ITO-26(2)(2), Mumbai V. SHRI. MATIULLAH KARMULLAH KHAN, Mumbai

ITA 762/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6718 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 11-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K GUBGOTRA J
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO. 762/MUM/2019 ( ASSESSMENT YEAR: 2011-12) I.T.O.-26(2)(2), BUILDING NO. C-11, 7 TH FLOOR, ROOM NO. 704, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI- 400051. VS. SHRI MATIULLAH KARMULLAH KHAN, M/S SHAMS SALES CORPORATION, ROOM NO. 2, QUDDUS COMPOUND, OPP. M.K. BROTHERS, ANDHERI KURLA ROAD, JARIMARI MUMBAI- 400072. PAN/GIR NO.AAGPK 7147 J (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI R.K. GUBGOTRA (JCIT-DR) ASSESSEE BY NONE DATE OF HEARING 05/02/2020 DATE OF PRONOUNCEMENT 06/02/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD. CIT(A)-38, MUMBAI DATED 19/09/2018 FOR THE A.Y. 2011-12 IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A) FOR GIVING FURTHER RELIEF TO THE EXTENT OF G ROSS PROFIT DECLARED BY ITA NO. 762/MUM/2019 ITO VS SHRI MATIULLAH KARMULLAH KHAN 2 THE ASSESSEE OUT OF ADDITION OF 12.5% MADE BY THE A .O. IN RESPECT OF ALLEGED BOGUS PURCHASES. 3. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF M .S. SCRAPS AND ALL TYPES OF SCRAPS. ON GETTING INFORMATION FROM THE SA LES TAX DEPARTMENT REGARDING THE ASSESSEE TAKING BOGUS PURC HASE BILLS, THE A.O. REOPENED THE ASSESSMENT AND ADDED 12.5% OF ALL EGED BOGUS PURCHASES IN ASSESSEES INCOME. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DIRECT ED TO A.O. TO GIVE FURTHER RELIEF OF 4% OUT OF PROFIT DECLARED BY THE ASSESSEE. PRECISE FINDING OF THE LD. CIT(A) WAS AS UNDER: 7.4.4 IN THE PRESENT FACTS AND CIRCUMSTANCES OF T HE CASE AS SALES ARE NOT DOUBTED, THE CASE OF THE AO IS THAT THE APPELLANT O NLY TOOK BILLS FROM THE ABOVE PARTIES TO EXPLAIN THE PURCHASES ACCOUNTE D IN ITS BOOKS OF ACCOUNT AT HIGHER PRICE TO INFLATE EXPENSES AND RED UCE TAXABLE PROFIT ALTHOUGH THE MATERIAL PURCHASE WAS MADE FROM GREY/O PEN MARKET AT LOWER PRICES. IN THE LIGHT OF THE ABOVE FACTS AND C IRCUMSTANCES OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS OF VARIOUS JUD ICIAL AUTHORITIES ON THE ISSUE OF ALLEGED BOGUS PURCHASE, I CONCUR WI TH THE STAND TAKEN BY THE ASSESSING OFFICER THAT THE PROFIT ELEMENT EM BEDDED IN THE ALLEGED BOGUS PURCHASES SHOULD BE BROUGHT TO TAX. T AKING INTO CONSIDERATION THE OVERALL FACTS AND LEGAL PROVISION S APPLICABLE TO THE INSTANT CASE I AM OF THE OPINION THAT ESTIMATIN G THE PROFIT ELEMENT EMBEDDED IN THE SAID TRANSACTIONS/ PURCHASE S, KEEPING IN MIND, THE INFLATED PRICE AS PER ALLEGED PURCHASE IN VOICES RECORDED IN ITA NO. 762/MUM/2019 ITO VS SHRI MATIULLAH KARMULLAH KHAN 3 THE BOOKS OF THE APPELLANT AND COST BENEFITS AVAILE D BY THE APPELLANT AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY T HE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIMIT P.SET H REPORTED IN 356 ITR 451 AND IN THE CASE OF CIT VS. M/S. BHOLANATH P OLYFAB PVT. LTD (2013) REPORTED IN 355 ITR 290 AN ESTIMATE AT 12.5% OF THE TOTAL ALLEGED PURCHASES IMPOSED BY THE AO IS CONSIDERED R ATIONAL. HOWEVER, IN VIEW OF THE FACT THAT THE APPELLANT OFF ERED FOR TAX THE PROFIT AT NP RATIO OF 3.92% TREATED, AS 4%, TAKING SUPPORT OF THE MAXIM LAID DOWN BY THE HON'BLE ITAT, A BENCH, MUMBA L IN ITS ORDER DATED 25.09.2017 IN ITA NO. 6924, 6504 & 6505/MUM/2 014 IN THE CASE OF KANTILAL C JAM, WHEREIN THE RATE OF PRO FIT, IS TAKEN AT 12.5% LESS NET PROFIT DECLARED BY THE APPELLANT, TH E PROFIT EMBEDDED IN THE ALLEGED PURCHASES IN THE PRESENT AP PELLANT'S CASE IS CONSIDERED JUSTIFIED IF COMPUTED AT 8.5% (1 2.5% LESS NET 4% STATED ABOVE) OF TOTAL ALLEGED BOGUS PURCHAS E OF RS.74,23,398/-. THE PROFIT ACCORDINGLY WORKS OUT TO RS.6,30,989/-. THE AO IS DIRECTED TO RESTRICT THE ADDITION TO TOTA L INCOME TO RS.6,30,989/-. ACCORDINGLY, THIS GROUND OF APPEAL I S PARTLY ALLOWED. 5. IT IS CLEAR FROM THE ORDER OF THE LD. CIT(A) THA T AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUD ICIAL PRONOUNCEMENTS LAID DOWN TO THIS EFFECT BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SETH 356 ITR 45 1 & M/S BHOLANATH POLYFAB PVT. LTD. (2013) 355 ITR 290 HE HAD GIVEN F URTHER RELIEF OF PROFIT ALREADY DECLARED BY THE ASSESSEE OUT OF ADDI TION OF 12.5% SO MADE BY THE A.O. THE DETAILED FINDINGS SO RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD DR BY BRINGING ANY POSITIVE ITA NO. 762/MUM/2019 ITO VS SHRI MATIULLAH KARMULLAH KHAN 4 MATERIAL ON RECORD, THEREFORE, I DO NOT FIND ANY RE ASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A). HENCE, I UPHOLD THE SA ME. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH FEBRUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 06/02/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//