAS NOTHING BUT GROSS PROFIT RATE REFLECTED BY THE ASSE SSEE IN THE IMPUGNED AY. THE ADDITION ON ACCOUNT OF PURCHASES MADE FROM AMEE ENTERPRISES, IN SIMILAR MANNER, WAS REDUCED TO RS.5,400/-. CONSEQUE NTIALLY, THE ADDITIONAL GROSS PROFIT ADDITION OF RS.6,62,475/- AS MADE BY L D. AO WAS DELETED BY LD. CIT(A). AGGRIEVED, THE REVENUE IS IN FURTHER AP PEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE [DR], SHRI RAJESH KUMAR YADAV, SUBMITTED THAT THE ASSESSEE MISERABLY FAILED TO SUB STANTIATE THE PURCHASE TRANSACTIONS DESPITE BEING PROVIDED WITH A DEQUATE OPPORTUNITY AND THUS, FAILED TO DISCHARGE THE INITIAL ONUS CAST ED UPON HIM IN THIS REGARD. HENCE, LD. CIT(A) WAS NOT JUSTIFIED IN SHIFTING THE ONUS ON LD. AO TO PROVIDE SUBSTANTIAL RELIEF TO THE ASSESSEE. THE SAM E WAS CONTROVERTED BY LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [DR], SHRI KIRIT SANGHVI, WHO 5 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 SUBMITTED THAT THE ASSESSEE ACCEPTED THE VERDICT OF LD. CIT(A) AND THE SAME WAS JUST AND PROPER. IT WAS SUBMITTED THAT THE PURCHASED GOODS WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AS EVID ENCED BY STOCK REGISTER MAINTAINED BY THE ASSESSEE. 7. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINI ON THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL SINCE THE ASSE SSEE WAS ENGAGED IN TRADING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOCUMENTS AND THE PURCHASED GOODS WERE REFLECTED IN THE STOCK REGISTER MAINTAINED BY THE ASSESSEE. AT THE SAME TIME, THE A SSESSEE COULD NOT CONCLUSIVELY SUBSTANTIATE THE DELIVERY OF MATERIAL AND FAILED TO PRODUCE ANY OF THE PARTY TO CONFIRM THE TRANSACTIONS. NOTICES ISSUED U/S 133(6) ELICITED NO SATISFACTORY RESPONSE. ALL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THE LD. CIT(A), IN OUR OPINION, E RRED IN SHIFTING THE ONUS, IN THIS REGARD, UPON LD. AO SINCE EVEN THE PRIMARY ONUS OF PROVING THE TRANSACTIONS COULD NOT BE DISCHARGED BY THE ASSESSE E. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHA SES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER, KEEPING IN VIEW T HE FACTUAL MATRIX, CONDUCT OF ASSESSEE AND THE PRODUCTS BEING DEALT BY THE ASSESSEE, THE RATE 6 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 OF 1.77% AS ESTIMATED BY LD. CIT(A), IN OUR OPINION , IS QUITE LOW. THEREFORE, WE ENHANCE THE SAME TO 4% OF ALLEGED BOGUS PURCHASES AS WELL AS PURCHASES MADE BY THE ASSESSEE FROM AMEE ENTERPRISES. ACCORDINGLY, WE ESTIMATE THE ADDITIONS @ 4% OF AGGREGATE PURCHASES OF RS.3,86,98,368/- MADE BY THE ASSESSEE FROM THESE ENTITIES INCLUDING PURCHASES MADE FROM AMEE ENTERPRISES . THE SAME COMES TO RS.15,47,935/-. THE ORDER OF LD . FIRST APPELLATE AUTHORITY STAND MODIFIED TO THAT EX TENT. CONSEQUENTLY, THE STAND OF LD. CIT(A) IN DELETING THE ADDITIONAL GROS S PROFIT ADDITION OF RS.6,62,475/- STAND CONFIRMED. 8. BOTH THE REPRESENTATIVES, DURING THE COURSE OF H EARING, PLACED ON RECORD CONTRARY JUDGMENTS OF VARIOUS JUDICIAL AUTHO RITIES TO SUPPORT THEIR VIEW POINT. HOWEVER, WE FIND THE MATTER TO BE FACTU AL ONE WHEREIN THE DECISION IS TO BE TAKEN CONSIDERING THE OVERALL FAC TUAL MATRIX OF INDIVIDUAL CASE AND THEREFORE, UNABLE TO APPLY THE RATIO OF TH ESE CASES STRAIGHTWAY. 9. FINALLY, THE REVENUES APPEAL STAND PARTLY ALLOW ED IN TERMS OF OUR ABOVE ORDER. ITA NO.753/MUM/2016, AY 2010-11 10. IN THIS AY, THE ASSESSEE, IN SIMILAR MANNER, HA S BEEN ASSESSED AT RS.564.48 LACS IN QUANTUM ASSESSMENT ORDER PASSED U /S 143(3) READ WITH SECTION 147 ON 18/03/2013. THE ASSESSEE HAS BEEN SADDLED WITH PEAK CREDIT ADDITION OF RS.4,36,10,802/- (AFTER ADJUSTING PEAK CREDIT AND ADDITIONAL GROSS PROFIT ADDITION OF AY 2009-10) AGA INST ALLEGED BOGUS PURCHASES OF RS.8,16,41,551/- . ANOTHER ADDITION OF RS.44,02,985/- HAS 7 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 BEEN MADE AGAINST PURCHASES MADE BY THE ASSESSEE FR OM AN ENTITY NAMELY MAHAVIR ENTERPRISES SINCE THE SAME REMAIN UNSUBSTANTIATED . FURTHER, AS DONE IN AY 2009-10, LD. AO ENHANCED GROSS PROFIT RATE AGAINST GROSS ALLEGED BOGUS PURCHASES FROM 1.01% TO 3.5%, WHICH LED TO ANOTHER ADDITION OF RS.16,24,666/- IN THE HANDS OF THE ASSE SSEE. THE LD. CIT(A), IN SIMILAR MANNER, ESTIMATED THE ADDITIONS AGAINST ALLEGED / UNSUBSTANTIATED BOGUS PURCHASES @1% AND DELETED THE SEPARATE ADDITION OF RS.16.24 LACS. SINCE FACTUAL MATRIX IS SIMILAR AS IN AY 2009 -10, TAKING THE SAME STAND, WE ESTIMATE THE ADDITIONS @ 4% OF AGGREGATE PURCHASES OF RS.8,60,44,536/- WHICH WORKS OUT TO RS.34,41,781/- . THE ORDER OF LD. FIRST APPELLATE AUTHORITY STAND MODIFIED TO THAT EXTENT. NO INFIRMITY IS FOUND IN THE ACTION OF LD. CIT(A) IN DELETING ADDITIONAL GROSS P ROFIT ADDITION OF RS.16,24,666/- AS MADE BY LD. AO. RESULTANTLY, THES E GROUNDS OF REVENUES APPEAL STAND PARTLY ALLOWED. 11. THE REVENUE, IN THIS AY, IS FURTHER AGGRIEVED B Y DELETION OF AN ADDITION OF CASH CREDIT OF RS.10 LACS U/S 68 AS MADE BY LD. AO BUT DELETED BY LD. CIT(A). THE DETAILS OF THE SAME COULD BE TABULATED IN THE FOLLOWING MANNER:- NO. NAME OF LENDER AMOUNT OF LOAN TAKEN REASONS FOR MAKING ADDITIONS BY LD. AO REASONS OF DELETION BY LD. CIT(A) 1. RAMESH BHAI RS. 5 LACS LOAN CONFIRMATION NOT FILED THE LOAN WAS RECEIVED FROM THE WIFE OF THE LENDER WHO CONFIRMED THE TRANSACTIONS DULY SUPPORTED BY BANK STATEMENT 2. VIKAS SANGHVI PROP. VARSHA TOOLS RS. 20 LACS RS. 5 LACS NOT REFLECTED BY THE LENDER IN THE CONFIRMATION OF ACCOUNT LOAN CONFIRMED BY THE LENDER ALONG WITH PAN, ASSESSEES BANK STATEMENTS REFLECTED THE AMOUNT RECEIVED ON VARIOUS DATES 8 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 UPON DUE CONSIDERATION, WE FIND THAT MATTER TO BE F ACTUAL ONE. SINCE, THE ASSESSEE PRODUCED SUFFICIENT DOCUMENTARY EVIDENCES BEFORE LD. CIT(A) TO CONFIRM THE LOAN TRANSACTIONS AND LD. CIT(A) WITH D UE APPLICATION OF MIND, PROVIDED RELIEF TO THE ASSESSEE, WE SEE NO INFIRMIT Y IN THE ACTION OF LD. FIRST APPELLATE AUTHORITY IN THIS REGARD. THEREFORE, THIS GROUND OF REVENUES APPEAL STAND DISMISSED. 12. RESULTANTLY, THE REVENUES APPEAL STAND PARTLY ALLOWED. ITA NO.755/MUM/2016, AY 2011-12 13. THE FACTS ARE SIMILAR IN AY 2011-12 WHEREIN THE ASSESSEE HAS BEEN SADDLED WITH PEAK CREDIT ADDITION OF RS.54,43,577/- (AFTER ADJUSTING PEAK CREDITS OF EARLIER YEARS) AGAINST ALLEGED BOGUS PURCHASES. THE ADDITIONAL GROSS PROFIT AGAINST THESE PURCHASES HAS BEEN ESTIM ATED AT RS.1,11,593/-. THE LD. CIT(A), IN SIMILAR MANNER, HAS REDUCED THE ADDITIONS TO RS.1,08,870/- AND DELETED ADDITION OF RS.1,11,593/ ALTOGETHER. SINCE FACTUAL MATRIX IS SIMILAR AS IN EARLIER YEARS, TAKING THE S AME STAND, WE ESTIMATE THE ADDITIONS @ 4% OF AGGREGATE PURCHASES OF RS.54,43,5 77/- WHICH WORKS OUT TO RS.2,17,743/-. THE ORDER OF LD. FIRST APPELLATE AUTHORITY STAND MODIFIED TO THAT EXTENT. NO INFIRMITY IS FOUND IN THE ACTION OF LD. CIT(A) IN DELETING ADDITIONAL GROSS PROFIT ADDITION OF RS.1,11,593/-. RESULTANTLY, THE REVENUES APPEAL STAND PARTLY ALLOWED. 9 AMIT RAJENDRA SHETH ASSESSMENT YEARS: 2009-10 TO 2011-12 CONCLUSION 14. ALL THE AFORESAID APPEALS FILED BY THE REVENUE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY,2018 SD/- SD/- (C.N.PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI;DATED :13.07.2018 SR.PS:-THIRUMALESH ( COPY OF THE ORDER FORWARDED TO : 1. )*+,-. ( THE APPELLANT 2. 234-. ( THE RESPONDENT 3. 74874 9: ; )*+, < ( THE CIT