I.T.O.25(3)(4), MUMBAI V. SURESH MANEKLAL SHETH, MUMBAI

MA 301/MUM/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5594 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHOOPATHI
• Assessee Lawyers: BANJAL TIBDEWALA
• Keywords: Bogus purchase; Accommodation entries; Tax effect
• Section: 143(3); 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER MA NO.301/M/2019 (ARISING OUT OF ITA NO.3506/M/2018) ASSESSMENT YEAR: 2007-08 & ITA NO.3506/M/2018 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER 25(3)(4), ROOM NO.605, C-10, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400051 VS. MR. SURESH MANEKLAL SHETH, 1, KUSUM NIWAS, S.V. ROAD, IRLA, VILE PARLE, MUMBAI 400 056 PAN: AJMPS0119H (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI BANJAL TIBDEWALA, A.R. REVENUE BY : SHRI BHOOPATHI, D.R. DATE OF HEARING : 20.09.2019 DATE OF PRONOUNCEMENT : 22.10.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: BY VIRTUE OF THIS MISCELLANEOUS APPLICATION THE REV ENUE SEEKS THE RECALLING OF THE ORDER PASSED ITA NO.3506/M/2018 A.Y. 2007-08 DATED 21.08.2018. 2. THE LD. A.R. SUBMITTED BEFORE US THAT THE APPEAL OF THE REVENUE IN ITA NO.3506/M/2018 WAS DISMISSED FOR LOW TAX EFFECT VIDE ORDER DATED 21.08.2018 DESPITE THE SAID APPEAL IS COVERED IN THE EXCEPTION 3(E) OF THE CIRCULAR NO.03 /2008 DATED MA NO.301/M/2019 (ITA NO.3506/M/2018) MR. SURESH MANEKLAL SHETH 2 11.07.2018 AND THEREFORE THE ORDER OF THE TRIBUNAL IS PRIMA- FACIE CONTAINED AN ERROR TO THAT EFFECT. 3. THE LD. D.R. PRAYED BEFORE THE BENCH THAT THE OR DER OF THE TRIBUNAL MAY KINDLY BE RECALLED AS THE SAID APPEAL THOUGH HAVING LOW TAX EFFECT BUT WAS SPECIFICALLY EXCLUDED FROM THE AMBIT AND SCOPE OF THE SAID CIRCULAR IN CLAUSE 3(E ) AND THEREFORE MAY KINDLY BE RECALLED. 4. THE LD. A.R., ON THE OTHER HAND, CANDIDLY AGREED TO THE ARGUMENTS OF THE LD. DR THAT THE SAID APPEAL IS COV ERED IN THE EXCEPTION AS PROVIDED IN PARA 10 OF CIRCULAR NO.03/ 2018 DATED 11.07.2018. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE APPEAL OF THE REVENUE H AS WRONGLY BEEN DISMISSED FOR HAVING LOW TAX EFFECT WHILE THE SAME IS COVERED IN THE EXCEPTIONS PROVIDED IN THE SAID CIRC ULAR. ACCORDINGLY, WE ARE OF THE VIEW THAT THE SAID APPEA L HAD WRONGLY BEEN DISMISSED. WE, THEREFORE, RECALL OUR ORDER PAS SED IN ITA NO.3506/M/2018 A.Y. 2007-08 DATED 21.08.2018. ITA NO.3506/M/2018 6. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE RESTRICTION OF DISALLOWANCE TO THE TUNE OF 12.5% OF THE TOTAL BOGUS PURCHASES AS AGAINST THE 100% DISALLOWANCE MA DE BY THE AO. 7. THE FACTS IN BRIEF ARE THAT ASSESSEE FILED THE R ETURN OF INCOME ON 21.04.2014 DECLARING AN INCOME OF RS.6,63 ,520/-. MA NO.301/M/2019 (ITA NO.3506/M/2018) MR. SURESH MANEKLAL SHETH 3 THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING NO TICE UNDER SECTION 148 DATED 19.03.2014 WHICH WAS DULY SERVED ON THE ASSESSEE. THE CASE OF THE ASSESSEE WAS REOPENED AF TER RECEIVING THE INFORMATION FROM SALES TAX DEPARTMENT, GOVERNME NT OF MAHARASHTRA THAT ASSESSEE IS BENEFICIARY OF HAWALA PURCHASE ACCOMMODATION ENTRIES FROM TWO PARTIES NAMELY BIGWI N PAPER DISTRIBUTOR PVT. LTD. RS.32,29,062/- AND ARUN PAPER AND IRON TRADERS RS.21,27,463/- AGGREGATING TO RS.53,56,525/ -. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS THE ASSESSE E FILED VARIOUS DETAILS AND EVIDENCES TO PROVE THE GENUINEN ESS OF THE PURCHASES IN REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE AO. THE AO IN ORDER TO VERIFY THE PURCHASES ALSO ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT WHICH WERE RETURNE D UNSERVED. FINALLY, THE AO TREATED THE ENTIRE PURCHASES AS BOG US AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE BY FRAMING A SSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 DATED 27 .03.2015. 8. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON EQUAL TO 12.5% OF THE TOTAL PURCHASES BY FOLLOWING THE DECIS ION OF HONBLE GUJARAT HIGH COURT CIT VS. SIMIT P. SHETH 38 TAXMAN 385 (GUJ) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN TH E CASE OF NIKUNJ EXIM ENTERPRISES VS. CIT 216 TAXMANN.COM 171 (BOM.). 9. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE UNDISPUTEDLY T HE ASSESSEE IS BENEFICIARY OF HAWALA PURCHASE ENTRIES TO THE TUNE OF RS.53,56,525/- WHICH WERE ADDED BY THE AO TO THE IN COME OF THE ASSESSEE WHEN THE AO COULD NOT SERVE NOTICE UND ER SECTION MA NO.301/M/2019 (ITA NO.3506/M/2018) MR. SURESH MANEKLAL SHETH 4 133(6) WHICH WERE RETURNED UNSERVED. HOWEVER, THE AO DID NOT DISPUTE THE CORRESPONDING SALES OF THE ASSESSEE MAD E OUT OF THE ALLEGED BOGUS PURCHASES. THE LD. CIT(A) PARTLY ALL OWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO ASSES S THE ADDITIONAL INCOME @ 12.5% OF THE BOGUS PURCHASES AS THE AO HAS NOT DISPUTED THE SALES. IN THE INSTANT CASE W E OBSERVE THAT THE ASSESSEE IS TRADING IN PAPERS AND DURING THE YE AR DECLARED A GP OF APPROXIMATELY 8% ON THE ENTIRE PURCHASES INCL UDING THE BOGUS PURCHASES. IT HAS BEEN BROUGHT TO OUR NOTICE DURING THE COURSE OF HEARING THAT ASSESSEE IS NOT IN APPEAL AG AINST THE ORDER OF LD. CIT(A). UNDER THESE CIRCUMSTANCES AND FACTS, WE DO NOT FIND ANY DEFECT OR INFIRMITY IN THE ORDER OF LD . CIT(A) WHO HAS DIRECTED THE AO TO MAKE ADDITION @ 12.5% OF THE BO GUS PURCHASES BY FOLLOWING THE JURISDICTIONAL HIGH COUR T ORDER. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE REVENUE IS ALLOWED, HOWEVER, THE APPEAL OF THE REVENUE IS DISM ISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2019. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.10.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI MA NO.301/M/2019 (ITA NO.3506/M/2018) MR. SURESH MANEKLAL SHETH 5 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.