ACIT 26 (1), MUMBAI V. SHRI. HARISH K ALIMCHANDANI, MUMBAI

ITA 7684/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2004 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 13-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Accommodation entries
• Section: 133(6); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M. BALAGANESH , ACCOUNTANT MEMBER ITA NO. 7684 /MUM/2019 ASSESSMENT Y EAR: 2010 - 11 ASSISTANT COMMISSIONER OF INCOME TAX 26(1), ROOM NO. 302 , 3 RD FLOOR, KAUTILYA BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 VS. SHRI HARISH K ALIMCHANDANI, 515, MARATHON MAX, MULUND GOREGAON LINK ROAD, MULUND (W), MUMBAI - 400080 PAN: AADPA6436F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI GURBINDER SINGH (D R) ASSESSEE BY : SHRI DHAVAL SHAH ( A R ) DATE OF HEARING: 04/05 /20 21 DATE OF PRONOUNCEMENT: 02 / 0 6 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE REVENUE AGAINST T HE ORDER DATED 20.09 .2019 OF LEARNED COMMISS IONER OF INCOME TAX (APPEALS) 4 0, MUMBAI FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE SOLE GRIEVANCE OF THE REVENUE IS WITH REGARD TO RESTRICTION OF DISALLO WANCE ON ACCOUNT OF ALLEGED NON GENUINE PURCHASES TO 12.5% O F SUCH PURCHASES. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL AND IS STATED TO BE A MANUFACTURER OF EOT C RANES AND OTHER MATERIAL HANDING EQUIPMENTS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 27.09.2010 DECLARING INCOME OF RS. 3,42,82,460/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICE D THAT AS PER THE INFORMATION RECEIVED FROM SALES TAX DEPARTM ENT THROUGH DGIT (INV.), MUMBAI, D URING THE 2 ITA NO. 7684 / MUM/2019 ASSESSMENT YEAR: 201 0 - 1 1 YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES OF RS. 14,64,377/ - BY WAY OF NON GENUINE PURCHASES FROM TWO PARTIES. BASED ON SUCH INFORMATION, THE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES . I N RESPONS E TO THE QUERY RAISED BY THE ASSESSING OFFICER, T HE ASSESSEE FURNISHED SOME DOCUMENTARY EVIDENCES TO PROVE THE PURCHASES. HOWEVER, THE AO WAS NOT CONVINCED. HE OBSERVED THAT THE CONCERNED SELLING DEALER S DID NOT RESPOND TO NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT, WHICH MADE THE SOURCE O F PURCHASES UN VERIFIABLE. ACCORDINGLY, TREATING THE PURCHASES AS NON GENUINE THE AO ADDED BACK AMOUNT OF RS. 14,64,377/ - . THE ASSESSEE CONTESTED THE A FORESAID ADDITION BEFORE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES BY ESTIMATING THE SAME AT 12.5%. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL ON RECORD. ON A READING OF THE ASSESSM ENT ORDER, IT BECOMES CLEAR THAT IN RESPONSE TO QUERY RA ISED BY THE AO, THE ASSESSEE HAD FURNISHED VARIOUS DETAILS INCLUDING BEFORE THE AO. THE ONLY REASON SHOWN BY THE AO FOR NOT ACCEPTING THE P URCHASES AS GENUINE IS , CONCERNED SELLING DEALERS ARE UNTRACEABLE WHICH MADE THE SO URCE OF PURCHASES UNVERIFIABLE. THUS, IT IS VERY MUCH CLEA R THAT THE FACT THAT THE ASESSEE HAD PURCHASED THE DISPUTED GOODS IS NOT IN DOUBT , BUT WHAT IS IN DOUBT IS THE SOUR CE OF SUCH PURCHASES. IN SUCH CIRCUMSTANCES, THE ENTIRE PURCHASES MADE BY THE ASSESSEE CANNOT BE DISALLOWED , BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR DISALLOWANCE TO TAKE CARE OF ANY LEAKAGE IN REVENUE ON ACCOUNT OF PURC HASES BEING MADE BY THE ASSESSEE FROM UNVERIFIABLE SOURCE BY SUPPRESSING ACTUAL PROFIT . T HAT BEING THE CASE , THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE TO 12.5% , BEING THE ESTIMATED PROFIT ELEMENT IMBEDDED IN TH E ALLEGED NON GENUINE PURCHASES, IN OUR VIEW, IS JUST AND PROPER. HENCE, DESERVES TO BE UPHELD . ACCORDINGLY, WE DO SO . G ROUNDS ARE DISMISSED. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . 3 ITA NO. 7684 / MUM/2019 ASSESSMENT YEAR: 201 0 - 1 1 ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE , 2021 . SD/ - SD/ - ( M. BALAGANESH ) ACCOUNTANT MEMBER ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 02 / 0 6 /202 1 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