SHRI BANWARILAL MAHESHWARI , MUMBAI V. INCOME TAX OFFICER 33(1)(2), MUMBAI

MA 558/MUM/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3283 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-05-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER MA No. 558/MUM/2019 (Arising out of ITA No. 5563/Mum/2017) (Assessment Year: 2010-11) Shri Banwarilal Maheshwari, Row House No. 3, Sheetal Nagar, Ashok Chakraborthy Cross Road, Kandivali (East), Mumbai - 400101 [PAN: AFYPM7592N] Income Tax Officer 33(1)(2), Room No. 704, 7 th Floor, C-12, Pratyakshakar Bhavan, BKC Bandra, Mumbai - 400051 .................. Vs .................. Appellant Respondent Appearances For the Appellant/Assessee For the Respondent/Department : : Shri Prakash Jhujhunwala Shri T. Shankar Date of conclusion of hearing Date of pronouncement of order : : 20.05.2022 05.08.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present Miscellaneous Application has been filed by the Assessee for rectification of order, dated 12.04.2019, passed by the Tribunal in ITA No. 5563/Mum/2017. 2. The Ld. Authorised Representative for the Assessee appearing before us submitted that following mistakes apparent on record have crept into order passed by the Tribunal. Firstly, the tax effect in the appeal was less than the specified limit and therefore, the Tribunal erred in not dismissing the appeal filed by MA No. 558/Mum/20 Assessment Year: 2009-10 2 the Revenue in limine. Secondly, the Tribunal had incorrectly directed the Assessing Officer to estimate profit element taking non-genuine purchases as a base instead of cost of goods sold without appreciating the quantum of purchases forming part of the closing stock. Thirdly, the Tribunal has incorrectly applied the rate of 8% holding that the Assessee is a civil contractor, whereas the Assessee is a telecom contractor. Fourthly, the Tribunal ITAT failed to consider the fact that the Assessee had disclosed gross profit @ 9.34% and the Tribunal had, in addition, sustained addition of 8% of non-genuine purchases, thereby taking the gross profit rate to 17.34% which is impossible to achieve in the telecom contracts business. 3. Per contra, the Ld. Departmental Representative relied upon the brief synopsis/submissions filed during the course of hearing and submitted that the present appeal cannot be dismissed on account of low tax effect as Assessing Officer has in paragraph 1 and 3 of the assessment order clearly stated that the information was received from the Sales Tax Department, Govt. of Maharashtra and therefore, the appeal has been validly instituted as it falls within the ambit of exception specified in paragraph 3(e) of Instruction F. No. 279/Misc. 142/2007-ITJ(Pt), dated 20.08.2018 issued by Central Board of Direct Taxes (CBDT). He further submitted that the Assessee is, in effect, seeking review of the order passed by the Tribunal which is not permitted. In this regard, he relied upon the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax vs. Karam Chand Thapar & Bros. (P.) Ltd.: 176 ITR 535 (SC) and Commissioner of Income Tax (IT-4), Mumbai vs. Reliance Telecom Limited: 440 ITR 1 (SC). MA No. 558/Mum/20 Assessment Year: 2009-10 3 4. We have considered the rival submissions and perused the material on record. We find merit in the submissions advanced by the Ld. Departmental Representative that the present appeal falls within the exception as contained in paragraph 3(e) of the Instruction F. No. 279/Misc. 142/2007-ITJ(Pt) dated 20.08.2018 issued by CBDT and cannot be dismissed on account of low tax effect. On perusal of paragraphs 1 to 3 of the Assessment Order it can be discerned that the Assessing Officer had received information from the Sales Tax Department, Government of Maharashtra that the Assessee has made purchases from dealers which appeared in the list of suspicious dealer. 5. On perusal of the grounds of appeal raised before the Commission of Income Tax (Appeals), we note that the Assessee had raised the following ground: “4. Learned AO has made addition @ 12.5% of alleged purchases in addition to 8.85% gross profit shown by assessee.” The CIT(A) had, vide order dated 27.10.2016, granted relief to the Assessee by restricting the addition to 0.75% of the alleged non-genuine purchases. Against the aforesaid relief granted by the CIT(A), Revenue preferred appeal before Tribunal. Vide order dated 12.04.2019, the Tribunal restored the addition to 8% of the non-genuine purchases. Thus, in the assessment as well as appellate proceedings the base for computation of profits/addition was non-genuine purchases and not the cost of goods sold. We note that the Tribunal has, after considering the judgments of the Hon’ble Gujarat High Court, directed the Assessing Officer to estimate the profit element from non- genuine purchases at the rate of 8% purchases. In our view, MA No. 558/Mum/20 Assessment Year: 2009-10 4 there is no mistake apparent on record in adopting the quantum of non-genuine purchases as the base for computing the profit element in respect of non-genuine purchases to be added as income in the hands of the Assessee. As regards, the contention of the Assessee that the Tribunal has adopted the rate of 8% by under a mistake that the Assessee is a civil contractor whereas, the Assessee actually a telecom contractor, we note that in paragraph 2, the Assessing Officer has clearly stated that the Assessee is proprietor of M/s Advance Engineering engaged in the business of contracts. The Assessee has not challenged this findings in appeal filed before CIT(A) or ITAT as incorrect. Even the statement of facts filed by the Assessee before CIT(A) states that the Assessee is an individual supplying fabricated material to telecom companies. We agree with the Ld. Departmental Representative that the Assessee is seeking the review of the order, dated 12.04.2019, passed by the Tribunal. 6. In view of the above, the present miscellaneous application filed by the Assessee, which in our view is seeking review of the order, dated 12.04.2019, passed by the Tribunal, cannot be allowed as per the judgments of the Hon’ble Supreme Court in the case of Karam Chand Thapar & Bros. (P.) Ltd. (supra), and Reliance Telecom Limited (supra). Accordingly, the present miscellaneous application is dismissed. Order pronounced on 05.08.2022. Sd/- Sd/- (Maharishi Prashant) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 05.08.2022 Alindra, PS MA No. 558/Mum/20 Assessment Year: 2009-10 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Applicant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदिकरण, म ुंबई / ITAT, Mumbai