INCOME TAX OFFICER-26(2)(3), MUMBAI V. NOORJAHAN NIYAZ AHMED KHAN, MUMBAI

ITA 809/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0129 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAFAR HADSA
• Keywords: Accommodation entries
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY (JM) ITA NO. 809 /MUM/2019 ASSESSMENT Y EAR: 2011 - 12 INCOME TAX OFFICER - 26(2)(3), BUILDING NO. C - 11, 7 TH FLOOR, ROOM NO. 711, PRATYAKSHAKAR B HAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 VS. NOORJAHAN NIYAZ AHMED KHAN, ROOM NO. 5, OM HSG. SOC., LBS NAGAR, 90FT. ROAD, BEHIND HANUMAN MANDIR, SAKI NAKA, MUMBAI - 400072 PAN: ALVPK4821H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAURABH KUMAR RAI (D R) ASSESSEE BY : SHRI JAFAR HADSA (A R) DATE OF HEARING : 27 /05 /202 1 DATE OF PRONOUNCEMENT: 06 / 0 7 /202 1 O R D E R THIS IS AN APPEAL BY THE REVENUE AGAINST THE O RDER DATED 10.09.2018 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 38, MUMBAI FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE APPROPRIATE RATE OF PROFIT, WHICH CAN BE APPLIED FOR MAKING DISALLOWANC E ON ACCOUNT OF ALLEGED NON - GENUINE PURCHASES. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL AND IS STATED TO BE ENGAGED IN MANUFACTURING OF MS W ASHER S THROUGH HIS PROPRIETARY CONCERN M/S RI Y A Z ENGINEERING WORKS. FOR THE ASSESSMENT YEAR U NDER D ISPUTE, ASSESSEE FILED HIS RETURN OF INCOME ON 10.09.2011 DECLARING TOTAL INCOME OF RS. 6,36,220/ - . SUBSEQUENTLY, BASED ON INFORMATION RECEIVED FROM SALES TAX 2 ITA NO. 809 / MUM/201 9 ASSESSMENT YEAR: 20 11 - 1 2 DEPARTMENT, GOVT. OF MAHARASHTRA THROUGH DGIT (INV.), MUMBAI THAT THE ASSESSEE IS A BENEFICIARY O F ACCOMMODATION ENTRIES BY WAY OF BOGUS PURCHAS E BILLS WORTH RS. 61,56,780/ - , T HE ASSESSING OFFICER ( AO ) REOPEN ED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT , 1961 . IN COURSE OF ASSESSMENT PROCEEDINGS, THOUGH , THE ASSESSEE CLAIMED THAT THE PURCH ASES ARE GENUINE. HOWEVER, THE AO WAS NOT CONVINCED. THOUGH, THE AO HELD THAT THE GOODS IN QUESTION WERE NOT PURC HASED FROM THE DECLARED SOURCES, H OWEVER, HE WAS CONVINCED THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM GREY MARKET , THEREBY , SUPPRESSED TRUE PROFIT RATE. ACCORDINGLY, ESTIMATING THE PROFIT RATE AT 25% ON THE ALLEGED NON - GENUINE PUR CHASES, THE AO DISALLOWED RS. 15,39,195/ - . WHILE DECIDING ASSESSE E'S APPEAL ON THE ISSUE LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE AL LEGED NON GENUINE PURCHASES. 4. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THOUGH, THE AO HAS ENTERTAINED DOUBT REGARDING THE SOURCE OF PURCHASES OF THE DISPUTED GOODS, H OWEVER, HE WAS CONVINCED THAT THE ASSESSEE HAD PURCHASED THE GOO D S FROM UNVERIFIED SOURCES. FOR THIS REASON ALONE, HE HAS RESTRICTED THE DISALLOWANCE TO THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON - GENUINE PURCHASES BY EST IMATING AT 25%. WHEREAS, LEARNED COMMISSIONER (APPEALS) HAS REDUCED IT TO 12.5%. AFTER C ONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS DECISIONS OF THE TRIBUNAL IN SIMILAR NATURE OF CASES, I AM OF THE CONSIDER ED VIEW THAT THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE TO 12.5% OF THE ALL EGED NON GENUINE PURCHASES IS FAIR AND REASONABLE. HENCE, DESERVES TO BE UPHELD. ACCORDINGLY , I DO SO. GROUNDS ARE DISMISSED. 5. IN THE RESULT , APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JULY , 2021 . SD/ - ( SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI ; DATED: 06 / 07 /2021 ALINDRA, PS 3 ITA NO. 809 / MUM/201 9 ASSESSMENT YEAR: 20 11 - 1 2 / 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