ITO WD 1(2), KALYAN V. MUKESH SHALIGRAM SHARDA, BHIWANDI

ITA 93/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0370 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: IN
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 131; 10; 2; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 92 AND 93 / MUM/ 20 1 7 ( / ASSESSMENT YEAR S : 2 0 10 - 11 AND 2011 - 12 ) INCOME TAX OFFICER - 1(2), 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADS, KALYAN (W). / VS. SHRI MUKESH SHALIGRAM SHARDA, M/S SIYA CREATION 93/1, BRAHMAN ALI, ROOM NO.9, GURU ASHISH BLDG, BHIWANDI - 421302 ( / APPELLANT) : ( / RES PONDENT ) ./ PAN : AUFPS2113R ( / APPELLANT) : ( / RESPONDENT ) ITA NO. 15 4 / MUM/ 2017 ( / ASSESSMENT YEAR: 2 009 - 10 ) INCOME TAX OFFICER - 32(1)(5), 203, 2 ND FLOOR , C - 11, PRATYAKSHA BHAVAN, BANDRA KURLA COMPLE X, BANDRA (E), MUMBAI - 400051 / VS. M/S HAS ENTERPRISE, SUNDERDHAM I T CHS, RAMBAUG LANE, OFF S V ROAD, POISAR, BORIVALI (E), MUMBAI - 400066 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AADFH7953G ( / APPE LLANT) : ( / RESPONDENT ) 2 ITA NO. 93 AND 93 /MUM/20 1 7 AND 15 4 /MUM/2017 / REVENUE BY : SHRI SUMAN KUMAR / ASSESSEE BY : IN ITA NO.92 AND 93/MUM/17 SHRI N A KULKARNI IN ITA NO.15 4 /MUM/2017 - NONE / DATE OF HEARING : 21.8. 2017 / DATE OF PRONOUNCEMENT : 21. 8 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED ARE APPEAL S BY THE REVENUE PERTAINING TO ASSESSMENT YEAR S 20 10 - 11 AND 2011 - 12 . THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 2 , THANE , DATED 2 6 .1 0 .201 6 WHICH IN TURN HAS ARISE N FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 2 4 .3.201 5 UNDER SECTION 143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). APPEAL BEARING ITA NOS.15 4 /M/2017 IS ALSO FILED BY THE REVENUE AGAINST THE ORDE R OF LD.CIT(A) DATED 27.10.2016 FOR THE ASSESSMENT YEAR 2009 - 10. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT IN ITA NO.154/MUM/2017 NEITHER THE ASSESSEE OR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEAL WAS CALLED FOR HE ARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL OF THE REVENUE IN ABSENCE OF ASSESSEE AFTER HEARING THE LD. DR. 3 ITA NO. 93 AND 93 /MUM/20 1 7 AND 15 4 /MUM/2017 SINCE ISSUE INVOLVED IN A LL THESE APPEALS PERTAIN S TO THE ADDITION ON ACCOUNT OF BOGUS PURCHASES, THESE APPEALS WERE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO. 92/ MUM/201 7 2. T HE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF BOGUS PURCHASE OF RS.87,87,645/ - AND SUSTAINING THE ADDITION TO THE EXTENT OF 12.5 % OF THE SAID HAWALA PURCHASES AT RS.10,98,456/ - BY THE LD.CIT(A) AS AGAINST MADE BY THE AO EQUAL TO 100% O F THE HAWALA BOGUS PURCHASE S . 3. FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 8.10.2010 DECLARING TOTAL INCOME OF RS.1,93,208/ - . T HE AO RECEIVED INFORMATION FROM THE DGIT(INV), GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE WA S ONE OF TH E BENEFICIARY OF HAWALA PURCHASES FROM THE FOLLOWING PARTIES WHO WERE ENGAGED IN HAWALA BRACKETS AS PER DETAILS HERE UNDER : S.NO. NAME OF THE ENTRY PROVIDER MAHASHTRA VAT NO. AY AMOUNT IN THE BILLS TAKEN BY THE ASSESSEE 1 SAMIR TRADING CORPORATION 2 7830386376V 2010 - 11 2509621 2 SKAND INDUSTRIES 27500537441V 2010 - 11 2261862 4 ITA NO. 93 AND 93 /MUM/20 1 7 AND 15 4 /MUM/2017 3 MAHAVIR ENTERPRISES 27560556517V 2010 - 11 2808278 4 RAHUL TRADERS 27590509892V 2010 - 11 907884 5 ARIHANT TRADERS 27230613104V 2010 - 11 300000 TOTAL 87,87,645 THEREAFTER T HE AO ISSUED SHOW CAUSE NOTICE/S 148 OF THE ACT DATED 17.5.2013 TO THE ASSESSEE WHICH WAS COMPLIED WITH VIDE LETTER DATED 16.9.2013 SUBMITT ING THAT THE RETURN FILED ON 8.10.2010 BE TREATED AS RETURN FILED TO THE REPLY TO NOTICE DATED 17.5.2013. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE MADE TOTOAL PURCHASES OF RS.1,67,62,854/ - DURING THE YEAR WHICH INCLUDE D PURCHASE S OF RS.87,87,645/ - MADE FROM THE HAWALA OPERATORS AND ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. THE ASSESSEE DENIED TO HAVE MADE ANY BOGUS PURCHASE FROM THE SAID PARTIES BY SUBMITTING THAT THE GOODS WERE RECEIVED AND THE PAYMENTS OF THE SAID GOODS WERE MADE THROUGH CHEQUES. THE AO NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND FINALLY FRAMED THE ASSESSMENT VIDE ORDER DATED 24.3.2015 PASSED UNDER SECTION 143(3) R.W.S.147 OF THE ACT BY MAKING ADDITION OF THE ENTIRE AMOUNT OF RS.87,87,645/ - ASSESSING THE TOTAL INCOME AT RS.89,80,850/ - . IN THE APPELLATE PROCEEDINGS, THE FAA PARTLY A LLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING VERY CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : FINDING FOR A.Y. 2010 - 11 - FROM THE ABOVE CHART, IT IS NOTICED THAT THE GROSS PROFIT RATE IN A.Y.201O - 11 HAD BEEN DECL ARED AT LOWER 5 ITA NO. 93 AND 93 /MUM/20 1 7 AND 15 4 /MUM/2017 SIDE I.E. @ 4.52%, AS COMPARED TO 2014 - 15 (5.96%) I.E. NON - HAWALA YEAR, FOR WHICH THE APPELLANT COULD NOT OFFER ANY VALID EXPLANATION. THE APPELLANT HAD SUPPRESSED ITS GP BY 1.44%, AS COMPARED TO A YR 2014 - 15. THE QUANTUM OF SUPPRESSED GP I S WORKED OUT AT RS. 2.71.804/ - (18875293 X 1.44/100)., THE APPELLANT BEING A TRADER IN YARN AND CONSIDERING THESE FACTS/DEFECTS IN ENTIRETY AND RELYING ON THE DECISION IN THE CASE OF SIMIT P SETH (2013) 356 ITR 451 (GUJ), IN MY CONSIDERED OPINION, THE DIS ALLOWANCE @12.5% OUT OF HAWALA PURCHASES, AS REQUESTED BY THE LD. AR, WILL BE REASONABLE. THE SAME IS WORKED OUT AT RS . 10,98,456/ - (87,87,645/ - X 12.5%). SINCE THE DISALLOWANCE OF HAW ALA PURCHASES @ 12.5%, I.E. RS 10,98,456/ - , IS HIGHER THAN THE SUPPRESSE D GP OF RS 2,71,804/ - , THEREFORE, SUSTAINED AND BALANCE DISALLOWANCE OF RS.76,89,189/- (87,87,645/ - LESS RS 10,98,456/ - ) IS DELETED. 4. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE OR DERS OF AUTHORITIES BELOW . THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS AVAILED SOME ENTRIES OF BOGUS PURCHASES FROM THE HAWALA DEALERS TO THE TUNE OF RS.87,87,645/ - FROM FIVE PARTIES AS STATED HEREINABOVE. THE INFORMATION RECEIVE D BY THE AO FROM THE DGIT(INV) AND ALSO FROM VAT DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE AO AFTER CONSIDERING AND REJECTING THE SUBMISSIONS OF THE ASSESSEE DISALLOWED THE ENTIRE PURCHASES WHEREAS THE LD.CIT(A) SUSTAINED THE ADDITIONS PARTLY AT THE RATE OF 12.5% OF BOGUS PURCHASES WHICH WORKED OUT TO RS.10,98,456/ - BY HOLDING THAT THE GP DURING THE YEAR HAS F ALL EN DOWN BY 1.44% AS COMPARED TO THE EARLIER YEAR. IN THIS CASE, THE ASSESSEE DENIED TO HAVE MADE ANY SUCH BOGUS 6 ITA NO. 93 AND 93 /MUM/20 1 7 AND 15 4 /MUM/2017 PURCHASE S IN THE ASSESSMENT PROCEEDINGS . THE AO HOWEVER, ISSUED NOTICE TO THE PARTIES U/S 133(6) WHICH WERE RETURNED UNSERVED. THEREAFTER THE AO ALSO DEPUTED INSPECTOR FROM THE DEPARTMENT TO SERVE THE SUMMON U/S 131 OF THE ACT ON THE SAID HAWALA PARTIES. ON THE SPOT INQUIRY , IT WA S REVEALED THAT NO SUCH BUSINESS WA S B EING EVER CARRIED OUT BY THE SAID FIVE PARTIES . HOWEVER, THE AO DID NOT DISPUTE THE SALES MADE BY THE ASSESSEE. UNDER THESE FACTS AND CI R CUMS TA NCES OF THE CASE, WE A R E IN AGREEMEN T WI TH VIEW BY THE LD. CIT(A) UPHOLDING THE ADDIT ION PARTLY AT 12.5% OF SUCH HAWALA PURCHASES. THEREFORE, WE ARE AFFIRMING THE ORDER OF LD.CIT(A). ACCORDINGLY , WE DISMISS T HE APPEAL OF THE REVENUE. ITA NO.93/MUM/2017 5 . ON IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE, WE HAVE DECIDED THE ISSUE AND DI SMISSED THE APPEAL OF THE REVENUE IN THE ITA NO.9 2 /MUM/201 7 . THE FACTS BEING THE SAME, THE FINDINGS OF ITA NO.9 2 /MUM/201 7 WOULD , MUTATIS MUTANDIS , APPLY TO TH IS APPEAL AS WELL. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 15 4 /MUM/2017 6 . ON IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE, WE HAVE ALREADY DECIDED THE ISSUE AND DISMISSED THE APPEAL OF THE REVENUE IN THE ITA NO.92/MUM/2017. THE FACTS BEING THE SAME, THE FINDINGS OF ITA 7 ITA NO. 93 AND 93 /MUM/20 1 7 AND 15 4 /MUM/2017 NO.92/MUM/2017 WOULD , MUTATIS MUTANDIS , APPLY TO THIS APPE AL AS WELL. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 7 . IN THE RESULT, THE APPEAL S OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 21ST AUG , 2017. S D SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21 ST AUG .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI