ITO 20(3)(4), MUMBAI V. TUSHAR A. SHAH (HUF), MUMBAI

ITA 863/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0063 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CULLA MUMBAI PANAAAHT F
• Keywords: Bogus purchase

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL IBENCH M UMBAI , ,, , , , , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAVISH SOOD, JUDICIAL MEMBER ./I.T.A./863/MUM/2017 , /ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER-20(3)(4) ROOM NO.616, 6TH FLOOR PIRAMAL CHAMBER, PAREL MUMBAI-400 012. VS. TUSHAR A. SHAH (HUF) 202, 2ND FLOOR, SUMER TOWER NO.1 108, SETH MOTISHA LANE BYCULLA, MUMBAI-400 010. PAN:AAAHT 9068 F ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI SAURABH KUMAR RAI-DR ASSESSEE BY: SHRI NONE / DATE OF HEARING: 22/08/2017 / DATE OF PRONOUNCEMENT: 22/08/2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 30/11/2016 OF CIT(A) -32,MUMBAI, THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE-HUF,ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, FILED ITS RETURN OF INCOME ON 26/9/2009,DECLARING T OTAL INCOME OF RS.19.06 LAKHS.THE AO COMPLETED THE ASSESSMENT U/S.143(3) R.W.S. 147 OF T HE ACT,ON 20/3/15,DETERMINING ITS INCOME AT RS.84.91 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT GRANTING RELIEF OF RS.40.10 LAKHS BY RESTRICTING THE ADDITION FROM 12.5% TO 4.8% OF TOTAL BOGUS PURCHASE S FROM HAWALA PARTIES. DURING THE ASSESSMENT PROCEEDINGS THE AO RECEIVED INFORMATION FROM DGIT (INV.), THAT THE ASSESSEE HAD INDULGED IN MAKING BOGUS PURCHASES FROM NINE PARTIE S, THAT THE TOTAL OF SUCH ALLEGED PURCHASES WAS RS.5.20 CRORES.HE DIRECTED THE ASSESS EE TO PRODUCE THE DETAILS OF THE PURCHASES MADE FROM DHARMESH TRADING CO. (RS.1.44 CRORES),SHR EE DURGA STEEL PIONEER TRADING CORP. (RS.20,925/-), M/S. JV INTERLINK (RS.12.70 LAKHS), JINDAL STEEL CORPN (RS.19.93 LAKHS), BRIGHT CORPN. (RS.18.75 LAKHS);YASH IMPEX (RS.1.66 CRORES) ,MARUTI STEEL TRADERS (RS.13,178/-), QUALITY ENTERPRISES (RS.10.41 LAKHS); OM ENTERPRISE S (RS.1.48 CRORES).HE ISSUED NOTICES U/.S 133(6)TO THE SUPPLIERS OF THE GOODS,BUT THE NOTICES WERE RETURNED AS UNSERVED FROM POSTAL AUTHORITIES.THE ASSESSEE WAS ASKED TO FILE EXPLANAT ION IN THAT REGARD. AFTER CONSIDERING THE ITS SUBMISSION,THE AO HELD THAT IT HAD ARRANGED BILLS F ROM THE ABOVE PARTIES TO SUPPRESS TRUE 863/M/17-TUSHAR A.SHAH(HUF) 2 PROFITS.ACCORDINGLY,HE ADDED 12.5% (RS.65.10 LAKHS) OF TOTAL AMOUNT OF BOGUS PURCHASES MADE FROM THESE PARTIES. 3. AGGRIEVED BY THE ORDER OF THE AO,ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE ELABORATE SUBMISSIONS. AFTE R CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSION OF THE ASSESSEE,HE HELD THAT THERE W AS ENOUGH CIRCUMSTANTIAL EVIDENCE TO CAST A DOUBT ON ALLEGED PURCHASES,THAT THE AO DID NOT DOUB T THE SALES MADE, THAT THE SALES COULD NOT HAVE BEEN MADE WITHOUT PURCHASES OF THE GOODS.HE RE FERRED TO THE CASES OF MOTIPUR SUGAR FACTORY LTD. (94ITR401)SEETARAMA MINING CO.(68ITR1) AND HELD THAT INFORMATION RECEIVED FROM SALES TAX DEPARTMENT HAS TO BE GIVEN DUE WEIGH T. HE ALSO REFERRED TO THE CASE MADHUKANT B.GANDHI(ITA/1950/MUM/2009,DT.23.2.2010)JITENDRA S. MOTANI (ITA.S 3024-3028/DEL/2011; AND HELD THAT THE AO HAD NOT DOUBTED THE SAME,THAT IT WAS POSSIBLE THAT ASSESSEE MIGHT HAVE PURCHASED THE MATERIAL IN CASH FROM THE OPEN MARKE T , THAT ONLY THE PROFIT ELEMENT EMBEDDED IN PURCHASES HAD TO BE TAXED, HE RELIED UPON THE CA SE OF BHOLANATH POLYFAB PVT.LTD. (355 ITR 290)SANJAY OIL CAKE INDUSTRIES (316ITR274)AND SIMIT P. SHETH (356/451) AND OBSERVED THAT THE ASSESSEE WAS NOT IN A POSITION TO PROVE THE EX ISTENCE OF THE SUPPLIERS, THAT IT HAD RECORDED GP OF 9.36% IN THE BOOKS OF ACCOUNT, THAT IT HAD OF FERED FOR ADDITION ON AVERAGE GP % OF CURRENT YEAR AND SUBSEQUENT YEAR @ 4.8% (GP FOR CUR RENT YEAR 3.65% + GP OF EARLIER YEAR 5.94%).FINALLY,HE DIRECTED THE AO TO ESTIMATE PROFI T @ 4.8% ON THE TOTAL ALLEGED BOGUS PURCHASES OF RS.5.20 CRORES NAND REDUCED THE ADDITI ON TO RS.25,00,013/- AND ALLOWED RELIEF OF RS.40.10 LAKHS TO THE ASSESSEE. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE (DR) ARGU ED THAT THE ASSESSEE HAD NOT PRODUCED THE PARTIES FROM WHOM IT HAD CLAIMED TO HAVE PURCHA SED GOODS,THAT THE AO HAD ALREADY GRANTED SUBSTANTIAL RELIEF,THAT THERE WAS NO JUSTIF ICATION FOR REDUCING THE ADDITION MADE BY THE AO. NONE APPEARED ON BEHALF OF THE ASSESSEE. 5. WE HAVE PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD NOT PRODUCED THE PARTIES FROM WHOM IT HAD CLAIMED TO HAVE PURCHASED GOODS,THAT THE AO HAD NOT DOUBTED THE SALES MADE BY THE ASSESSEE,THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES,THAT THE ASSESSEE WAS NOT PROVIDED THE COPIES OF STATEMENTS OF THE ALLEGED HAWALA DEALERS BY THE AO, THAT THE AO HAD MADE AN ADDITION OF RS.65.10 LAKHS@ 12.5% OF THE TOTAL PURCHASES OF RS.5.20 CRORES,THAT THE ASSESSEE HAD RECORDED GP OF 9.36% I N ITS BOOKS OF ACCOUNT,THAT THE FAA CONSIDERED THE GP OF THE CURRENT YEAR AND THE PREVI OUS YEAR FOR TAKING AVERAGE RATE OF GP, THAT HE REDUCED THE ADDITION MADE BY THE AO TO RS.2 5 LAKHS(APPROXIMATELY).WE FIND THAT IN THE CASE OF SIMIT P.SHETH(SUPRA),THE HON'BLE GUJARA T HIGH COURT HAD HELD THAT ENTIRE PURCHASE 863/M/17-TUSHAR A.SHAH(HUF) 3 PRICE CANNOT BE ADDED IN CASE OF BOGUS PURCHASES I. E. PURCHASES MADE FROM THE PARTIES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNT,THAT O NLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES COULD BE ADDED TO THE INCOME OF THE ASSES SEE, THAT ESTIMATION OF RATE OF PROFIT RETURN MUST VARY WITH THE NATURE OF BUSINESS.IN THE CASE U NDER APPEAL THE ASSESSEE HAD SHOWN GP AT 9.36%, THAT THE AVERAGE GP ADOPTED BY FAA WAS,IN OU R OPINION, TAKEN CORRECTLY @ 4.8%. IT IS A MATTER OF ESTIMATING THE PROFIT AND NO ARITHMETIC AL CORRECTNESS CAN BE EXPECTED IN SUCH CASES.THEREFORE,WE ARE NOT INCLINED TO INTERFERE WI TH THE ORDER OF THE FAA.CONFRMING THE SAME,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE O PEN COURT ON 22 ND ,AUGUST, 2017. 22 ,2017 SD/- SD/- ( / RAVISH SOOD) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 22.08.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR I BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.