M/S SUNMOON ENTERPRISES , MUMBAI V. ASST CIT 19 (3), MUMBAI

ITA 7747/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9529 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3)

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 7747 / / 2019 (%. 2007-08 ) ITA NO.7747/MUM/2019(A.Y 2007-08 ) M/S. SUN MOON ENTERPRISES, FC-8160A,FC-8161, FC-8162, BHARAT DIAMOND BOURSE, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 PAN:AACFS-2954-D ...... ' / APPELLANT % VS. ASSTT. COMMISSIONER OF INCOME TAX 19(3), INCOME TAX OFFICE, MATRU MANDIR, MUMBAI 400 007 ..... ()/ RESPONDENT '*/ APPELLANT BY : NONE ()*/ RESPONDENT BY : SHRI SANJAY J. SETHI %+) / DATE OF HEARING : 02/06/2021 ,-. +) / DATE OF PRONOUNCEMENT : 26/07/2021 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER COMMISSIONER OF INCOME TAX(APPEALS)-3, MUMBAI [IN S HORT 'THE CIT(A)] DATED 30/09/2019 FOR THE ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS ENGAGED IN TRADING OF DIAMONDS. ON THE BASIS OF INFORMATION RECEIVED FROM DGIT(INV), MUMBAI, THE ASSESSMENT IN THE CASE OF AS SESSEE FOR ASSESSMENT YEAR 2007-08 WAS REOPENED. AS PER INFORMATION RECEIV ED THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES TO THE TUNE OF RS. RS.96,06,064/- FROM M/S. 2 . 7747 / / 2019 (%. 2007-08 ) ITA NO.7747/MUM/2019(A.Y 2007-08) LITTLE DIAM, A CONCERN BELONGING TO BHANWARLAL JAIN GROUP. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PROD UCE COGENT EVIDENCE OF DELIVERY OF GOODS PURCHASED FROM SUSPICIOUS DEALER. EXCEPT FROM STOCK REGISTER AND DETAILS OF THE CHEQUE PAYMENTS, NO OT HER DOCUMENTS WERE PRODUCED BY THE ASSESSEE. THE ASSESSING OFFICER AC CEPTED THE SALES TURNOVER DECLARED BY THE ASSESSEE AND MADE ADDITION OF RS.7 ,68,485/- BY ESTIMATING SUPPRESSED PROFIT MARGIN ON UNPROVED PURCHASES AT 8%. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23/03/2015 PASSED UNDER SECT ION 143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 ( IN SHORT 'THE ACT'), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) INTER-ALIA CHALLENGING REOPENING OF ASSE SSMENT AND ESTIMATED ADDITION MADE ON ALLEGED BOGUS PURCHASES. THE CIT( A) DISMISSED THE APPEAL OF ASSESSEE AND UPHELD THE ASSESSMENT ORDER. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 3. SHRI SANJAY J. SETHI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE AP PEAL OF ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE HAS OBTAINED ACCOMMODATION ENTRIES FROM A CONCERN BELONGING TO BHANWARLAL JAIN GROUP. A SEARCH AND SURVEY ACTION WAS CONDUCTED IN THE CASE OF BHANWARLAL JAIN GROUP ON 03/10/2013. DURING SEARCH OPERATION A STATEME NT OF BHANWARLAL JAIN AND HIS FAMILY MEMBERS WERE RECORDED, WHEREIN THEY ADMI TTED THAT THE GROUP CONCERN WERE FLOATED ONLY FOR PROVIDING ACCOMMODA TION ENTRIES AGAINST COMMISSION. THE LD. DEPARTMENTAL REPRESENTATIVE AS SERTED THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN PROVING GENUINE NESS OF PURCHASES MADE FROM M/S. LITTLE DIAM, A CONCERN BELONGING TO BH ANWARLAL JAIN GROUP. 3 . 7747 / / 2019 (%. 2007-08 ) ITA NO.7747/MUM/2019(A.Y 2007-08) 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. UNDISPUTEDLY, THE ASSE SSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF PURCHASES MADE FROM M/S. LITTLE DIAM. AT THE SAME TIME IT IS OBSERVED THAT THE ASSESSING OFFICER HAS NOT DISTURBED THE SALES TURNOVER DECLARED BY THE ASSESSEE. THEREFORE, IT I S ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTION THAT CAN BE BROUGHT TO TAX. THE ESTIMATION OF SUPPRESSED PROFIT MARGIN BY ASSESSING OFFICER AND C ONFIRMATION BY CIT(A) AT 8% IS VERY MUCH ON THE HIGHER SIDE. AFTER UNEARTHING OF SPATE OF BOGUS TRANSACTION IN THE TRADE OF DIAMOND, A TASK GROUP FOR DIAMOND S ECTOR WAS CONSTITUTED BY DEPARTMENT OF COMMERCE, GOVERNMENT OF INDIA. THE TA SK FORCE IN ITS REPORT OBSERVED THAT THE NET PROFIT IN DIAMOND TRADING RAN GES BETWEEN 1% TO 3%. TAKING INTO CONSIDERATION ENTIRETY OF FACTS I AM OF THE CONSIDERED VIEW THAT ENDS OF JUSTICE WOULD BE MET IF THE ADDITION ON ACC OUNT OF UNPROVED PURCHASES IS RESTRICTED TO 3%. I HOLD AND DIRECT ACCORDINGL Y. 5. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 26 TH DAY OF JULY, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 0%/ DATED 26/07/2021 VM , SR. PS (O/S) 4 . 7747 / / 2019 (%. 2007-08 ) ITA NO.7747/MUM/2019(A.Y 2007-08) COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. () / THE RESPONDENT. 3. 1) ( )/ THE CIT(A)- 4. 1) CIT 5. 23()% , . . . , / DR, ITAT, MUMBAI 6. 34567 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI