ITO 22(1)(6), MUMBAI V. DEENANATH GUPTA , MUMBAI

ITA 768/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6914 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY SETHI
• Keywords: Bogus purchase; Rejection of books of accounts
• Section: 143(3); 133(6); 147

Judgement Text

ITO - 22(1)(6) VS. DEENANATH GUPTA ITA NO.768/MUM/2020 A. Y. 2009 - 10 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC - II BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 768 /MUM/20 20 (ASSESSMENT YEAR: 20 09 - 10 ) INCOME - TAX OFFIER 22(1)(6) 104, FIRST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012 PAN AABPG9838M VS. DEENANATH GUPTA GROUND FLOOR, NO. 5, BLOCK NO. 1, NEW TRANSIT CAMP, DHARAVI, MUMBAI 400 017. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI SANJAY SETHI , D .R DATE OF HEARING : 03 .0 8 .202 1 DATE OF PRONOUNCEMENT : 03 .0 8 .202 1 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 33 , MUMBAI, DATED 19 .11.2019 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 147 R.W.S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 28.02.2015 FOR A.Y 2009 - 10 . 2 . BRIEFLY STATED, THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF TRADING IN STEEL AND IRON HAD FILED HIS RETURN OF INCOME FOR A.Y 2009 - 10 ON 18.09.2009 , DECLARING A N INCOME OF RS. 9,45,640/ - . O N THE BASIS OF INFORMATION RECEIVED BY THE A.O FROM THE DGIT(IN V.), MUMBAI THAT THE ASSESSEE AS A BENEFICIARY HAD PROCURED BOGUS PURCHASE BILLS WITHOUT ACTUAL DELIVERY OF GOODS, HIS CASE WAS REOPENED UNDER SEC. 147 OF THE ACT. ITO - 22(1)(6) VS. DEENANATH GUPTA ITA NO.768/MUM/2020 A. Y. 2009 - 10 2 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD CLAIMED TO HAVE MADE PURCHASES AMOUNTING TO RS. 2,72,308/ - FROM THE FOLL OWING FOUR THREE PARTIES: SR. NO. NAME OF PARTY AMOUNT 1. SIDDHIVINAYAK STEEL RS. 2,46,654/ - 2. BANARSIDASS AGGARWAL & SONS RS. 5,125/ - 3. ANIL TRADINGCO, RS. 20,529/ - TOTAL RS. 2,72,308/ - IN ORDER TO VERIFY THE GENUINENESS AND VERACITY OF THE AFORESAID PURCHASE TRANSACTIONS THE A.O ISSUED NOTICES UNDER SEC. 133(6) OF THE ACT TO T H E AFOREMENTIONED PARTIES. HOWEVER, THE NOTICES WERE RETURNED UNSERVED BY THE POSTAL DEPARTMENT WITH THE REMARK S NOT KNOWN. IN THE BACKDROP OF THE AFORESAID FACTS, THE A.O CALLED UPON THE ASSESSEE TO PRODUCE THE AFOREMENTIONED PARTIES. ALSO, THE ASSESSEE WAS DIRECTED TO PLACE ON R ECORD SUPPORTING DOCUMENTARY EVIDENCE VIZ. COPY OF BANK STATEMENTS , COPY OF LEDGER ACCOUNTS , COPY OF OCTROI RECEIPTS , LR OF PROOF OF GOODS RECEIVED AND DETAILS QUA THE MODE OF TRANSPORTATION OF GOODS . IN RESPONSE THERETO, THOUGH THE ASSESSEE PARTLY FURNISH ED THE DETAILS AS WERE CALLED FOR BY THE A.O, VIZ. COPIES OF THE LEDGER ACCOUNTS OF THE PARTIES, VOUCHERS AND BANK STATEMENT , HOWEVER, HE FAILED TO PRODUCE THE ABOVEMENTIONED PARTIES BEFORE HIM. BACKED BY THE AFORESAID FACTS, THE A.O HELD A CONVICTION THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS THAT WAS CAST UP ON HIM AS REGARDS PROVING THE AUTHENTICITY OF THE PURCHASE TRANSACTIONS IN QUESTION. ACCORDINGLY, THE A.O MADE AN ADDITION OF THE ENTIRE AMOUNT OF THE IMPUGNED PURCHASES OF RS. 2,72,308/ - IN TH E HANDS OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE CIT(A) . ALTHOUGH THE CIT(A) PRINCIPALLY AGREED WITH THE A.O THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE AUTHENTICITY OF THE PURCHASES CLAIMED TO HAVE BEEN MAD E FROM THE AFOREMENTIONED PARTIES, HOWEVER, HOLDING A CONVICTION THAT ONLY THE PROFIT ELEMENT EMBEDDED IN THE IMPUGNED PURCHASES COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE, THE CIT(A) RESTRICTED THE ADDITION TO 25% OF THE VALUE OF THE SAID IMPUGNED PURCHASES AND SCALED DOWN THE ITO - 22(1)(6) VS. DEENANATH GUPTA ITA NO.768/MUM/2020 A. Y. 2009 - 10 3 ADDITION TO AN AMOUNT OF RS. 68,077/ - (25% OF RS. 2,72,308/ - ). AS SUCH, THE APPEAL WAS PARTLY ALLOWED BY THE CIT(A). 5. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. AS TH E ASSESSEE RESPONDENT DESPITE HAVING BEEN INTIMATED ABOUT THE HEARING OF THE APPEAL HA D FAILED TO PUT UP AN APPEARANCE BEFORE US , THEREFORE, AS PER RULE 2 5 OF THE APPELLATE TRIBUNAL RULES, 1963, WE ARE CONSTRAINED TO PROCEED WITH AND DISPOSE OFF THE APPEAL AFTER HEARING T H E APPELLANT REVENUE AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES. 6. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE AFORESAID TAINTED PARTIES, THEREFORE, THE A.O HAD RIGHTLY STAMPED THE IMPUGNED PURCHASES AS BOGUS AND MADE AN ADDITION OF THE ENTIRE AMOUNT OF THE SAID PURCHASES IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER AVERRED BY THE LD. D.R THAT THE CIT(A) HAD MOST ARBITRARILY SCALED DOWN THE ADDITION MADE BY THE A.O QUA THE BOGUS PURCHASES TO 25% OF THE VALUE OF SUCH PURCHASES. 7 . WE HAVE HEARD THE LD. D.R , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD . A DMITTEDLY , THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE AUTHENTICITY OF THE IMPUGNED PURCHASES THAT WERE CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES ON THE BASIS OF CLINCHING DOCUMENTARY EVIDENCE. OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT BY THE REVENUE, FOR ADJUDICATING, AS TO WHETHER THE CIT(A) IS RIGHT IN LAW AND THE FACTS OF THE CASE IN CONFINING T H E ADDITION AS REGARDS THE IMPUGNED PURCHASES ONLY TO T H E EXTENT OF THE PROFIT ELEMENT THAT THE ASSESSEE WOULD HAD MADE QUA THE BOGUS/UNSUBSTANT IATED PURCHASES IN QUESTION. AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER, WE FIND, THAT THE A.O HAD NEITHER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE NOR RECORDED ANY FINDING THAT THE IMPUGNED GOODS CLAIMED BY THE ASSESSEE TO HAVE BEEN PURCHASED FROM THE AFOREMENTIONED TAINTED PARTIES NEITHER FORMED PART OF HIS SALES OR CLOSING STOCK FOR THE YEAR UNDER CONSIDERATION. APART FROM THAT, THERE IS ALSO NO SUCH FINDING ITO - 22(1)(6) VS. DEENANATH GUPTA ITA NO.768/MUM/2020 A. Y. 2009 - 10 4 TO THE EFFECT THAT THE GP RATE OF THE ASSESSEE WAS NOT IN ACCORD WITH THAT OF THE PRECEDIN G YEARS, WHICH WOULD HAVE INSTILLED AT LEAST SOME CONFIDENCE AS REGARDS THE CLAIM OF THE A.O THAT THE ASSESSEE HAD ONLY BOOKED BOGUS PURCHASES IN QUESTION WITH A PURPOSE OF SUPPRESSING HIS TRUE PROFITS FOR THE YEAR UNDER CONSIDERATION. BE THAT AS IT MAY, A S OBSERVED BY THE CIT(A), AND RIGHTLY SO, THE ASSESSEE HAD PURCHASED THE GOODS UNDER CONSIDERATION NOT FROM THE AFORE MENTIONED TAINTED PARTIES BUT AT A DISCOUNTED RATE FROM THE OPEN/GREY MARKET. ACCORDINGLY, IN THE BACKDROP OF THE AFORESAID FACTS, THE CIT( A) IN OUR CONSIDERE D VIEW HAD RIGHTLY OBSERVED THAT THE ADDITION IN THE HANDS OF THE ASSE S S E E COULD ONLY BE MADE TO T H E EXTENT OF T H E PROFIT WHICH THE ASSESSEE WOULD HAD MADE BY PROCURING THE GOODS IN QUESTION AT A DISCOUNTED VALUE FROM THE OPEN/GREY MARKE T. INSOFAR THE QUANTIFICATION OF THE PROFIT ELEMENT @ 25% OF THE VALUE OF THE IMPUGNED PURCHASES IS CONCERNED, WE FIND NO UNREASONABLENESS IN ADOPTION OF THE SAME BY THE CIT(A). WE, THUS, FINDING NO INFIRMITY IN T H E VIEW TAKEN BY THE CIT(A), UPHOLD THE SAM E. 8 . RESULTANTLY THE APPEAL OF THE REVENUE BEING DEVOID AND BEREFT OF ANY MERIT IS DISMISSED . ORDER P RONOUNCED IN THE OPEN COURT ON 03 . 0 8 .202 1 SD/ - SD/ - ( S. RIFAUR RAHMAN ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 03 .0 8 .202 1 PS. ROHIT / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI