MR.KANTILAL N. JAIN, MUMBAI V. INCOME TAX OFFICER-19(2)(2), MUMBAI

ITA 994/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3520 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Accommodation entries
• Section: 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 994 / MUM . /201 9 ( ASSESSMENT YEAR : 20 09 10 ) SHRI KANTILAL JAIN 13/105, RATANSADAN 5 TH KUMBHARWADA, 2 ND PATHAN STREET MUMBAI 400 004 PAN ADCPJ9751E . APPELLANT V/S INCOME TAX OFFICER WARD 19(2)(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI S.L. JAIN REVENUE BY : SHRI SAURABH DESHPANDE DATE OF HEARING 06.02.2020 DATE OF ORDER 04.03.2020 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 26 TH DECEMBER 2017, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 53, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2. T HE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION OF ` 16,37,933, ON ACCOUNT OF NON GENUINE PURCHASES. 2 SHRI KANTILAL JAIN 3. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS A TRADER IN FERROUS AND NON FERROUS METAL S . FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED RETURN OF INCOME ON 1 ST AUGUST 2009, DECLARING TOTAL INCOME OF ` 3,69,790. INI TIALLY, THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER S ECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THROUGH THE DGIT (INV.), MUMBAI, THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY CERTAIN PARTIES IDENTIFIED AS HAWALA OPERATOR S , THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WORTH ` 1,31,03,467, CLAIMED TO HAVE B EEN MADE DURING THE YEAR FROM THIRTEEN PARTIES. THOUGH, THE ASSESSEE FURNISHED CERTAIN DOCUMENTARY EVIDENCES TO PROVE THE PURCHASES, HOWEVER, THE ASSESSING OFFICER DID NOT FIND THEM ACCEPTABLE. THEREFORE, HE ULTIMATELY CONCLUDED THAT THE P URCHASES CLAIMED TO HAVE BEEN MADE ARE NON GENUINE. HOWEVER, FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V/S SUMIT P. SHETH, [2013] 356 ITR 451 (GUJ.), HE PROCEEDED TO ADD THE GROSS PROFIT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASE BY ESTIMATING IT AT 12.5%. ACCORDINGLY, HE MADE AN ADDITION OF ` 3 SHRI KANTILAL JAIN 16,37,933. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE LEARNED COMMISSION ER (APPEALS), HOWEVER, CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 5. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE PROFIT RATE IN THE NATU RE OF BUSINESS CARRIED ON BY THE ASSESSEE IS GENERALLY IN THE RANGE OF 3% TO 4%. HE SUBMITTED , THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR HAS DECLARED GROSS PROFIT @ ABOVE 5% . THUS, HE SUBMITTED , THE GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE SHOULD BE REDUCED FROM THE GROSS PROFIT ESTIMATED @ 12.5%. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFF ICER AND LEARNED COMMISSIONER (APP EALS). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THOUGH, THE ASSESSING OFFICER HAS TREATED THE PURCHASES AS NON GENUINE, HOWEVER, ULTIMATELY, HE HAS ADDED ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHAS ES BY ESTIMATING IT @ 12.5%. LEARNED COMMISSIONER (APPEALS) HAS ALSO SUSTAINED THE AFORESAID ADDITION MADE BY THE ASSESSING OFFICER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE NATURE OF BUSINESS AND THE PROFIT RATE 4 SHRI KANTILAL JAIN GENERALLY INVOLVED IN SUCH BUSINESS, WE ARE OF THE VIEW THAT THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE STATED TO BE AT AROUND 5% SHOULD BE REDUCED FROM THE PROFIT ESTIMATED @ 12.5% AND THE ADDITION SHOULD BE RESTRICTED TO THAT EXTENT. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE ADDITION ACCORD INGLY. GROUNDS RAISED ARE PARTLY ALLOWED. 8. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 04.03.2020 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 04.03.2020 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 ASSISTANT REGISTRAR ITAT, MUMBAI