DHARENDRA BABULAL MEHTA, MUMBAI V. INCOME TAX OFFICER - WARD 4(1), MUMBAI

ITA 912/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0218 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Tangible material; Accommodation entries
• Section: 133(6); 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 91 2 / MUM . /2018 ( ASSESSMENT YEAR : 20 1 1 1 2 ) DHARENDRA BABULAL MEHTA 6/B, NEW SANGAM BUILDING SREEPAL COMPLEX VIRAR (WEST), THANE 401 202 PAN AABPM2211Q . APPELLANT V/S INCOME TAX OFFICER WARD 4 ( 1 ), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 1 0 .09.2018 DATE OF ORDER 19.09.2018 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 7 TH DECEMBER 2017 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 3 , MUMBAI, FOR THE ASSESSMENT YEAR 20 11 12 . 2 . WHEN THE APPEAL WAS CALLED FOR HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. IT IS SEEN FROM RECORD, NOTICE OF HEARING ISSUED TO THE ASSESSEE PER REGISTERED POST IN THE ADDRESS MENTIONED IN COL. NO.10 OF FORM NO.36, HAS RETURNED UNSERVED WITH THE PO STAL REMARK LEFT. THEREFORE, I PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 2 DHARENDRA BABULAL MEHTA 3 . THE ISSUE IN THE PRESENT APPEAL RELATES TO THE ADDITION OF ` 19,61,061 ON ACCOUNT OF NON GENUINE PURCHASE S. 4 . BRIEF FACTS ARE, THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 29 TH SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 2,91,840. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT FIVE PARTIES FROM WHOM THE ASSESSEE HAS SHOWN PURCHASES OF ` 19,61,061 ARE HAWALA OPERATORS PROVIDING ACCOMMODATION ENTRIES, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHAS ES MADE FROM THE CONCERNED PARTIES BY PRODUCING THE PARTIES PHYSICALLY AND FURNISHING CONFIRMATION, DELIVERY CHALLAN, ETC. HOWEVER, AS OBSERVED BY THE ASSESSING OFFICER , THE ASSESSEE FAILED TO PRODUCED THE NECESSARY EVIDENCE EVEN THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES RETURNED UNSERVED. S INCE , IN SPITE OF SEVERAL OPPORTUNITIES BEING GIVEN TO THE ASSESSEE TO PROVE TH E PURCHASES, HE FAILED TO DO SO, T HE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THUS, ULTI MATELY HE CONCLUDED THAT PURCHASES OF ` 19,61,061, IS NON GENUINE 3 DHARENDRA BABULAL MEHTA AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE LEARNED COMMISSIONER (APPEALS), HE ALSO SUSTAINED THE ADDITION. 5 . I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS REGARDS THE ISSUE RELATING TO VALIDITY OF PROCEEDING INITIATED UNDER SECTION 147 OF THE ACT, I FIND THAT ON THE BASIS OF SPECIFIC INFORMATION RECEIVED FROM EXTERNAL SOURCES THAT CERTAIN PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE, THE ASSESSING OFFICER HAS RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THEREFORE, THE ASSESSING OFFICER HAD TANGIBLE MATERIAL TO FORM THE BELIEF REGARDING ESCAPEMENT OF INCOME. MOREOVER, IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS SEPARATELY DEALT WITH THE OBJECTION FILED BY THE ASSESSEE AND PROVIDED AND COMMUNICATED TO THE ASSESSEE ALL ADVERSE MATERIALS IN HIS POSSESSION. THUS, IT CANNOT BE SAID THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT IS INVALID. AS REGARDS THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS), IT NEEDS TO BE OBSERVED THAT THE ASSESSEE IN SPITE OF SUFFICIENT OPPORTUNITY BEIN G GRANTED TO HIM WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASE THROUGH PROPER DOCUMENTARY EVIDENCES. NEITHER THE ASSESSEE WAS ABLE TO PRODUCE EVEN A SINGLE PARTY BEFORE THE ASSESSING OFFICER NOR COULD HE FURNISH CONFIRMATION FROM THE 4 DHARENDRA BABULAL MEHTA CONCERNED PARTIES. N O EVIDENCE WAS PRODUCED BY HIM TO PROVE THE DELIVERY OF GOODS. IN THESE CIRCUMSTANCES, IT HAS TO BE CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF PURCHASES. HOWEVER, IT IS EVIDENT, THE ASSESSING OFFICER HAS NOT DISPUTE D THE SALES EFFEC TED BY THE ASSESSEE , MEANING THEREBY , IN THE ABSENCE OF PURCHASES MADE ASSESSEE COULD NOT HAVE EFFECTED THE SALES. THEREFORE, IT HAS TO BE PRESUMED THAT THE ASSESSEE HAS PURCHASED THE GOODS FROM THIRD PARTIES OTHER THAN THE DECLARED SOURCE THEREBY AVOIDING PAY MENT OF VAT/ OTHER TAX. T HEREFORE, IN THESE CIRCUMSTANCES THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES HAS TO BE TAXED TO TAKE CARE OF THE REVENUE LEAKAGE. THEREFORE, ON OVERALL CONSIDERATION OF FACTS AND MATERIAL ON RECORD, I AM OF THE VIEW THAT ADDI TION @ 12.5% OF THE NON GENUINE PURCHASES OF ` 19,61,061 NEEDS TO BE SUSTAINED. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. GROUNDS RAISED ARE PARTLY ALLOWED. 6 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORD ER PRONOUNCED IN THE OPEN COURT ON 19.09.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 19.09.2018 5 DHARENDRA BABULAL MEHTA COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI