Shri Pavankumar M. Sanghvi,, Baroda v. The Income Tax Officer, Ward-5(1),, Baroda

ITA 1313/AHD/2014 | 2009-2010
Pronouncement Date: 29-09-2016 | Result: Partly Allowed

Appeal Details

RSA Number 131320514 RSA 2014
Assessee PAN AGIPS3322F
Bench Ahmedabad
Appeal Number ITA 1313/AHD/2014
Duration Of Justice 2 year(s) 4 month(s) 24 day(s)
Appellant Shri Pavankumar M. Sanghvi,, Baroda
Respondent The Income Tax Officer, Ward-5(1),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 29-09-2016
Date Of Final Hearing 28-09-2016
Next Hearing Date 28-09-2016
Assessment Year 2009-2010
Appeal Filed On 05-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI MANISH BORAD ACCOUNTANT MEMBER ./ ITA.NO.1313/AHD/2014 / ASSTT. YEAR: 2009-2010 PAVANKUMAR M. SANGHVI C/O. LAXMIRAJ DISTRIBUTORS PVT.LTD. NARSINH ESTATE WADI YAMUNA MILL ROAD PRATAPNAGAR BARODA. PAN : AGIPS 3322 F VS ITO WARD-5(1) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI HITESH M. SHAH AR REVENUE BY : SHRI JAMES KURIAN SR.DR / DATE OF HEARING : 28/09/2016 / DATE OF PRONOUNCEMENT: 29/09/2016 $%/ O R D E R PER RAJPAL YADAV JUDICIAL MEMBER ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD.C IT(A)-V BARODA DATED 30.12.2013 FOR THE ASTT.YEAR 2009-10. 2. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE ADMITTED FACTS ARE THAT THE ASSESSEE WAS ENGAGED IN TRADING OF STEEL. ACCORDING TO THE AO PURCHASES H AVING VALUE OF RS.18 02 736/- COULD NOT BE PROVED BY THE ASSESSEE. THEREFORE HE TREATED SUCH PURCHASES AS BOGUS. HE MADE ADDITION OF RS.18 02 736/- TO THE INCOME OF THE ASSESSEE. DISSATISFIED WITH THIS ADDITION THE ASSESSEE CARRIED THE MATTER ITA NO.1313/AHD/2014 2 BEFORE THE LD.CIT(A). THE LD.CIT(A) IN PRINCIPLE CONCURRED WITH THE AO BUT CONFIRMED THE ADDITION TO THE EXTENT OF 25%. T HE LD.CIT(A) WAS OF THE OPINION THAT ELEMENT OF PROFIT INVOLVED IN SUCH BOG US PURCHASES COULD BE TO THE EXTENT OF 25% BECAUSE SALES OF THE ASSESSEE AR E NOT IN DISPUTE. ACCORDING THE LD.CIT(A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF RS.4 50 684/-. 3. BEFORE US THE LD.COUNSEL FOR THE ASSESSEE ON T HE STRENGTH OF HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXMANN.COM 385 (GUJ) (COPY OF THE JUDGMENT PLACED ON RECORD) CONTENDED THAT HONBLE GUJARAT HIGH COURT HAS UPHELD THE ADDI TION IN A SIMILAR TYPE OF CASE AT THE RATE OF 12.5% OF THE PURCHASES. HE PRA YED THAT AT THE MOST ADDITION COULD BE CONFIRMED AT 12.5% OF THE PURCHAS ES. ON THE OTHER HAND THE LD.DR CONTENDED THAT ASSESSEE MIGHT HAVE BEEN I NVOLVED IN THIS MODUS OPERANDI FROM LONG BACK. IN THIS YEAR HE HAS BEEN CAUGHT AND THEREFORE HIS TOTAL PURCHASES SHOULD BE ADDED NO DEDUCTION OUGHT TO BE ALLOWED TO THE ASSESSEE ON ACCOUNT OF PURCHASE COST. 4. ON DUE CONSIDERATION OF THE ABOVE FACTS WE ARE OF THE VIEW THAT NO DOUBT THE ASSESSEE COULD NOT PROVE CREDENTIAL OF HI S SUPPLIER. BUT IT IS ALSO TRUE THAT THE LD.AO HAS NOT DOUBTED THE SALES MADE BY THE ASSESSEE. FOR ACHIEVING PARTICULAR SALES FIGURE THE ASSESSEE MUS T HAVE MADE PURCHASES. HE MUST HAVE PURCHASED FROM X Y Z BUT PRODUCE D BILLS FROM A B C AND THIS WAY HE FAILED TO PROVE CREDENTIAL OF HIS SUPPLIERS. IN THIS SITUATION THE LD.CIT(A) THOUGHT THAT ASSESSEE MUST HAVE EARNED A PROFIT AT THE RATE OF 25% OF THE PURCHASE BECAUSE IF THERE IS N O HIGHER RATE OF PROFIT THEN THERE IS NO NEED FOR THE ASSESSEE TO INDULGE IN THI S TYPE OF ACTIVITIES. IN THE CASE OF SIMIT P. SHETH (SUPRA) THE CIT(A) HAS ESTI MATED THE PROFIT IN THIS ITA NO.1313/AHD/2014 3 MODUS OPERANDI AT 30% WHICH HAS BEEN SCALED DOWN BY THE TRIBUNAL TO 12.5%. THIS ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT. IN OUR OPINION IN DIFFERENT TRADE ITE MS THERE MAY BE DIFFERENT RATE OF PROFIT. WHENEVER ANY PROFIT IS BEING ESTIM ATED THE ELEMENT OF GUESSWORK WOULD ALWAYS BE INVOLVED. IN THE CASE OF SIMIT P. SHETH(SUPRA) ON AN ANALYSIS OF THE MATERIAL TRIBUNAL DREW AN INFER ENCE THAT IN THE TRADE OF STEEL PROFIT AT THE RATE OF 12.5% MAY BE REASONABLE PROFIT WHEN THE ASSESSEE HAS PROCURED MATERIAL FROM DIFFERENT SOURCES AND BI LLS FROM DIFFERENT SOURCES. THIS FORMATION OF OPINION WAS NOT DISTURBED BY THE HONBLE HIGH COURT. THEREFORE WE FIND FORCE IN THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE THAT THIS DECISION IS A GUIDING FACTOR FOR ESTIMATI NG ELEMENT OF PROFIT INVOLVED IN THE ACTIVITY OF THE ASSESSEE. WE ALLOW THE APP EAL OF THE ASSESSEE PARTLY AND MODIFY THE ORDER OF THE LD.CIT(A). ADDITIONS C ONFIRMED BY THE LD.CIT(A) AT THE RATE OF 25% OF THE TOTAL BOGUS PURCHASES IS RESTRICTED TO 12.50% (TWELVE POINT FIVE PERCENT). THE LD.AO SHALL GIVE NECESSAR Y EFFECT WHILE COMPUTING THE INCOME OF THE ASSESSEE AFTER TRIBUNALS ORDER. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29 TH SEPTEMBER 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANTN MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 29/09/2016