ITO 27 (3)(1), MUMBAI V. VRAJLAL MANILAL SHAH, MUMBAI

MA 157/MUM/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5643 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-07-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DINKEL HARIYA
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) “SMC" BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 157/MUM/2021 [ARISING OUT OF ITA.No. 6179/MUM/2018 (A.Y. 2009-10)] Income Tax Officer-27(3)(5) R. No. 442, 4 th floor Tower No. 6 Vashi Railway Station Vashi, Navi Mumbai-400703 v. Shri Vrajlal Manilal Shah (Prop. M/s Vacuum Form Products) 37, Vadhani Industrial Estate L.B.S. Road, Opp. Shreyas Cinema Ghatkopar (W) Mumbai-400086. PAN: AAGPS2788D (Appellant) (Respondent) Assessee by : Shri Dinkel Hariya Department by : Shri T. Shanakar Date of Hearing : 17.12.2021 Date of Pronouncement : 23.12.2021 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application revenue requested to amend the ITAT order in ITA.No. 6179/Mum/2018 (A.Y. 2009-10) dated 28.11.2019 as certain mistakes apparent on record. MA.No. 157/MUM/2021 Shri Vrajlal Manilal Shah 2 2. At the time of hearing, Ld. DR submitted that ITAT has passed an order in ITA.No. 6179/Mum/2018 dated 28.11.2019 and submitted that ITAT has passed the order for the Assessment Year 2009-10. Due to inadvertent mistake in the order the amounts mentioned are relating to A.Y. 2011-12. Accordingly, Ld. DR submitted copies of the relevant assessment order and order passed by the Ld.CIT(A) and prayed that suitable modification may be made. 3. On the other hand, Ld. AR of the assessee accorded with the submissions of the Ld.DR. 4. Considered the rival submissions and material placed on record, we noticed that while dictating the order, inadvertently the figures of the A.Y. 2011-12 were recorded while passing the order. In order to rectify the above apparent mistake, we replace the respective paras of the order from Para No. 4 to 8 as under: “4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that vide order dated 04.09.2018, the Ld. CIT(A) by following the decision of the Hon’ble Gujarat High Court in CIT v. Simit P. Sheth (ITA No. 553 of 2012) and CIT v. Bholanath Polyfab (P.) Ltd. (ITA No. 63 of 2012) restricted the disallowance to 12.5% of the disputed purchases which comes to Rs. 19,729/- and deleted the balance amount of Rs. 1,38,104/-. MA.No. 157/MUM/2021 Shri Vrajlal Manilal Shah 3 5. Before us, the Ld. Departmental Representative (DR) submits that the notices issued by the AO u/s 133(6) were returned un-served by the postal authorities with the remarks “not known” and “unclaimed”. The assessee also failed to produce the said parties before the AO for examination. The Ld. DR further submits that the assessee failed to furnish before the AO the current address of the said parties. Thus it is explained that the addition of Rs.1,57,833/- made by the AO be restored. 6. On the other hand, the Ld. counsel for the assessee submits that the Ld. CIT(A) considering the facts and circumstances of the case has rightly restricted the disallowance to 12.5% of the disputed purchases and the same may be affirmed. 7. We have heard the rival submissions and perused the relevant materials on record. In the case of N.K Proteins Ltd. (supra), there was search proceedings conducted by the Revenue at the office premises of the assessee wherein blank signed cheque books and voucher of number of concerns were found. Accordingly, the purchases made from these concerns were treated as bogus by the AO and the entire deposits in bank accounts of these parties were treated as assessee’s income on protective basis. On appeal, the ITAT restricted the addition on account of alleged bogus purchases at 25% i.e. Rs.73,23,322/- of the total purchases amounting to Rs.2,92,93,288/-. On further appeal, the Hon’ble High Court modified the order of the Tribunal and directed for addition of entire bogus purchases. After hearing the counsels, the Hon’ble Supreme Court dismissed the SLP filed by the assessee and confirmed the decision of the High Court for addition of entire income on account of bogus purchases. On facts, the instant case is distinguishable from the decision in N.K Proteins Ltd. (supra). In the instant case, there is a specific finding by the Ld. CIT(A) that in case of non-existent parties from whom purchases are shown to have been made, only a part of such purchases can be disallowed, particularly in such cases where the corresponding sales are not doubted. Accordingly, the profit embedded in such sales against the alleged bogus purchases should be brought to tax. We find that considering the facts and circumstances of the case, the Ld. CIT(A) has rightly restricted the disallowance to MA.No. 157/MUM/2021 Shri Vrajlal Manilal Shah 4 12.5% of such disputed purchases which comes to Rs.19,729/- and deleted the balance amount of Rs.1,38,104/-. We affirm the order of the Ld. CIT(A). 8. In the result, the appeal filed by the revenue is dismissed.” 5. In the net result, Miscellaneous Application filed by the revenue is allowed. Order pronounced on 23.12.2021 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 23/12/2021 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Asstt. Registrar) ITAT, Mum