ITO 20 (1)(1), MUMBAI V. M/S ADAMJI & CO. , MUMBAI

ITA 7677/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1762 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 7677 //2019 (. . 2010-11 ) ITA NO.7677/MUM/2019 (A.Y.2010-11) ITO -20 (1)(1), ROOM NO. 124, 1 ST FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 ...... ) / APPELLANT VS. M/S ADANI & CO. 141, SURTI MOHALLA, TANK STREET, VASIL KHAN MARG, MUMBAI-400008. PAN: AAAFA0794M .. ... *,/ RESPONDENT ) -/ APPELLANT BY : SH. SANJAY J. SETHI *, -/ RESPONDENT BY : NONE . / DATE OF HEARING : 31/05/2021 . / DATE OF PRONOUNCEMENT : 10/06/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-32, MUMBAI [HE REINAFTER REFERRED TO AS THE CIT(A)] DATED 17.10.2019 FOR THE ASSESSMENT Y EAR (AY) 2010-11. 2 . 7677 //2019 (. .2010-11 ) ITA NO.7677/MUM/2019 (A.Y.2010-11) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN TRADING OF COTTON WASTE AND COTTON RA GS. THE ASSESSMENT IN THE CASE OF ASSESSEE FOR AY 2010-11 WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT(INVESTIGATIONS), MUMBAI. AS PER THE INFORMATION RECEIVED, THE ASSESSEE HAD OBTAINED ACCOMMODATION E NTRIES AGGREGATING TO RS. 26,09,729/- FROM FOLLOWING PARTIES: (1) M/S ARIHANT TRADERS RS. 11,72,262/- (2) M/S RAHUL TRADERS RS. 10,12,960/- (3) M/S ROHIT TRADERS RS. 4,24,507/- TOTAL RS. 26,09,729/- 4. THE AO ISSUED NOTICES UNDER SECTION 133(6) TO TH E ABOVESAID VENDORS ON THE ADDRESSES FURNISHED BY THE ASSESSEE. HOWEVER, T HE NOTICES WERE RECEIVED BACK UNSERVED FROM THE POSTAL AUTHORITIES WITH REMA RKS NOT KNOWN, NO SUCH ADDRESS, LEFT. FURTHER, THE ASSESSEE FAILED TO S UBSTANTIATE PHYSICAL DELIVERY OF GOODS. NO TRANSPORT RECEIPT, INWARD REGISTER, STOCK REGISTER, ETC. WAS FURNISHED BY THE ASSESSEE. THE AO MADE DISALLOWANCE BY ESTIMA TING GROSS PROFIT (GP) @ 12.5% ON BOGUS PURCHASES. THUS, AN ADDITION OF RS. 3,26,216/- WAS MADE ON ACCOUNT OF BOGUS PURCHASES. AGAINST THE ASSESSMENT ORDER DATED 06.01.2016 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 O F THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], THE ASSESSE E FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE GP RATE DE CLARED BY THE ASSESSEE RESTRICTED THE ADDITION TO 5% OF THE BOGUS PURCHASE S. HENCE, THE PRESENT APPEAL BY THE REVENUE. 3 . 7677 //2019 (. .2010-11 ) ITA NO.7677/MUM/2019 (A.Y.2010-11) 5. SHRI SANJAY J. SETHI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE F INDINGS OF CIT(A). THE LD. DR SUBMITTED THAT THE AO MADE A FAIR AND REASONABLE ESTIMATION OF PROFIT MARGIN AT 12.5% ON BOGUS PURCHASES. THE ASSESSEE HA S DECLARED GP OF 9.86%, THEREFORE, THE GP ESTIMATED BY CIT(A) AT 5% ON BOGU S PURCHASES IS VERY MUCH ON THE LOWER SIDE. THE LD. DR PRAYED FOR RESTORING THE FINDINGS OF AO. 6. SUBMISSIONS MADE BY LD. DR HEARD, ORDERS OF AUTH ORITIES BELOW EXAMINED. UNDISPUTEDLY, THE ASSESSEE FAILED TO DISC HARGE ITS ONUS IN PROVING GENUINENESS OF THE PURCHASES AND THE DEALERS. IN SU CH LIKE TRANSACTIONS, IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN BOGUS TRANSACTI ON THAT HAS TO BE BROUGHT TO TAX. THE AO HAS ESTIMATED GP ON BOGUS PURCHASES AT 12.5%. THE CIT(A) IN FIRST APPELLATE PROCEEDINGS HAS RESTRICTED THE ADDI TION TO 5%. 7. I AM OF CONSIDERED VIEW THAT THE ESTIMATION OF G P BY AO IS ON THE HIGHER SIDE. THE ASSESSEE HAS DECLARED GP OF 9.86% ON REGU LAR PURCHASES. THE GP ESTIMATED BY CIT(A) ON BOGUS PURCHASES IS OVER AND ABOVE THE GP DECLARED BY THE ASSESSEE. I CONCUR WITH THE FINDINGS OF CIT(A), THE SAME ARE UPHELD AND THE APPEAL OF REVENUE IS DISMISSED, SANS MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , THE 10 TH DAY OF JUNE, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3/ DATED: 10/06/2021 SK, PS 4 . 7677 //2019 (. .2010-11 ) ITA NO.7677/MUM/2019 (A.Y.2010-11) * 4 * 4 * 4 * 4 COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *, / THE RESPONDENT. 3. 5 ( )/ THE CIT(A)- 4. 5 CIT 5. * , . . . , / DR, ITAT, MUMBAI 6. 9 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI