SHRI. BHARAT CHANDRAKANT JASANI, Mumbai V. ITO-27(1)(2), Mumbai

ITA 800/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5739 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SOURABH DESH
• Assessee Lawyers: NIRAJ PUNMIYA
• Keywords: Bogus purchase; Accommodation entries
• Section: 271(1)(c); 143(3); 234B; 133(6); 274; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.800/MUM/2019 ( ASSESSMENT YEARS: 2009-10 ) BHARAT CHANDRAKANT JASANI, 37 TH FLOOR, 3179, COMMERCIAL CHAMBER, YUSUF MATHRALI ROAD, MASJID BUNDER, MUMBAI. / VS. ITO 27(1)(2) 417, 4 TH FLOOR TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI 400 703. ./ ./ PAN/GIR NO. : AFCPJ7029K ( / // / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI . NIRAJ PUNMIYA , AR / RESPONDENT BY : SHRI . SOURABH DESHPANDE , DR / / / / DATE OF HEARING 05 /02 /20 20 / DATE OF PRONOUNCEMENT 14/ 02 /20 20 / O R D E R PER SHRI G. MANJUNATHA- AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-25, MUMBAI DATED 15-01- 2019 AND IT PERTAINS TO THE A.Y 2009-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 800/MUM/2019. BHARAT CHANDRAKANT JASANI. - 2 - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN CONFIRMING THE REOPENING THE CASE U /S 148 WHICH IS BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 24,29,16 1/- TO THE TOTAL INCOME OF THE APPELLANT BY ESTIMATING PROFIT ELEMENT @ 12.5 % ON ALLEGED BOGUS PURCHASE OF RS. 1,94,33,290 /- ON ALLEGED NON-GENUINE PURCHASES AND UNEXPLAINED PURCH ASES. 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING INTIMATION OF PENALTY PROCEEDIN G U/S 274 R.W.S 271(1)(C) OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LD. CIT(A) ERRED IN CONFIRMING THE CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 5. THE ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFOR E THE DATE OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADER IN BALL BEARINGS AND SLE EVES, FILED HIS RETURN OF INCOME FOR AY 2009-10 ON 30/09/2009, DECL ARING THE TOTAL INCOME AT RS. 10,04,180/-. THE ASSESSMENT WAS COMPL ETED U/S 143(3) OF THE I.T.ACT, 1961 ON 3/11/2011, DETERMINI NG THE TOTAL INCOME AT RS. 11,32,040/-. THE CASE HAS BEEN SUBSEQ UENTLY REOPENED U/S 147 OF THE ACT, ON THE BASIS OF INFORM ATION RECEIVED FROM DGIT, INVESTIGATION, MUMBAI, AS PER WHICH, SAL ES TAX AUTHORITIES OF GOVERNMENT OF MAHARASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS, WHO HAD ISSUED B OGUS 800/MUM/2019. BHARAT CHANDRAKANT JASANI. - 3 - PURCHASE BILLS TO VARIOUS PARTIES IN MUMBAI AND OTH ER PLACES. AS PER LIST OF BENEFICIARIES, THE ASSESSEE IS ONE OF T HE BENEFICIARY, WHO HAD TAKEN ACCOMMODATION BILLS OF BOGUS PURCHASE S FROM VARIOUS PARTIES AS LISTED BY THE AO IN PARA 2 OF H IS ASSESSMENT ORDER AMOUNTING TO RS. 1,94,33,290/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3).R.W.S. 147 OF THE I.T.ACT, 1961 ON 15/03/201 5 AND DETERMINED TOTAL INCOME OF RS. 35,61,201/-, AFTER M AKING ADDITIONS OF 12.50% GROSS PROFIT ON ALLEGED BOGUS PURCHASE FR OM THOSE PARTIES AND MADE ADDITIONS OF RS. 24,29,161/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A ), THE ASSESSE HAS FILED ELOBARATE WRITTEN SUBMISSIONS WHICH HAS B EEN REPRODUCED AT PARA 4 ON PAGES 3 TO 18 OF THE LD. CI T(A) ORDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFO RE THE LD.CIT(A) ARE THAT PURCHASE FROM THE ABOVE PARTY IS GENUINE, WHICH IS SUPPORTED BY NECESSARY EVIDENCES. THEREFOR E, NO ADDITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM THIRD PARTY. THE LD.CIT(A), AFTER CONSIDERING RELEV ANT SUBMISSION OF THE ASSESSEE AND ALSO, BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS. SIMITH P . SHETH (356 ITR 451) HAS UPHELD ADDITION MADE BY THE AO TOWARDS ALLEGED 800/MUM/2019. BHARAT CHANDRAKANT JASANI. - 4 - BOGUS PURCHASES TO 12.50% GROSS PROFIT ON TOTAL PUR CHASES FROM THOSE PARTIES. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW ALONG WITH CASE LAWS CITED BY BOTH PARTIES. W E FIND THAT THE LD. AO HAS MADE ADDITION OF 12.50% PROFIT ON ALLEGE D BOGUS PURCHASES ON THE GROUND THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF BOGUS PURCH ASE BILLS ISSUED BY HAWALA DEALERS. ACCORDING TO THE LD. AO, ALTHOUGH ASSESEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAIL ED TO FILE FURTHER EVIDENCE IN THE BACKDROP OF CLEAR FINDING BY THE SA LES TAX DEPARTMENT, MAHARASHTRA THAT THOSE PARTIES ARE INVO LVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELI VERY OF GOODS. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE INVESTIG ATION CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, AS PER WHICH NOTICE ISSUED U/S 133(6) TO THE PARTIES WERE RETURNED UN- SERVED BY THE POSTAL AUTHORITIES. THEREFORE, HE CAM E TO THE CONCLUSION THAT PURCHASES FROM THE SAID PARTIES ARE BOGUS IN NATURE. IT IS THE CONTENTIONS OF THE ASSESSEE BEFOR E THE LOWER AUTHORITIES THAT PURCHASES FROM THE ABOVE PARTY ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNISHED ALL POSSIBLE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS; STOCK DETAILS AND BANK STATEMENT TO 800/MUM/2019. BHARAT CHANDRAKANT JASANI. - 5 - PROVE THAT PAYMENT AGAINST SAID PURCHASES HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. 6 HAVING CONSIDERED ARGUMENTS OF BOTH THE PARTIES A ND ALSO, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES HAVE FAILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECES SARY EVIDENCES. ALTHOUGH, ASSESSEE HAS FILED CERTAIN BASIC EVIDENCE S, BUT FAILED TO FILE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHA SES TO THE SATISFACTIONS OF THE LD.AO. FURTHER, MERE PAYMENT B Y CHEQUE DOES NOT PROVE THE GENUINENESS OF PURCHASE, MORE PARTICU LARLY WHEN OTHER CIRCUMSTANTIAL EVIDENCE SAYS OTHERWISE. AT TH E SAME TIME, THE LD. AO HAD ALSO FAILED TO TAKE THE INVESTIGATIO N TO A LOGICAL CONCLUSION BY CARRYING OUT NECESSARY ENQUIRES, BUT HE SOLELY RELIED UPON INFORMATION RECEIVED FROM INVESTIGATION WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHA RASHTRA SALES TAX DEPARTMENT. THE AO NEITHER POINTED OUT ANY DESC REPANICES IN BOOKS OF ACCOUNTS NOR MADE OUT A CASE OF SALES OUTS IDE BOOKS OF ACCOUNTS. IN FACT, THE AO DID NOT DISPUTED SALES DE CLARED FOR THE YEAR. UNDER THESE CIRCUMSTANCES, IT IS DIFFICULT TO ACCEPT ARGUMENTS OF BOTH THE SIDES. FURTHER, IN A CASE WHERE PURCHAS ES ARE CONSIDERED TO BE PURCHASED FROM SUSPICIOUS/HAWALA D EALERS, VARIOUS HIGH COURTS AND TRIBUNALS HAD CONSIDERED AN IDENTICAL ISSUE IN LIGHT OF INVESTIGATION CARRIED OUT BY THE SALES TAX 800/MUM/2019. BHARAT CHANDRAKANT JASANI. - 6 - DEPARTMENT AND HELD THAT IN CASE OF PURCHASES CLAIM S TO HAVE MADE FROM ALLEGED HAWALA DEALERS, ONLY PROFIT ELEME NT EMBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES. THE HONBLE GUJARAT HIGH COURT, IN T HE CASE OF CIT VS SIMITH P.SHETH 356 ITR 451 HAD CONSIDERED A SIMI LAR ISSUE AND HELD THAT AT THE TIME OF ESTIMATION OF PROFIT FROM ALLEGED BOGUS PURCHASES NO UNIFORM YARDSTICKS COULD BE ADOPTED, B UT IT DEPENDS UPON FACTS OF EACH CASE. THE ITAT, MUMBAI, IN NUMBE R OF CASES HAD CONSIDERED AN IDENTICAL ISSUE AND DEPENDING UPO N FACTS OF EACH CASE, DIRECTED THE LD.AO TO ESTIMATE GROSS PRO FIT OF 10% TO 15% ON TOTAL ALLEGED BOGUS PURCHASES. IN THIS CASE, CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE THE LD. AO H AS MADE 12.50% PROFIT ADDITIONS, WHICH HAS BEEN UPHELD BY T HE LD. LD.CIT(A). ALTHOUGH, BOTH AUTHORITIES HAVE TAKEN 12 .50% RATE OF PROFIT FOR ESTIMATION OF INCOME FROM ALLEGED BOGUS PURCHASE, BUT NO ONE COULD SUPPORT SAID RATE OF GROSS PROFIT WITH NECESSARY EVIDENCES OR ANY COMPARABLE CASES. HOWEVER, IT IS S UPORTED BY VARIOUS DECISIONS OF HIGH COURTS AND TRIBUNALS. THE REFORE, CONSIDERING FACTS AND CIRCUMSTANCES OF THIS CASE AN D CONSISTENT WITH VIEW TAKEN BY THE CO-ORDINATE BENCH IN NUMBER OF CASES, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) H AS TAKEN A FAIR VIEW AND UPHELD ADDITION OF 12.50% GROSS PROFIT ON ALLEGED BOGUS PURCHASES TO SETTLE DISPUTE BETWEEN THE PARTIES AND HENCE, WE ARE 800/MUM/2019. BHARAT CHANDRAKANT JASANI. - 7 - INCLINED TO UPHOLD ORDER OF THE LD. CIT(A) AND DISM ISS APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 14/02/2020 SD/- SD/- (SAKTIJIT DEY) ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 14/02/2020 KRK, PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. / CONCERNED CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. / BY ORDER, //TRUE COPY// 1. ( ASST. REGISTRAR) / ITAT, MUMBAI