M/S JAYDEEP METALS & TUBES, MUMBAI V. ITO-19(2)(1), MUMBAI

ITA 86/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0628 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARBINA SHAIKH
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . ITA NO.86/MUM/2019(A.Y.2011-12) M/S. JAYDEEP METALS & TUBES, 40/27, GROUND FLOOR, SHREE NIWAS BLDG., 2 ND CARPPENTER STREET, MUMBAI 400 004 PAN: AAFFJ3431M ...... # / APPELLANT VS. ITO WARD 19(2)(1), MUMBAI ..... &'/ RESPONDENT #(/ APPELLANT BY : MS. ARBINA SHAIKH &'(/ RESPONDENT BY : SHRI R. BHOOPATHI )' / DATE OF HEARING : 23/01/2020 * )' / DATE OF PRONOUNCEMENT : 13/03/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-6, MUMBAI (IN SHORT THE CIT(A) ) DATED 26/10/2018 FOR THE ASSESSMENT YEAR 2011-12. 2. MS. ARBINA SHAIKK, APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN TRADING OF FERROUS AND N ON-FERROUS METALS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEAR ON 2 . ITA NO.86/MUM/2019(A.Y.2011-12) 20/09/2011 DECLARING TOTAL INCOME OF RS.53,203/-. ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT, ASSESSMENT FOR ASSESSMENT YEAR 2010-11 WAS REOPENED BY THE ASSESS ING OFFICER ON THE GROUND THAT ASSESSEE HAS OBTAINED BOGUS PURCHASE B ILLS AMOUNTING TO RS.40,51,270/- FROM DECLARED HAWALA DEALERS. THE A SSESSING OFFICER MADE ADDITION OF RS.5,06,408/- I.E. 12.5% OF THE TOTAL A LLEGED BOGUS PURCHASES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 11/11/2016 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISS ED THE APPEAL OF THE ASSESSEE, HENCE, THE PRESENT APPEAL BY THE ASSESSEE . THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAS RAISED GROUNDS CHALLENGING THE VALIDIT Y OF REOPENING AS WELL AS ADDITION ON MERITS. THE LD.AUTHORIZED REPRESENTATI VE OF THE ASSESSEE FURTHER SUBMITTED THAT AT THIS STAGE, THE ASSESSEE IS ONLY PRESSING GROUNDS CHALLENGING THE ADDITION ON MERITS. THE ADDITION M ADE BY THE REVENUE AUTHORITIES @12.5% ON THE ALLEGED NON-GENUINE PUR CHASES IS OVER AND ABOVE THE NORMAL PROFIT OF 11.13% DECLARED BY THE ASSESSE E. THE ASSESSING OFFICER HAS NOT REJECTED BOOKS OF ACCOUNT AND HAS NOT RA ISED DOUBT OVER GP DECLARED BY THE ASSESSEE. 3. ON THE OTHER HAND, SHRI R. BHOOPATHI, REPRESENTI NG THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD.DEP ARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER AND CIT(A) HAS ESTIMATED GP @12.5% IN LINE WITH THE DECISION OF HONBLE GUJA RAT HIGH COURT IN THE CASE 3 . ITA NO.86/MUM/2019(A.Y.2011-12) OF CIT VS. SIMIT P. SHETH,356 ITR 451. THE LD.DEPA RTMENTAL REPRESENTATIVE PRAYED FOR UPHOLDING THE IMPUGNED ORDER AND DISMISS ING THE APPEAL OF ASSESSEE. 4. BOTH SIDES HEARD. ORDERS OF AUTHORITIES BELOW PE RUSED. THE ASSESSEE MADE PURCHASES TO THE TUNE OF RS.40,51,270/- FROM T HE HAWALA DEALERS. THE ASSESSING OFFICER ESTIMATED THE GP AT 12.5% ON TH E ALLEGED BOGUS PURCHASES. THE CIT(A) HAS UPHELD THE SAME. BEFORE THE TRIBUNA L, ASSESSEE ASSAILED GP ESTIMATED BY THE AUTHORITIES BELOW ON ALLEGED BOGUS PURCHASES IS VERY MUCH ON THE HIGHER SIDE AND IS OVER AND ABOVE THE GP DEC LARED BY THE ASSESSEE. THE GP DECLARED BY THE ASSESSEE I.E. 11.13%, HAS NOT BEEN DOUBTED BY THE REVENUE. AT THE SAME TIME IT IS OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE HIS ONUS OF PROVING GENUINENESS OF THE PURCHASE TRANSACTIONS. THE ASSESSEE COULD NEITHER PRODUCE THE VENDORS NOR THE ASSESSEE COULD SHOW TRAIL OF GOODS BY PROVIDING SUPPORTING DOCUMENTS VIZ. DEL IVERY CHALLANS, TRANSPORT RECEIPTS, OCTROI RECEIPTS, ETC. SINCE, THE SALES D ECLARED BY ASSESSEE HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER, THE ASSESSEE MAKING PURCHASES FROM GREY MARKET AND THEREAFTER OBTAINING PURCHASE BILL S FROM HAWALA DEALERS CANNOT BE RULED OUT. UNDER SUCH SITUATION IT IS ON LY THE PROFIT ELEMENT EMBEDDED IN BOGUS PURCHASES THAT HAS TO BE BROUGHT TO TAX. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, I DEEM IT APPROP RIATE TO MODIFY THE IMPUGNED ORDER BY ADOPTING GP RATE OF 11.13% ( AS DECLARED B Y THE ASSESSEE) ON ALLEGED BOGUS PURCHASES AS WELL. THE APPEAL OF THE ASSESSE E IS PARTLY ALLOWED IN THE TERMS AFORESAID. 4 . ITA NO.86/MUM/2019(A.Y.2011-12) 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY THE 13TH DAY OF MARCH, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, ,/ DATED 13/03/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT , 2. &' / THE RESPONDENT. 3. -' ( )/ THE CIT(A)- 4. -' CIT 5. 01&' , . . . , / DR, ITAT, MUMBAI 6. 12345 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI