ABDUL SAYEED SAMANE, MUMBAI V. ITO 20(1)(1), MUMBAI

ITA 79/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7161 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

P A G E | 1 ITA NO. 79/MUM/2016 AY. 2009 - 10 SHRI ABDUL SAYEED SAMANE VS. INCOME TAX OFFICER - 20(1)(1) IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, M UMBAI BEFORE SHRI G.S.PANNU , AM AND SHRI RAVISH SOOD, JM ITA NO.79 /MUM/2016 ( / ASSESSMENT YEAR :2009 - 10 ) SHRI ABDUL SAYEED SAMANE RASHMI ZAVERY & CO. CHARTERED ACCOUNTANTS, ARHAM, GR. FLOOR, PLOT 266, SION (E), MUMBAI - 400022 / VS. INCOME TAX OFFICER - 20(1) (1) ROOM NO. 124, LALBAUG, PAREL MUMBAI - 400012 ./ ./ PAN NO. AVZPS0612G ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI RAJESH KUMAR YADAV , D.R / DATE OF HEARING : 06.06 .2018 / DATE OF PRONOUNCEMENT : 1 5 .06.2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 32, MUMBAI, DATED 02.11.2015, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 18.02.2015 FOR A.Y 2009 - 10. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 5,97,167/ - ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. THE APPELLANT PRAYS THAT THE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO THE EXTENT OF RS. 5,97,167/ - MAY BE DELETED. P A G E | 2 ITA NO. 79/MUM/2016 AY. 2009 - 10 SHRI ABDUL SAYEED SAMANE VS. INCOME TAX OFFICER - 20(1)(1) 3. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTE R, AMEND, OR MODIFY OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL HAD FILED HIS RETURN OF INCOME FOR A.Y 2009 - 10 ON 30.09.2009, DEC LARING TOTAL INCOME OF RS.2,27,570/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. ON THE BASIS OF INFORMATION RECEIVED BY THE A.O FROM THE MAHARASHTRA SALES TAX DEPARTMENT THAT THE ASSESSEE HAD TAKEN ACCOM MODATION ENTRIES TO THE TUNE OF RS.1,26,25,095/ - IN THE NAT URE OF BOGUS PURCHASES, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC.147 OF THE ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE A.O IN ORDER TO VERIFY THE VERACITY OF THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE PURCHASES OF RS.1,26,25,095/ - , WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THE FOLLOWING PARTIES: NAME OF THE PARTY AMOUNT SIDDHIVINAYAK STEEL 13,35,693/ - ASIAN STEEL 13,10,358/ - RUPANI & CO. 1,13,152/ - GARIMA STEEL TRADERS 2,08,032/ - SHIV INDUSTRIES 45,98,956/ - MARUTI STEEL TRADERS 50,58,904/ - TOTAL 1,26,25,095/ - HOWEVER, DESPITE SUFFICIENT OPPORTUNITY THE ASSESSEE FAILED TO PLACE ON RECORD DOCUMENTARY EVIDENCE VIZ. PURCHASE REGISTER, DELIVERY CHALLANS , LORRY RECEIPTS, TRANSPORTATION DETAILS ETC. WHICH COULD PROVE TO THE HILT THE GENUINENESS AND VERACI TY OF THE PURCHASE TRANSACTIONS . RATHER, THE ASSESSEE TRIED TO IMPRESS UPON THE A.O THAT THE AUTHENTICITY OF THE PURCHASE TRANSACTIONS COUL D NOT DOUBTED FOR THE REASON THAT THE PAYMENTS TO THE SAID RESPECTIVE PARTIES WERE MADE THROUGH BANKING CHANNELS. ON THE BASIS OF THE AFORESAID FACTS , THE A.O NOT BEING PERSUADED TO SUBSCRIBE TO THE CLAIM OF T HE ASSESSEE THAT IT HAD MADE GENUINE PURCHASE S FROM THE AFOREMENTIONED PARTIES , DECLINED TO ACCEPT THE SAME . HOWEVER, THE A.O OBSERVING THAT THE P A G E | 3 ITA NO. 79/MUM/2016 AY. 2009 - 10 SHRI ABDUL SAYEED SAMANE VS. INCOME TAX OFFICER - 20(1)(1) ASSESSEE HAD ACTUALLY PURCHASE D THE GOODS UNDER CONSIDERATION , THOUGH NOT FROM THE AFOREMENTIONED PARTIES, BUT FROM THE OPEN/GREY MARKET, THU S DID NOT DISLODGE THE CORRESPONDING SALES ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT . THE A.O WAS OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD MADE THE PURCHASES OF THE GOODS NOT FROM THE AFOREMENTIONED HAWALA PARTIES, BUT RATHER FROM THE OPEN/GREY MARKET, THEREFORE , IT MUST HAVE BENEFITED BY WAY OF SAVING ON SALES TAX ETC. ON THE BASIS OF THE AFOREMENTIONED DELIBERATIONS AND TAKING SUPPORT OF VARIOUS JUDICIAL PRO NOUNCEMENT S , THE A.O CONCLUDED THAT THE PROFIT ELEMENT EMBEDDED IN MAKING OF SUCH PURCHASES BY THE ASSESSEE FROM THE OPEN/GREY MARKET COULD SAFELY BE TAKEN AT 12.5% OF THE AGGREGATE VALUE OF THE BOGUS PURCHASES OF RS.1,26,25,095/ - . IN THE BACKDROP OF THE A FORESAID OBSERVATIONS, THE A.O MADE AN ADDITION OF RS.15,78,136/ - IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE , WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO HIS CLAIM THAT AS THE GENUINENESS OF THE PURCHASE TRANSACTIONS WAS DULY PROVED, HENCE THE A.O HAD ERRED IN CHARACTERISING THE SAME AS BOGUS PURCHASES . RATHER, THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE FACTS OF THE CASE WAS PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE A.O , THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. HOWEVER, THE CIT(A) DID FIND FAVOUR WITH THE CLAIM OF THE ASSESSEE THAT THE ADDITION IN RESPECT OF THE PURCHASE TRANSACTIONS UNDER CONSIDERATION WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE DISCLOSED GROSS PROFIT OF 4.73% FOR THE YEAR UNDER CONSIDERATION. ON THE BASIS OF HIS AFORESAID D ELIBERATIONS THE CIT(A) RESTRICTED THE ADDITION IN THE HANDS OF THE ASSESSEE TO RS.5,97,167/ - . 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT THE ASSESSEE DESPITE BEING INTIMATED AS RE GARDS THE DATE OF HEARING OF THE APPEAL , HAD HOWEVER NEITHER PUT UP AN APPEARANCE BEFORE US NOR ANY APPLIC ATION SEEKING AN ADJOURNMENT HAS BEEN FILED BY HIM. WE THUS, IN THE BACKDROP OF THE P A G E | 4 ITA NO. 79/MUM/2016 AY. 2009 - 10 SHRI ABDUL SAYEED SAMANE VS. INCOME TAX OFFICER - 20(1)(1) AFORESAID FACTS ARE CONSTRAINED TO PROCEED WITH THE MATTER AFTER H EARING THE RESPONDENT REVENUE AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDER PASSED BY THE CIT(A). 6. WE HAVE HEARD THE LD. D.R . AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND FROM A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, THAT THE FACT THAT THE ASSESSEE HAD MERELY OBTAINED ACCOMMODATION ENTRIES FROM THE AFOREMENTIONED SIX PARTIES AND HAD NOT MADE ANY GENUINE PURCHASES FROM THEM STAND S PROVED TO THE HILT. WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN IT REMAINS AS A MATTER OF FACT THAT THE ASSESSEE HAD MADE PURCHASES OF THE GOODS UNDER CONSIDERATION, THOUGH NOT FROM THE A FOREMENTIONED HAWALA PARTIES, BUT FROM THE OPEN/GREY MARKET, THUS TH E FACT TH AT THE ASSESSEE MUST HAD BENEFI TED F RO M PROCURING SUCH GOODS AT A LOWER RATE BY WAY OF SAVING ON SALES TAX AND SUCH OTHER BENEFITS , CANNOT BE RULED OUT. WE FIND THAT THOUGH THE A.O HAD ESTIMATED SUCH MONETARY BENEFIT IN THE HANDS OF THE ASSESSEE A T THE RATE OF 12.5% OF THE AGGREGATE VALUE OF THE SUCH BOGUS PURCHASES, HOWEVER THE SAME WAS RESTRICTED BY THE CIT(A) TO THE EXTENT OF THE DISCLOSED GROSS PROFIT OF 4.73% SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. WE ARE OF THE CONSIDERED V IEW THAT AS THE CIT(A) HAD ALREADY ADOPTED A REASONABLE APPROACH AND HAD RESTRICTED THE DISALLOWANCE IN THE HANDS OF T HE ASSESSEE TO 4.73% OF THE AGGREGATE VALUE O F THE BOGUS PURCHASES, HENCE WE DO NOT FIND ANY REASON TO DISLODGE THE SAME. WE THUS , FINDING NO INFIRM ITY OF THE ORDER OF THE CIT(A), UPHOLD THE ADDITION OF RS.5,97,167/ - AS SUSTAINED BY HIM. THE GROUNDS OF APPEAL NO. 1 AND 2 ARE DISMISSED. 7. THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 5 .06.20 18 S D / - S D / - (G.S.PANNU) (RAVISH SOOD) A CCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 15 .06.2018 PS. ROHIT P A G E | 5 ITA NO. 79/MUM/2016 AY. 2009 - 10 SHRI ABDUL SAYEED SAMANE VS. INCOME TAX OFFICER - 20(1)(1) / 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