ITO, 19(1)(1), MUMBAI V. AMIT MAFATLAL SHAH, MUMBAI

ITA 941/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6486 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K GUBGOTRA J
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 44AB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTATNT MEMBER ITA NO. 940 & 941/MUM/2019 ( ASSESSMENT YEAR: 2010-11 & 2011-12) INCOME TAX OFFICER 19(1)(1), ROOM NO. 223, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007. VS. SHRI AMIT MAFATLAL SHAH, ROOM NO. 27, 78/80, GORA GANDHI BUILDING, 2 ND FLOOR, C.P. TANK ROAD, C.P. TANK, MUMBAI-400004. PAN/GIR NO.AABPS 5009 A (APPELLANT ) .. (RESPONDENT ) C.O. NO. 21 & 20/MUM/2019 (ARISING OUT OF ITA NO. 940 & 941/MUM/2019) ( ASSESSMENT YEAR: 2010-11 & 2011-12) SHRI AMIT MAFATLAL SHAH, ROOM NO. 27, 78/80, GORA GANDHI BUILDING, 2 ND FLOOR, C.P. TANK ROAD, C.P. TANK, MUMBAI-400004. VS. INCOME TAX OFFICER 19(1)(1), ROOM NO. 223, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007. PAN/GIR NO. AABPS 5009 A (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI R.K. GUBGOTRA (JCIT-DR) ASSESSEE BY SHRI VIMAL PUNMIYA (AR) DATE OF HEARING 06/02/2020 DATE OF PRONOUNCEMENT 10/02/2020 / O R D E R PER: R.C. SHARMA, A.M. THESE APPEALS FILED BY THE REVENUE AND CROSS OBJEC TIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDE RS OF THE LD. CIT(A)- 03, MUMBAI DATED 14/09/2018 FOR THE A.Y. 2010-11 & 2011-12 ITA NO. 940 & 941/MUM/2019 & CO 21 & 20/MUM/2019 ITO VS SHRI AMIT MAFATLAL SHAH 2 RESPECTIVELY IN THE MATTER OF ORDER PASSED U/S 143( 3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON-FERROUS META L. THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2010-11 ON 25/0 9/2010 DECLARING TOTAL INCOME AT RS. 9,63,794/- AND FOR A.Y. 2011-12 ON 28/09/2011 DECLARING TOTAL INCOME AT RS. 19,21,540/-. NOTICE U /S 148 DATED 30/10/2014 FOR A.Y. 2010-11 AND DATED 07/11/2014 FO R A.Y. 2011-12 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE CASE W AS REOPENED ON THE INFORMATION RECEIVED BY THE INCOME TAX MUMBAI F ROM SALES TAX DEPARTMENT THROUGH DGIT (INV.), MUMBAI THAT ASSESSE E WAS ENGAGED IN THE PRACTICE OF INFLATING THE PURCHASES THROUGH THE HAWALA PARTIES BY TAKING BOGUS BILLS WITHOUT DELIVERY OF GOODS FROM P ARTIES. IN THE REASSESSMENT PROCEEDINGS, THE A.O. MADE ADDITION BY ESTIMATING PROFIT @ 12.5%. 3. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS RESTRI CTED THE ADDITION TO THE EXTENT OF 8% AFTER ALLOWING CREDIT FOR THE G .P. ALREADY DECLARED BY THE ASSESSEE AFTER OBSERVING AS UNDER: 5.1 I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE CONTENTION OF THE APPELLANT THAT IT MAINTAINED STOCK REGISTER AND THAT THE PURCHASES AND SALES WERE DULY REFLECTED IN THE STOCK ITA NO. 940 & 941/MUM/2019 & CO 21 & 20/MUM/2019 ITO VS SHRI AMIT MAFATLAL SHAH 3 REGISTER IS NOT CORRECT. IT IS SEEN FROM THE ANNEXU RE-IX OF THE TAX AUDIT REPORT AND THE SECTION 44AB OF THE ACT TH AT THE APPELLANT DID NOT MAINTAIN STOCK REGISTER. THE REMA RKS OF THE AUDITORS ARE REPRODUCED BELOW: 'THE SAID ITEMS ARE OF DIFFERENT SIZES, GRADE AND SPECIFICATIONS AND IT IS PRACTICALLY NOT POSSIBLE T O MAINTAIN THE STOCK RECORDS. THERE MAY BE SOME ITEMS WHICH MAY BE CONSIDERED AS PRINCIPAL ITEMS BUT IN ABSENCE OF STOCK RECORD WE ARE UNABLE TO GIVE THE D ETAILS.' 5.2 THE FACTS IN THE CASE OF GEO LIFE ORGANICS VS ACIT (ITA NO. 3699/MUM 2016) CITED BY THE APPELLANT ARE DIFFERENT FROM THE FACTS OF THE APPELLANT'S CASE. IN THE CASE OF G EO LIFE IRGANICS THE ASSESSEE (GEO LIFE ORGANICS) HAD PRODU CED CONFIRMED LEDGER COPIES OF CONCERNED PARTIES, BANK ACCOUNT STATEMENT, PURCHASE BILLS, DELIVERY CHALLANS THE GE NUINENESS OF PURCHASES. BUT IN THIS CASE, WHEN ASKED TO PRODUCE EVIDENCE AND DETAILS IN SUPPORT OF THE CLAIM OF PUR CHASES, THE APPELLANT DID NOT SUBMIT THE DETAILS CALLED FOR AND INSTEAD, AS PER PARA 7 OF THE ASSESSMENT ORDER, REQUESTED TH E AO TO RESTRICT ADDITION TO THE GROSS PROFIT. IN THE COURS E OF THE APPELLATE PROCEEDINGS THE AR OF THE APPELLANT SUBMI TTED A COPY OF LETTER WHICH WAS FILED ON 11.03.2016 WERE I N THE APPELLANT SUBMITTED AS UNDER: 'KINDLY CONSIDER THE PURCHASES ARE GENUINE MADE DUR ING THE COURSE OF BUSINESS AND ASSESSED ACCORDINGLY. TO AVO ID THE FURTHER LITIGATION AND TO BUY PEACE THE ASSESSEE RE QUEST FOR A REASONABLE GROSS PROFIT ADDITION ON THE SOME PURCHA SES CONSIDERING THE GROSS PROFIT ALREADY DECLARED IN TR ADING ACCOUNT.' 5.3 THE APPELLANT SUBMITTED A COPY OF LETTER SUBMITTED BEFORE THE AO ON 19.11.2015. AS PER THAT LETTER, THE APPELLANT HAD SUBMITTED THE QUANTITATIV E ITA NO. 940 & 941/MUM/2019 & CO 21 & 20/MUM/2019 ITO VS SHRI AMIT MAFATLAL SHAH 4 DETAILS OF PURCHASES AND SALES. THE AR OF THE APPEL LANT ALSO SUBMITTED THAT THE AO SHOULD HAVE CONSIDERED T HE FACT THAT THE GOADS SOLD WERE EXPORTED AND SHOULD H AVE MADE A MORE REASONABLE ADDITION. 5.4 CONSIDERING THE FACT THAT THE APPELLANT HAD FU RNISHED QUANTITATIVE DETAILS OF PURCHASES AND SALES AND ALS O THE FACT THAT THE SALES OF THE APPELLANT WERE EXPORTED, I RESTRICT THE ADDITION TO 8% OF THE PURCHASES ON AN ESTIMATED BASIS. 4. THE REVENUE IS IN APPEAL BEFORE THE ITAT AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A). THE ASSESSEE HAD ALSO FILE D CROSS OBJECTIONS. IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE, IT W AS ALLEGED BY THE LD AR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDI NG ADDITION TO THE EXTENT OF 8% WHEN THE ASSESSEE HAS FILED ALL THE DO CUMENTARY EVIDENCES TO PROVE THE PURCHASES, SALES, MOVEMENT O F GOODS. AS PER THE LD AR, THE ASSESSEE WAS ONLY DOING TRADING BUSI NESS WHEREIN SUBSTANTIAL G.P. WAS DECLARED WHICH WAS REASONABLE TO THE TRADE IN WHICH THE ASSESSEE WAS ENGAGED. 5. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDER OF THE A.O. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUN D THAT BEFORE THE A.O. THE ASSESSEE HAS FILED FOLLOWING DOCUMENTARY E VIDENCES TO PROVE THE GENUINENESS OF PURCHASES: 1. ASSESSEE HAS ALL BILLS OF PURCHASES. ITA NO. 940 & 941/MUM/2019 & CO 21 & 20/MUM/2019 ITO VS SHRI AMIT MAFATLAL SHAH 5 2. ALL PAYMENTS MADE THROUGH ACCOUNT PAYEE CHEQUE. 3. SUPPLIER PROVIDED ALL IDENTITY OF BANK FOLLOWING KYC NORMS. 4. ALL SALES OF ASSESSEE WERE ACCEPTED. 5. WITHOUT PURCHASES SALES CANNOT TAKE PLACE. 6. ASSESSEE ACCOUNTS DULY AUDITED BY TAX AUDITOR AN D VAT AUDITOR. 7. DELIVERY CHALLAN OF ALL PURCHASES ARE DULY MAINT AINED. 8. ASSESSEE PURCHASES ARE SOLD TO CUSTOMERS AND BAL ANCE ARE LYING AS CLOSING STOCK. 9. ASSESSEE PURCHASES ARE SOLD TO CUSTOMERS AND COR RELATION GIVEN BY ASSESSEE. 10. ALL PURCHASE BILLS ALSO HAD SHOWN VAT AMOUNT WH ICH IS DULY PAID BY ASSESSEE TO SUPPLIER. 11. VAT IS PAID BY US TO THE MAHARASHTRA GOVERNMENT . 12. THERE IS NO EVIDENCE THAN CASH RECEIVED BACK BY ASSESSEE. 13. A.O. MADE ALLEGATION THAT ASSESSEE REDUCED TRUE PROFIT THROUGH ALLEGED PURCHASES. IF THE A.O. CONTENTION I S ACCEPTED THAN IT WILL LEAD TO UNEXPECTED GP WHICH W ILL BE UNPRACTICAL. 7. HOWEVER, THE A.O. RELIED MERELY ON SALES TAX DEP ARTMENT INFORMATION BUT SALES TAX DEPARTMENT. LEVIED SALES TAX ON SAID PURCHASES AND ASSESSEE ALSO PAID SALES TAX TO SALES TAX DEPARTMENT ITA NO. 940 & 941/MUM/2019 & CO 21 & 20/MUM/2019 ITO VS SHRI AMIT MAFATLAL SHAH 6 WHICH CLEARLY SHOWS THAT THE ASSESSEE PURCHASED GOO DS. UNDER THESE FACTS AND CIRCUMSTANCES AND KEEPING IN VIEW THE VAR IOUS JUDICIAL PRONOUNCEMENTS AS CITED BY THE LD AR, I MODIFY THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE A.O. TO RESTRICT THE ADD ITION TO THE EXTENT OF 2% OF ALLEGED BOGUS PURCHASE IN BOTH THE YEARS UNDE R CONSIDERATION. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED AND BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOW ED IN PART, IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 10/02/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//