ITO 4(3)(1), MUMBAI v. BINAL DAMJI BORICHA, MUMBAI

ITA 113/MUM/2016 | 2010-2011
Pronouncement Date: 08-11-2017 | Result: Allowed

Appeal Details

RSA Number 11319914 RSA 2016
Bench Mumbai
Appeal Number ITA 113/MUM/2016
Duration Of Justice 1 year(s) 10 month(s)
Appellant ITO 4(3)(1), MUMBAI
Respondent BINAL DAMJI BORICHA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Department
Tags No record found
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 08-11-2017
Last Hearing Date 23-10-2017
First Hearing Date 23-10-2017
Assessment Year 2010-2011
Appeal Filed On 08-01-2016
Judgment Text
ITA.NO.113 & 114/MUM/2016 BINAL DAMJI BORICHA ASSESSMENT YEARS-2010-11 & 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI . . BEFORE SHRI D.T. GARASIA JM AND SHRI MANOJ KUMAR AGGARWAL AM ./I.T.A. NO.113 & 114/MUM/2016 ( / ASSESSMENT YEARS: 2010-11 & 2011-12) INCOME TAX OFFICER 4(3)(1) ROOM NO.648 6 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 / VS. BINAL DAMJI BORICHA 92/102 2 ND FLOOR KARIN BUILDING KHADIKAR ROAD GIRGAON MUMBAI-400 004 ! ./ ./PAN/GIR NO. AMMPB-2049-J ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : BURZIN R.DARUWALLA LD.AR RE VENUE BY : V.JENARDHANAN LD. SR.DR / DATE OF HEARING : 23/10/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEALS BY REVENUE FOR ASSESSMENT YEARS [AY] 2010-11 & 2011-12 ASSAILS SEPARATE ORDER OF FIRST A PPELLATE AUTHORITY QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE AGAINST ALLEGED BOGUS PURCHASES. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THE APPEA L WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE & ITA.NO.113 & 114/MUM/2016 BINAL DAMJI BORICHA ASSESSMENT YEARS-2010-11 & 2011-12 2 BREVITY. FIRST WE TAKE UP ITA NO. 113/MUM/2016 FOR AY 2010-11 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-9 [CIT(A)] MUMBAI APPEAL NO.CIT(A)-9/CIR.4/32/2014-15 DATED 07/10/2015 BY RAISING THE FOLLOWING EFFECTIVE GROUN DS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1 27 67 428/- MADE U/S 69C OF THE I.T. ACT ON THE BASIS OF COMPARISON OF G.P RATIO OF THE YEAR S WHERE THERE WAS NO ESTABLISHED NON-GENUINE PURCHASE WITHOUT APPRECIAT ING THE FACT THAT IF INFORMATION OF SUCH PURCHASE IS NOT RECEIVED BY THE DEPARTMENT IN THOSE YEARS DOES NOT IPSO FACTO ESTABLISH THAT THERE WERE NO SU CH PURCHASES IN THOSE YEARS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN ERRONEOUSLY TAKING GP OF EARLIER YEARS WH ERE NO INFORMATION WAS RECEIVED RELATED TO BOGUS PURCHASES AS A TOUCHSTON E FOR EVERY SUBSEQUENT YEARS DESPITE THE FACT OF CONCLUSIVE EVIDENCE OF NO N-DELIVERY OF GOODS FROM THE SUPPLIERS WHO HAVE GIVEN ONLY BILL FOR YEAR UNDER C ONSIDERATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1 27 67 428/- EVEN THOUGH SHRI PARAS GANDHI WHO WAS RUNNING THE BOGUS FIRMS FROM WHOM A SSESSEE HAS SHOWN PURCHASES HAS ADMITTED THAT THE SAID CONCERNS WERE INVOLVED ONLY IN THE BUSINESS OF ISSUING SALES INVOICES WITHOUT ACTUAL S ALE OF GOODS. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER 4(3)(1) MUMBAI [AO] U/S 143(3) READ WITH SECTION 1 47 OF THE INCOME TAX ACT 1961 ON 24/03/2014. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN PAPER & BOARD PAPER UNDER PROPRIETORSHIP CONCERN NAMELY NATIONAL PAPER AGENCY WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 24/03/2014 AT RS.1 37 34 940/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.1 28 61 030/-. THE ORIGINAL RETURN WAS FILED ON 18/09/2010 AT RS.8 69 192/- WHICH WAS PROCESSED U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION A GAINST BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ITA.NO.113 & 114/MUM/2016 BINAL DAMJI BORICHA ASSESSMENT YEARS-2010-11 & 2011-12 3 ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.2 83 64 456/- FROM FIVE SUCH PARTIES. CONSEQUENT LY NOTICE U/S 148 DATED 01/03/2013 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). THE ASSESS EE REFLECTED TURNOVER OF RS.9.76 CRORES WITH GROSS PROFIT RATE OF 2%. 2.3 THE ASSESSEE CONTENDED THAT THE PURCHASES WERE GENUINE AND FURNISHED PURCHASE INVOICES BANK STATEMENT BALANC E CONFIRMATION ETC. HOWEVER LD. AO NOTED THAT ALL THE ALLEGED BOGUS CO NCERNS WERE RUN BY A SINGLE PERSON NAMELY PARAS GANDHI WHO BEFORE SALES TAX AUTHORITIES UPON OATH ADMITTED TO BE IN THE BUSINESS OF ISSUING SALES INVOICES AGAINST COMMISSION AND HENCE THE PURCHASES WERE NO T GENUINE. THE LD. AO ALSO NOTED THAT THE ASSESSEE FAILED TO PROVI DE DELIVERY CHALLANS TO SUBSTANTIATE THE PURCHASES. FINALLY LD. AO WORK ED OUT PEAK AMOUNT OF BOGUS PURCHASES WHICH CAME TO RS.1 28 61 030/- A ND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 07/10/2 015. THE ASSESSEE REITERATING THE SAID CONTENTIONS SUBMITTED THAT THE PURCHASES WERE GENUINE SINCE THE ASSESSEE PRODUCED LEDGER EXTRACTS COPY OF INVOICES BANK STATEMENT EVIDENCING PAYMENTS MADE TO THE SAID PARTIES AND MOREOVER THE TURNOVER ACHIEVED BY THE ASSESSEE WAS NOT DISTURBED AND THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASES. TH E ASSESSEE ALSO DREW ATTENTION TO THE COMPARATIVE CHART OF GROSS PR OFIT REFLECTED BY ASSESSEE IN OTHER YEARS. THE LD. CIT(A) AFTER CONS IDERING THE SAME IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS NOTED THAT LD . AO DID NOT CONFRONT THE ADVERSE MATERIAL TO THE ASSESSEE AND ALSO DID N OT POINT OUT ANY ITA.NO.113 & 114/MUM/2016 BINAL DAMJI BORICHA ASSESSMENT YEARS-2010-11 & 2011-12 4 INFIRMITIES IN THE DOCUMENTS SUBMITTED BY THE ASSES SEE AND THEREFORE THE IMPUGNED ADDITIONS WERE NOT JUSTIFIED. FINALLY LD. CIT(A) RESTRICTED THE IMPUGNED ADDITIONS TO RS.93 602/- BY APPLYING A VERAGE GROSS PROFIT RATE OF PRECEDING TWO YEARS. AGGRIEVED THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT LD. CIT(A) ERRED IN PROVIDING SUBSTAN TIAL RELIEF TO THE ASSESSEE SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE DELIVERY OF MATERIAL WITH COGENT MATERIAL. PER CONTRA LD. AR PLACED RELIANCE ON THE STAND OF LD. CIT(A) TO CONTEND THAT ADDITIONS WERE MADE MERELY ON THE BASIS OF MERE CONJECTURE OR SURMISES AND THE ADVERS E MATERIAL WAS NEVER CONFRONTED TO THE ASSESSEE. ON THE OTHER HAND THE ASSESSEE PROVIDED SUFFICIENT DOCUMENTARY EVIDENCES TO SUBSTA NTIATE THE PURCHASES AND THEREFORE THE ORDER OF FIRST APPELLA TE AUTHORITY WAS QUITE REASONABLE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER PERUSAL OF THE SAME WE F IND THAT THE SUBMISSIONS OF THE ASSESSEE AS WELL AS REVENUE STAN D ON EQUAL FOOTING. THE ASSESSEE ALTHOUGH SUBMITTED PURCHASES INVOICES BANK STATEMENTS & LEDGER EXTRACTS BUT COULD NOT FILE ANY CONFIRMATION FROM ANY OF TH E ALLEGED BOGUS SUPPLIER AND ALSO COULD NOT SUBSTANTI ATE THE DELIVERY OF MATERIAL BY PRODUCING TRANSPORT RECEIPTS ETC. FURTH ER ALL THE CONCERNS WERE BEING RUN BY SINGLE PERSON WHO UPON OATH ADMIT TED TO HAVE ENTERED INTO PROVIDING ACCOMMODATION ENTRIES AGAINS T COMMISSION WHICH CAST SERIOUS DOUBTS ON ASSESSEES CLAIM. ON THE OTH ER HAND LD. AO DID NOT CONFRONT THE ASSESSEE WITH ADVERSE MATERIAL IN VIOLATION OF PRINCIPLE ITA.NO.113 & 114/MUM/2016 BINAL DAMJI BORICHA ASSESSMENT YEARS-2010-11 & 2011-12 5 OF NATURAL JUSTICE. MOREOVER NO ATTEMPT WAS MADE T O TEST THE GENUINENESS OF THE TRANSACTIONS BY RESORTING TO POW ERS GRANTED U/S 133(6). 6. THEREFORE ON THE TOTALITY OF FACTS AND CIRCUMST ANCES WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. AO FO R ADJUDICATION D E NOVO WITH PROPER APPRECIATION OF FACTS AND AFTER PROVIDI NG ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHO IN TURN IS DIRECTED TO SUBSTANTIATE THE PURCHASES WITH COGENT MATERIAL INC LUDING DEMONSTRATION OF ACTUAL DELIVERY OF MATERIAL AND OTHER EVIDENCES. RESULTANTLY REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. THE ASSESSEE IN AY 2011-12 ON SIMILAR LINES HA S SUFFERED ADDITION ON ACCOUNT OF BOGUS PURCHASES FOR RS.2 38 02 109/-. THE SAME HAS BEEN DELETED ALTOGETHER BY LD. CIT(A) AGAINST W HICH THE REVENUE IS IN FURTHER APPEAL BEFORE US. THE FACTS AND CIRCUMST ANCES BEING IDENTICAL TAKING SAME STAND THIS MATTER IS ALSO RESTORED BAC K TO THE FILE OF LD. AO ON SIMILAR LINES. 8. RESULTANTLY BOTH THE APPEALS FILED BY THE REVEN UE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11.2017 SR.PS:- THIRUMALESH ITA.NO.113 & 114/MUM/2016 BINAL DAMJI BORICHA ASSESSMENT YEARS-2010-11 & 2011-12 6 ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- - / DR ITAT MUMBAI 6. . / GUARD FILE / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI