MR PRASHAANT MANOHAR JAIN LEGAL HEIR SMT VEENABEN M JAIN, MUMBAI V. ITO 23 (3)(5), MUMBAI

ITA 7590/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0133 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIDD ARAMAP P A
• Keywords: Corroborative evidences
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY (JM) ITA NO. 7590/MUM/2019 ASSESSMENT Y EAR: 2009 - 10 MR. PRASHAANT MANOHAR JAIN, ( LEGAL HEIR OF SMT. VEENABEN M. JAIN), FLAT NO. 1001, 10 TH FLOOR, MID SUMMER CHS L, PLOT NO. 94 - B, LINKING ROAD, ABOVE SKETCHERS SHOWROOM, SANTACRUZ (WEST), MUMBAI - 400054 PAN: ADCPJ6596P VS. ITO 23(3)(5), ROOM NO. 231, 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL PUNAMIYA (AR ) REVENUE BY : SHRI SHIDDARAMAPPA (DR) DATE OF HEARING: 25/05 /20 21 DATE OF PRONOUNCEMENT: 09 / 07 /202 1 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 16.09.2019 OF L EARNE D COMMISS IONER OF INCOME T AX (APPEALS) 55 , MUMBAI F OR THE ASSESSMENT YEAR 2009 - 10 . 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE MADE ON ACCOUNT OF ALLEGED NON GENUINE PURCHASES. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL A ND IS STATED TO BE TRADING IN METAL S . BASED ON INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THROUGH THE DGIT (INV.), MUMBA I INDICATING THAT PURCHASES OF RS. 23,81,273/ - ARE NON - GENUINE , AS , THE CONCERNE D SELLING DEALERS ALL EGEDLY WERE ONLY PROVIDING A CCOMMODATION BILLS WITHOUT ACTUAL SALE TRANSACTION, T HE ASSESSING OFFICER (AO) REOPEN ED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT , 1961. IN COURSE OF 2 ITA NO. 7590 / MUM/2019 ASSESSMENT YEAR: 2009 - 10 ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO PROVE THE PURCHASES THROU GH SUPPORTING EVIDENCES. HOWEVER , THE EVIDENCES FURNISHED BY TH E ASSESSEE COULD NOT CONVINCE T HE AO . F URTHER , THE NOTICES ISSUED UNDER SECTION 133 (6) OF THE ACT SEEKING INFORMATION FROM THE CONCERNED SELLING DEALERS DID NOT EVOKED ANY RE SPONSE. THEREFORE, THE AO CONCLUDED THAT THE PURCHASES REFERRED TO ABOVE ARE NON GENUINE. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE HAS E FFECTED THE SALES, THE AO CONCLUDED THAT THE ASSESSEE MUST HAVE PURCHASE THE GOODS FROM UNVERIFIED SOURCES BY SUP PRESSING THE ACTUAL PROFIT. ACCORDINGLY, HE DISALLOWED RS. 2,97,660/ - , BEING 12.5% OF THE ALLEGED NON GENUINE PURCHASES. THOUGH, THE ASSESSEE CONTESTED THE AFORE SAID DISALLOWANCE BEFORE LEARNED COMMISSIONER (APPEALS), HOWEVER, HE WAS UNSUCCESSFUL. 4. THE LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED , THE ONLY DEFECT POINTED OUT BY THE S ALES TAX DEPARTMENT IS THE SELLING DEALERS HAVE NOT PAID THE APPLICABLE VAT. HE SUBMITTED , FOR THIS R EASON, THE ASSESSEE HAS PAID TO THE SALES TAX DEPARTMENT T HE VAT DUE ON THE GOODS PURCHASED . HE SUBMITTED , WHEN IT IS ACCEPTED THAT THE ASSESSEE HAD PURCHASED THE GOODS , THE DISALLOWANCE AT 12.5% IS HIGH AND EXCESSIVE AS THE PROFIT RATE GENERALLY ATTACHED TO TRADING IN FERROUS AND NON - FERROUS METALS VARIES BETWEE N 1 TO 2%. HE SUBMITTED , SINCE THE ASSESSEE HAS ALREADY S HOWN GROSS PROFIT RATE OF 2.53%, DISALLOWANCE IF ANY, CAN BE RESTRICTED TO 2%. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE (DR) , ST RONGLY RELYING UPO N THE OBSERVATIONS OF AO AND LEARNED COMMISSIONER (APPEALS) , SUBMITTED THAT LEARNED COMMISSIONER (APPEALS) HAVING ALREADY GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE, NO FURTHER INTERFERENCE IS CALLED FOR. 6 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE DECEASE D ASSESSEE WAS A TRADER IN FERROUS AND NON - FERROUS METALS. T HE FACT THAT THE ASSESSEE HAS PURCHASED THE GOODS HAS BEEN ACCEPTED BY THE DEPARTMENTAL AUTHORITIES. THOUGH, THEY HAVE RAISED D OU B T REGARDING THE SOURCE OF PURCHASES . F OR THIS REASON ALONE , INSTEA D OF DISALLOWING THE ENTIRE PURCHAS ES, THE DISALLOWANCE HAS BEEN RESTRICTED TO THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCH ASES ON PURELY ESTIMATION BASIS. 3 ITA NO. 7590 / MUM/2019 ASSESSMENT YEAR: 2009 - 10 CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE AND THE P ROFIT ELEMENT GENERALLY EXPECTED TO EARN FROM SUCH LINE OF TRADING AND ALSO THE GROSS PROFIT RATE A LREADY DECLARED BY THE ASSESSEE, I AM OF THE CONSIDERED OPINION, DISALLOWANCE AT 2% ON THE ALLEGED NON GENUINE PURCHASES WOULD BE FAIR AND REASONABLE. ACCORDINGLY, I DIRE CT THE AO TO RESTRICT THE DISALLOWANCE TO 2% OF THE ALLEGED NON GENUINE PURCHASES. GROUNDS ARE PARTLY ALLOWED. 7 . IN THE RESULT, APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY , 2021 . SD/ - ( SAKTI JIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 09 / 07 /2021 ALINDRA, PS / 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 . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI