Appeal details
Counselvise Citation
[2021] 108 COUNSELVISE.COM (IT) 2981 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-06-2021
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2009-2010
Appeal Filed On
26-12-2019
Judgement Text
, ! % , & ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGRAWAL, ACCOUNTANT MEMBER. . 7976 / / 2019 (. .2009-10 ) ITA NO. 7976/MUM/2019 (A.Y.2009-10) . 7977 / / 2019 (. .2010-11 ) ITA NO. 7977/MUM/2019 (A.Y.2010-11) NIMISHA NILESH DOSHI, 701, TOWER NO.2- LIMONA RUNWAL ANTHURIUM, LBS MARG, OPP VEENA NAGAR, MULUND WEST, MUMBAI 400 080. PAN:AGXPD6917E / VS. : / APPELLANT INCOME TAX OFFICER 26(2)(7) KAUTILYA BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E) MUMBAI 400 020. : / RESPONDENT ASSESSEE BY : SHRI BHADRESH DOSHI REVENUE BY : SHRI SANJAY SETHI / DATE OF HEARING : 08/06/2021 / DATE OF PRONOUNCEMENT : 15/06/2021 / ORDER PER VIKAS AWASTHY, J.M: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-40, MUMBAI [IN SHORT THE CIT(A) ] FOR THE ASSESSMENT YEAR 2009-10 DATED 18/10/2019 AND FOR A SSESSMENT YEAR 2010-11 DATED 2 ITA NO. 7976/MUM/2019 (A.Y.2009-10) ITA NO. 7977/MUM/2019 (A.Y.2010-11) 20/09/2019, RESPECTIVELY. SINCE, THE ISSUE INVOLV ED IN BOTH THE APPEALS IS IDENTICAL, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATIO N AND ARE DECIDED BY THIS COMMON ORDER. ITA NO.7976/MUM/2019 A.Y.2009-10: 2. SHRI BHADRESH DOSHI APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT THE ASSESSEE IS A TRADER IN HARDWARE ITEMS, PIPE FITTIN GS, IRON AND STEEL AND ELECTRIC GOODS. THE ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WAS RE OPENED ON THE GROUND THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS AGGREGA TING TO RS.21,47,588/- FROM VARIOUS DEALERS DECLARED AS HAWALA OPERATORS. FUR THER, THE ASSESSING OFFICER MADE ADHOC DISALLOWANCE OF 30% TO 40% OF BUSINESS EXPEN DITURE, VIZ. ACCOUNTING CHARGES, AUDIT FEES, COMMISSION EXPENSES, CONVEYANCE AND TRA VELLING CHARGES, FREIGHT AND TRANSPORTATION, OFFICE RENT, ETC. THE LD.AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SUBMITTED ALL RELEV ANT DOCUMENTS IN SUPPORT OF THE EXPENDITURE CLAIMED. HOWEVER, THE ASSESSING OFFICER WITHOUT EXAMINING THE SAME MADE ADHOC DISALLOWANCE OF RS.1,94,292/-. THE AS SESSEE FILED APPEAL BEFORE THE CIT(A) ASSAILING AGAINST THE ASSESSMENT ORDER DATED 13/11/2014 PASSED UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE CIT(A) CONFIRMED ADDITION QUA BOGUS PURCHASES IN TOTO. IN RESPECT OF ADHOC DISALLOWANCE OF OFFICE EXPENSES, THE CIT(A) RESTRICTED THE SAME TO 20%. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE ADDED. THE ASSES SING OFFICER HAS ACCEPTED THE SALES DECLARED BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED THAT THE ASSESSEE HAS ACCEPTED THE ADDITIO N IN RESPECT OF BOGUS PURCHASES @12.5% IN PRECEDING ASSESSMENT YEARS. THE SAME PER CENTAGE MAY BE APPLIED IN THE IMPUGNED ASSESSMENT YEAR FOR MAKING DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FU RTHER POINTED THAT THE G.P DECLARED BY THE ASSESSEE IN ASSESSMENT YEAR 2009-10 IS 11.32%. 3 ITA NO. 7976/MUM/2019 (A.Y.2009-10) ITA NO. 7977/MUM/2019 (A.Y.2010-11) 3. SHRI SANJAY SETHI REPRESENTING THE DEPARTMENT VE HEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE A SSESSEE HAS FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF PURCHASES AND AUTHENTICITY OF THE DEALERS. WITH REGARD TO DISALLOWANCE OF BUSINESS EXPENSES THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURNISH R ELEVANT DOCUMENTARY EVIDENCE SUBSTANTIATING EXPENDITURE CLAIMED. HENCE, THE ASS ESSING OFFICER MADE DISALLOWANCE OF 30% OF SUCH EXPENDITURE. THE CIT(A) HAS REDUC ED IT TO 20%, THE ORDER OF CIT(A) IS FAIR AND REASONABLE. 4. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. UNDISPUTEDLY, THE ASSESSEE HAS FAILED TO SUBSTANTIATE GENUINENESS OF PURCHASES MADE FROM ALLEGED HAWALA OPERATORS. AT THE SAME TIME THE SALES TURNO VER DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. IN SUCH LI KE TRANSACTIONS IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTIONS THAT CAN BE T AXED, ENTIRE BOGUS PURCHASES CANNOT BE DISALLOWED[ REF: PCIT VS. PARAMSHAKTI DIS TRIBUTORS PVT. LTD., INCOME TAX APPEAL NO.413 OF 2017 DECIDED ON 15 TH JULY, 2019]. THE G.P RATE DECLARED BY THE ASSESSEE ON REGULAR TRANSACTIONS IS 11.32%. THE LD .AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS CONCEDED THAT THE DISALLOWANCE ON BOGU S PURCHASES MAY BE RESTRICTED TO 12.5% IN LINE WITH THE DISALLOWANCE MADE IN PREV IOUS ASSESSMENT YEARS. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, WE DEEM IT APPROPRIATE TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES @ 12.5%. THE GROUND NO.1 OF THE APPEAL IS PARTLY ALLOWED IN THE TERMS AFORESAID. 5. IN GROUND NO.2 OF APPEAL, THE ASSESSEE HAS ASSAI LED DISALLOWANCE OF BUSINESS EXPENDITURE. THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE OF 30% TO 40% IN RESPECT OF VARIOUS EXPENDITURE CLAIMED BY THE ASSES SEE. THE DISALLOWANCE OF BUSINESS EXPENDITURE WAS MADE BY THE ASSESSING OFFI CER ON THE GROUND THAT NO SUPPORTING EVIDENCES WERE FILED BY THE ASSESSEE. TH E CIT(A) RESTRICTED THE 4 ITA NO. 7976/MUM/2019 (A.Y.2009-10) ITA NO. 7977/MUM/2019 (A.Y.2010-11) DISALLOWANCE TO 20%. A PERUSAL OF THE ASSESSMENT OR DER SHOWS THAT THE ASSESSING OFFICER HAS DISALLOWED BUSINESS EXPENDITURE ON ME RE ESTIMATION. THE ASSESSING OFFICER MADE FLAT DISALLOWANCE OF 30% ON ALL BUSINE SS EXPENDITURE CLAIMED BY THE ASSESSEE AND DISALLOWANCE OF 40% WAS MADE IN RE SPECT OF CONVEYANCE AND TRAVELLING EXPENDITURE. THE MANNER OF MAKING DISAL LOWANCE BY THE ASSESSING OFFICER INDICATES THAT ASSESSING OFFICER HAS NOT EXAMINED T HE BOOKS OR THE RELEVANT DOCUMENTS. THE DISALLOWANCE HAS BEEN MADE MERELY ON SURMISES AND CONJECTURES, WITHOUT POINTING SHORT COMINGS IN THE BOOKS AND SUP PORTING DOCUMENTS MAINTAINED BY THE ASSESSEE. THE CIT(A) HAS REDUCED DISALLOWANC E TO 20% AGAIN ON ESTIMATIONS. WE FIND NO COGENT REASON TO SUSTAIN DISALLOWANCE I N RESPECT OF BUSINESS EXPENDITURE, ACCORDINGLY, THE SAME IS DIRECTED TO B E DELETED. THE ASSESSEE SUCCEEDS ON GROUND NO.2 OF THE APPEAL. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.7977/MUM/2019-A.Y.2010-11: 7. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE SOLITARY GROUND RAISED IN THE APPEAL IS WITH RESPECT TO DISA LLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSING OFFICER MADE 100% D ISALLOWANCE OF ALLEGED BOGUS PURCHASES. THE CIT(A) CONFIRMED THE FINDING OF ASS ESSING OFFICER. THE REASONS FOR MAKING DISALLOWANCE IN ASSESSMENT YEAR 2010-11 IS I DENTICAL TO ASSESSMENT YEAR 2009-10. THE LD.AUTHORIZED REPRESENTATIVE OF THE A SSESSEE FURTHER POINTED THAT THERE IS DISCREPANCY IN THE AMOUNT OF BOGUS PURCH ASES. THE PURCHASES MADE FROM ALLEGED HAWALA OPERATORS AGGREGATE TO RS.97,154/-, WHEREAS IN THE ASSESSMENT ORDER THE AMOUNT WAS INADVERTENTLY MENTIONED AS RS.16,92, 653/-. THE ASSESSEE HAD POINTED THIS MISTAKE DURING THE FIRST APPELLATE PRO CEEDINGS. THE CIT(A) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSE SSING OFFICER VIDE REMAND REPORT DATED 14/08/2019 ACCEPTED THAT AGGREGATE OF BOGU S PURCHASES FROM THREE PARTIES IS RS.97,154/- AND THE REMAINING AMOUNT IS TO BE D ELETED. HOWEVER, THE CIT(A) AGAIN 5 ITA NO. 7976/MUM/2019 (A.Y.2009-10) ITA NO. 7977/MUM/2019 (A.Y.2010-11) ERRED IN MAKING ADDITION OF AMOUNT MENTIONED IN THE ASSESSMENT ORDER. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REFERR ED TO THE REMAND REPORT AT PAGE 21 TO 23 OF THE PAPER BOOK. 8. THE LD.DEPARTMENTAL REPRESENTATIVE VEHEMENTLY DE FENDED THE IMPUGNED ORDER. HOWEVER, THE LD.DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT AS PER THE REMAND REPORT FURNISHED BY THE ASSESSEE IN PAPER BO OK CORRECTION HAS BEEN MADE IN THE AMOUNT OF BOGUS PURCHASES. 9. BOTH SIDES HEARD. THE SOLITARY ISSUE IN APPEA L IS WITH REGARD TO ADDITION MADE IN RESPECT OF BOGUS PURCHASES. IN SO FAR AS THE A DDITION ON ACCOUNT OF BOGUS PURCHASES IS CONCERNED THE SAME IS RESTRICTED TO 12 .5% FOR THE REASONS STATED IN THE DETAILED ORDER FOR ASSESSMENT YEAR 2009-10. 10. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSE E HAS POINTED THAT THERE IS AN ERROR IN THE AMOUNT OF BOGUS PURCHASE MENTIONED IN ASSESSMENT ORDER AND IMPUGNED ORDER. WE FIND THAT IN THE ASSESSMENT ORD ER THE ADDITION ON ACCOUNT OF BOGUS PURCHASES HAS BEEN MADE AT RS.16,92,657/-. THE CONTENTION OF THE ASSESSEE IS THAT THE ADDITION HAS BEEN MADE ON ACCOUNT OF BO GUS PURCHASES FROM THREE DEALERS, WHEREIN THE AGGREGATE OF AMOUNT INVOLVED I S RS.97,154/-. THIS ERROR WAS POINTED BY THE ASSESSEE BEFORE THE CIT(A). THE C IT(A) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER. HOWEVER, THE CIT(A) FAILED T O CONSIDER THE REMAND REPORT. THE RELEVANT EXTRACT OF REMAND REPORT DATED 14/08/2019 FROM THE ASSESSING OFFICER IS REPRODUCED HEREIN BELOW: 5.2 THEREFORE, OUT OF THE TOTAL ADDITION OF RS.16, 92,653/- U/S .69C DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE I.T. ACT, 1961, AS M ENTIONED IN PARA 2 ABOVE ONLY THE ADDITION IN RESPECT OF THE BOGUS PURCHASES MADE IN THE FOLLOWING PARTIES APPEARS TO BE CORRECT: 1) PAYAL ENTERPRISE RS. 46,980/- 2) MR CORPORATION RS. 48,094/- 3) SIDDIVNAYAK CORPORATION RS. 2,08 0/- TOTAL : RS. 97,154/- 6 ITA NO. 7976/MUM/2019 (A.Y.2009-10) ITA NO. 7977/MUM/2019 (A.Y.2010-11) ACCORDINGLY, THE REMAINING AMOUNT OF RS.15,95,499/- I.E.16,92,653 97,154 NEEDS TO BE DELETED. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTE D THE REMAND REPORT. THUS, IN THE LIGHT OF REMAND REPORT, THE TOTAL AMOUNT OF B OGUS PURCHASES IS RS.97,154/-. THE ASSESSING OFFICER IS DIRECTED TO RESTRICT ADD ITION ON ACCOUNT OF BOGUS PURCHASES TO 12.5% OF RS. 97,154/- 11. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. 12. TO SUM UP, BOTH APPEALS BY THE ASSESSEE ARE P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY T HE 15 TH DAY OF JUNE, 2021. SD/- SD/- (MANOJ KUMAR AGGRAWAL) (VIKAS AWASTHY) & / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, ,'/ DATED: 15/06/2021 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. - / THE APPELLANT , 2. ./ / THE RESPONDENT. 3. 0/ ( )/ THE CIT(A)- 4. 0/ CIT 5. 12./' , . . . , / DR, ITAT, MUMBAI 6. 23456 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI
