NISRIN DEESAWALA, MUMBAI V. ITO 17(1)(3),

ITA 953/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1670 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D SHRI C.N. PRASAD, JUDICIAL MEMBER ITA NO.953/M/2016 ASSESSMENT YEAR: 2011-12 NISRIN DEESAWALA, PROP SHABBIR TRADERS, 602, 6 TH FLR, KETAN APTS, 22, BELVEDRE ROAD, MAZGAON, MUMBAI 400 010 PAN: AKVPD6997J VS. ITO-17(1)(3), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI AKHILENDRA YADAV, D.R. DATE OF HEARING : 10.11.2016 DATE OF PRONOUNCEMENT : 30.11.2016 O R D E R PER C.N. PRASAD, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-32, MUMBAI [(H EREINAFTER REFERRED TO AS THE CIT(A)] DATED 05.01.2016 FOR THE ASSESSMENT YEAR 2011-12 ARISING OUT OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) RE AD WITH SECTION 147 OF THE ACT. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: GROUND NO. 1: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE IT O IN REOPENING THE ASSESSMENT U/S 147. GROUND NO.2: IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANT'S CASE THE LEARNED CIT(A) HAS GROSSLY ERRED IN ESTIMATING ADDITIONAL GROSS PR OFIT OF RS.8,07,383/- @2.15% OF DISPUTED PURCHASES AND ADDING IT TO THE I NCOME FROM BUSINESS. HE OUGHT TO HAVE ORDERED FOR THE DELETION OF THE ENTIRE UNEX PLAINED EXPENDITURE U/S 69C OF INCOME TAX ACT., 1961. ITA NO.953/M/2016 NISRIN DEESAWALA 2 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE NOR ANY ADJOURNMENT PETITION WAS MOVED. THE NOTICE SENT BY THE REGISTRY HAS BEEN RETURNED UNSERVED [BY THE POSTAL AUTHORITIES] WITH AN ENDORSEMENT UNCLAIMED. SINCE THE NOTICE SENT BY THE REGISTRY AT THE GIVEN ADDRESS OF THE ASSESSEE IS RETURNED UNSERVED WE PROCEED TO DISPOSE OF THIS APPEAL ON MERITS BY HEARING THE LD. D.R. 3. THE LD. D.R. SUBMITS THAT THE ASSESSEE AN INDIVI DUAL AND DOING BUSINESS IN THE NAME OF PROPRIETORSHIP M/S. SHABBIR TRADERS FILED RETURN OF INCOME ON 19.09.2011 DECLARING INCOME AT RS.7,65,601/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 DETERMIN ING THE INCOME AT RS.4,82,96,710/-. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER TREATED PURCHASES OF RS.3,74,31,110/- AS BOGUS PURC HASES FOR THE REASON THAT THE ASSESSEE FAILED TO PRODUCE THE PERSONS FROM WHOM SH E MADE THE PURCHASES AND REQUISITE DETAILS CALLED FOR WERE NOT PRODUCED. TH E LD. D.R. SUBMITS THAT SINCE THE ASSESSEE HAS NOT PRODUCED REQUISITE DETAILS THE ENTIRE PURCHASES WERE ADDED AS BOGUS AND AS UNEXPLAINED EXPENDITURE UNDER SECTI ON 69C OF THE ACT TREATING THEM AS BOGUS PURCHASES. THE LD. D.R. SUBMITS THAT ON APPEAL BY THE ASSESSEE THE LD. CIT(A) TAKING NOTE OF VARIOUS DECISIONS OF THE TRIBUNAL IN SIMILAR CIRCUMSTANCES HELD THAT ASSESSEE TOOK ONLY BILLS FR OM THE PARTIES AS ACCOMMODATION TO EXPLAIN THE PURCHASES AND AT THE S AME TIME THE ENTIRE PURCHASES FROM THESE PARTIES CANNOT BE ADDED AS BOG US. LD. CIT(A) HELD THAT WHAT NEEDS TO BE TAXED IS THE PROFIT ELEMENT EMBEDD ED IN SUCH TRANSACTIONS ONLY. THEREFORE THE LD. CIT(A) ESTIMATED THE GROSS PROFIT RATIO ON SUCH PURCHASES AT 2.15% WHICH ACCORDING TO THE LD. CIT(A ) IS REASONABLE AND THUS RESTRICTED THE ADDITION TO RS.8,07,383/-. THE LD. D.R. VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN TREATING THE ENTI RE PURCHASES AS BOGUS PURCHASES AND MAKING ADDITION UNDER SECTION 69C OF THE ACT. 4. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND HEARD THE LD. D.R. THE ASSESSING OFFICER DISALLOWED PURCHASES TO THE EXTENT OF ITA NO.953/M/2016 NISRIN DEESAWALA 3 RS.3,74,31,110/- BY TREATING THEM AS BOGUS PURCHASE S AND BROUGHT TO TAX UNDER SECTION 69C AS UNEXPLAINED EXPENDITURE ON THE GROUN D THAT THE ASSESSEE HAS NOT PRODUCED THE PARTIES, REQUISITE DETAILS CALLED FOR BY THE ASSESSING OFFICER WERE NOT PRODUCED BY THE ASSESSEE. WE FIND THAT THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND VARIOUS CASE LA WS ON SIMILAR CIRCUMSTANCES HELD THAT ENTIRE PURCHASES CANNOT BE TREATED AS BOG US FOR THE REASON THAT THE ASSESSEE HAS TAKEN BILLS FROM THESE PARTIES AS ACCO MMODATION TO EXPLAIN THE PURCHASES. HE CONCLUDED THAT THE REASONABLE ESTIMAT ION SHOULD BE MADE TOWARDS GROSS PROFIT ON THESE PURCHASES AND HE ESTI MATED THE GROSS PROFIT AT 12.15% AND RESTRICTED THE ADDITION TO RS.8,07,383/- . HAVING GONE THROUGH THE FINDINGS OF THE LD. CIT(A), WE DO NOT FIND ANY VALI D REASONS TO INTERFERE IN THE FINDINGS. THE FINDINGS OF THE LD. CIT(A) HAVE NOT BEEN CONTROVERTED BY THE ASSESSEE. THUS WE AFFIRM THE ORDER OF THE LD. CIT( A). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2016. SD/- SD/- (D. KARUNAKARA RAO) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.11.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.