K. RAJNIKAT & COmpany., MUMBAI V. AssISTANT COMMISSSIONER OF INCOME TAX 19(2), MUMBAI

MA 297/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7967 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 23-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER M.A. NO. 297/MUM./2018 ( ARISING OUT OF ITA NO. 5825 / MUM . /201 6 ) ( ASSESSMENT YEAR : 20 1 2 13 ) M/S. K. RAJNIKANT& CO. GW 3031 & TOWER, BHARAT DIAMOND BOURSE, BKC, BANDRA (EAST) MUMBAI 400 051 PAN AAFK1490J . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 19(2), MUMBAI . RESPONDENT ASSESSEE BY : MS. AARTI VISSANJI REVENUE BY : SHRI GANESH BARE DATE OF HEARING 1 8 . 0 1 .201 9 DATE OF ORDER 15.04.2019 O R D E R PER SAKTIJIT DEY, J.M. BY THE AFORESAID APPLICATION PURPORTED FILED UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) THE ASSESSEE SEEKS RECALL/RECTIFICATION OF THE ORDER DATED 22 ND NOVEMBER 2017, PASSED IN ITA NO.5825/MUM./2016. 2 M/S. K. RAJNIKANT& CO. 2 . TO BRIEFLY RECAPITULATE THE FACTS, THE ASSESSEE FIRM IS ENGAGED IN MANUFACTURING AND TRADING IN GOLD AND DIAMOND JEWELLERY. IN THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER ON THE BASIS OF INFORMATION AVAILABLE ON RECORD FOUND THAT DURING SEARCH AND SURVEY OPERATION CONDUCTED IN THE CASE OF BHAWARLAL JAIN GROUP CERTAIN INCRIMINATING MATERIALS FOUND WHICH REVEALED THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES PROVIDED BY THE ENTITIES BELONGING TO BHAWARLAL JAIN GROUP BY WAY OF BOGUS SALES. HE, THEREFORE, CALLED UPON THE ASSESSEE TO PROVE THE PURCHASES OF ` 10,14,68,721, FROM FOUR PARTIES BELONGING TO BHAWARLAL JAIN GROUP. ALLEGING THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF PURCHASES MADE FROM THE CONCERNED PARTIES, THE ASSESSING OFFICER DISALLOWED 8% OF THE NON GENUINE PURCHASES AND ADDED BACK TO THE INCOME OF THE ASSESSEE. WHILE DECIDING ASSESSEES APPEAL, LEARNE D COMMISSIONER (APPEALS) RESTRICTED THE ADDITION TO 3% OF THE NON GENUINE PURCHASES. BEING AGGRIEVED WITH THE AFORESAID DECISION , BOTH, THE REVENUE AND THE ASSESSEE PREFERRED APPEALS BEFORE THE TRIBUNAL. WHILE DECIDING THE AFORESAID CROSS APPEALS, THE TRIB UNAL DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 6% OF THE NON GENUINE PURCHASES. 3 . AS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE AND AVERRED IN THE MISC. APPLICATION, THE GRIEVANCE OF THE ASSESSEE IS WITH 3 M/S. K. RAJNIKANT& CO. REGARD TO THE DECISION OF THE TRIBUNAL IN DIRECTING THE DISALLOWANCE TO BE MADE @ 6%. IT IS THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE DISALLOWANCE ON ACCOUNT OF NON GENUINE PURCHASES SHOULD NOT EXCEED 3%. WHEREAS, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRON GLY OPPOSING THE CONTENTION OF THE ASSESSEE HAS SUBMITTED THAT IN THE GUISE OF RECTIFICATION, ASSESSEE IS SEEKING A REVIEW OF THE APPEAL ORDER. 4 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. P ERUSAL OF THE FINDING OF THE TRIBUNAL IN PARA 7 OF THE APPEAL ORDER WOULD REVEAL THAT AFTER CONSIDERING ALL RELEVANT FACTS OF THE CASE, THE TRIBUNAL HAS RECORDED A FACTUAL FINDING THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF PURCHASES FROM THE DECLARED SOURCE. IN FACT, THE AFORESAID F ACTUAL POSITION HAS NOT BEEN DISPUTED BY T HE ASSESSEE IN THE PRESENT MISC, APPLICATION AS WELL, AS, THE ASSESSEE IS ONLY SEEKING REDUCTION IN THE RATE OF DISALLOWANCE. FURTHER, THE TRIBUNAL HAS SET OUT THE REASONS FOR WHICH THE DISALLOWANCE WAS DIRECTED TO BE MADE AT 6% OF THE NON GENUINE PURCHASES. THE DISALLOWANCE TO BE MADE IN A CASE OF THIS NATURE DEPENDS COMPLETELY UPON THE FACTS OF THE CASE , HENCE, CANNOT BE EQUATED WITH ANY OTHER CASE . IN ANY CASE OF THE MATTER, THE RATE OF 6% ADOPTED BY THE TRIBUNAL FOR THE PURPOSE OF MAKING DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE IS BACKED BY PROPER REASONING AND IS A CONSCIOUS DECISION 4 M/S. K. RAJNIKANT& CO. TAKEN ON THE BASIS OF FACT S AVAIL ABLE. THEREFORE, ONLY BECAUSE IN REPORT OF THE TASK GROUP SOME OTHER PROFIT RATE IS PRESCRIBED O R EVEN IN ASSESSEES OWN CASE IN SUBSEQUENT YEARS, THE ASSESSING OFFICER HAS MADE DISALLOWANCE @ 3% WOULD NOT MAKE THE APPEAL ORDER PASSED BY THE TRIBUNAL ERRONEOUS. THE LEGISLATIVE INTEN T BE H IND INTRODUCTION OF SECTION 254(2) OF THE ACT IS FOR RECTIFYINGM ISTAKE A PPARENT ON THE FACE OF RECORD. THE SO - CALLED MISTAKE POINTED OUT BY THE ASSESSEE IN THE PRESENT APPLICATION DOES FALL WITHIN THE CATEGORY OF MISTAKE APPARENT ON THE FACE OF RECORD, AS INTERPRETED IN VARIOUS JUDICIAL PRECEDENTS. THE MAIN PURPOSE OF FILING OF THE PRESENT APPLICATION BY THE ASSESSEE IS TO SEEK A REVIEW OF THE APPEAL ORDER PASSED BY THE TRIBUNAL IN THE GUISE OF RECTIFICATION UNDER SECTION 254(2) OF THE ACT, WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE ACT. THEREFORE, FINDING NO MERIT IN THE APPLICATION FILED BY THE ASSESSEE, WE DISMISS THE SAME. 5 . IN THE RESULT, MISC. APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.04.2019 SD/ G. MANJUNATHA ACCOUNTANT MEMBER SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 15.04.2019 5 M/S. K. RAJNIKANT& CO. 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 (SR. PRIVATE SECRETARY) ITAT, MUMBAI