NOORJAHAN NIYAZ AHMED KHAN, MUMBAI v. INCOME TAX OFFICER-26(2)(3), MUMBAI

ITA 5056/MUM/2017 | 2009-2010
Pronouncement Date: 30-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 505619914 RSA 2017
Assessee PAN ALVPK4821H
Bench Mumbai
Appeal Number ITA 5056/MUM/2017
Duration Of Justice 4 month(s) 5 day(s)
Appellant NOORJAHAN NIYAZ AHMED KHAN, MUMBAI
Respondent INCOME TAX OFFICER-26(2)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 30-11-2017
Last Hearing Date 12-10-2017
First Hearing Date 12-10-2017
Assessment Year 2009-2010
Appeal Filed On 25-07-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI D.T. GARASIA JUDICIAL MEMBER ITA NOS.5056 & 5057/M/2017 ASSESSMENT YEARS: 2009-10 & 2010-11 SHRI NOORJAHAN NIYAZ AHMED KHAN ROOM NO.3 SANGAM MARKET NETAJI NAGAR 90 FEET RD. SAKINAKA MUMBAI-400 072 PAN: ALVPK4821H VS. ITO - 26(2)(3) C-12 RM NO.603 6 TH FLOOR PRATYAKSHKAR BHAVAN BANDRA (E) MUMBAI 400 051 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI HARIPRASAD CHAURASIA A.R. REVENUE BY : SMT. N. HEMALATHA D.R. DATE OF HEARING : 06.11.2017 DATE OF PRONOUNCEMENT : 30.11.2017 O R D E R PER D.T. GARASIA JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDERS DATED 24.04.2017 AND 27.04.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2009-10 & 2010 & 11 RESPECTIVELY. ITA NO.5056/M/2017 FOR A.Y. 2009-10 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN BUSINESS OF MANUFACTURING OF M.S. WASHE R IN THE NAME AND STYLE OF RIYAZ ENGINEERING WORKS. DURING THE YE AR THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) FOUND THAT ASSESSEE HAD MADE BOGUS PURCHASES FROM FOLLOWING PA RTIES: ITA NOS.5056 & 5057/M/2017 SHRI NOORJAHAN NIYAZ AHMED KHAN 2 SR. NO. NAME OF THE PARTY AMOUNT OF PURCHASE (RS) 1. SIDDHIVINAYAK STEEL 6 50 059/- 2. CHANCHAL TUBE CORPORATION 18 50 595/- 3. ASIAN STEEL 1 50 004/- 4. SURAT TUBE CORPORATION 23 66 350/- 5. GULAB TRADING CO. 1 20 062/- 51 37 070/- 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UND ER SECTION 133(6). THEREFORE THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.51 37 070/-. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE CLAIM OF THE ASSESSEE. 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LD. D.R. RELIED UPON THE DECISION OF THE TRIBUNAL AHMEDABAD BENCH IN THE CASES OF SHWETAMBAR STEELS VS. ITO AHMEDABAD AND GA NESH RICE MILLS VS. CIT (294 ITR 316). THE FACTS IN THE PRES ENT CASE SHOW THAT ASSESSEE COULD NOT PRODUCE THE PARTIES FROM WHOM GO ODS ARE STATED TO HAVE BEEN PURCHASED. THE SUPPLIERS WERE FOUND TO BE ENGAGED IN PROVIDING BOGUS BILL WITHOUT ACTUAL DEALING OF GOOD S. IN THIS REGARD THE ASSESSEE HAS STATED THAT THEY HAD SUBMITTED QUA NTITATIVE DETAILS OF STOCK WITH RESPECT OF THE SALES WITH PURCHASES FROM THE PARTIES DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS SUBMIT TED THE DETAIL OF CORRESPONDING SALES IN RESPECT OF THE PURCHASE FROM THE SAID PARTIES. AS MENTIONED ABOVE THE AO HAS NEVER DISPUTED OR EXA MINED THE ITA NOS.5056 & 5057/M/2017 SHRI NOORJAHAN NIYAZ AHMED KHAN 3 ASPECT OF SALES RECEIPTS. SINCE THE SALES MADE BY T HE ASSESSEE WAS NOT DOUBTED OR DISPUTED BY THE AO AND HE HAS ACCEPTED T HE SALES RECEIPTS OF THE ASSESSEE AS IT IS THEREFORE THE AO CANNOT DENY THAT PURCHASES WERE NOT MADE BY THE ASSESSEE AND THE MATERIAL WAS NOT USED FOR ITS SALES. WHAT IS UNDER DISPUTE IS THE PURCHASES FROM T HE PARTIES FROM WHOM BILLS HAVE BEEN TAKEN AND CHEQUES HAVE BEEN IS SUED TO THEM. PURCHASES ARE NOT IN DISPUTE BUT THE PARTIES FROM W HOM PURCHASE ARE SHOWN TO HAVE BEEN MADE ARE DISPUTED AND SUSPICIOUS . THE AO HAD MADE THE ADDITION AS SOME OF THE SUPPLIERS WERE DEC LARED HAWALA DEALERS BY THE VAT DEPARTMENT. THIS MAY BE A GOOD R EASON FOR MAKING FURTHER INVESTIGATION BUT THE AO DID NOT MAK E ANY FURTHER INVESTIGATION AND MERELY COMPLETED THE ASSESSMENT O N SUSPICION. ONCE THE ASSESSEE HAS BROUGHT ON RECORD THE DETAILS OF PAYMENTS BY ACCOUNT PAYEE CHEQUE IT WAS INCUMBENT ON THE AO TO HAVE VERIFIED THE PAYMENT DETAILS FROM THE BANK OF THE ASSESSEE A ND ALSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETHER THERE WAS A NY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. NO SUCH EXERCISE HAS BEEN DONE OR FINDINGS RECORDED. THERE WAS NO DETAILED INVESTIGAT ION MADE BY THE AO HIMSELF. IT IS ALSO FOUND THAT THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE WHICH ARE DULY REFLECTED IN TH E BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BACK FROM THE SUPPLIERS. MERELY BECAU SE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO OR SOME CONFIRMATION L ETTERS WERE NOT FURNISHED ONE CANNOT CONCLUDE THAT THE PURCHASES W ERE NOT MADE BY THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISIO N OF NIKUNJ EXIMP ENTERPRISES VS. CIT 216 TAXMAN 171 (BOM). TO THIS E XTENT I AM OF ITA NOS.5056 & 5057/M/2017 SHRI NOORJAHAN NIYAZ AHMED KHAN 4 THE VIEW THAT IF THE ASSESSEE HAS FULFILLED ITS ONU S OF MAKING THE PAYMENT BY CHEQUE AND HAS SUPPLIED THE ADDRESSES OF THE SELLERS THEN IT CANNOT BE PRESUMED THAT SUPPLIER WERE BOGUS SIMP LY BECAUSE THE SELLERS WERE NOT FOUND AT THE GIVEN ADDRESS. THERE IS A CONSIDERABLE TIME GAP BETWEEN THE PERIOD OF PURCHASE TRANSACTION AND PERIOD OF SCRUTINY PROCEEDINGS. THE AO HAS NOT BROUGHT ANY MA TERIAL ON RECORD TO SHOW THAT THERE IS SUPPRESSION OF SALES. IT IS B ASIC RULE OF ACCOUNTANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PUR CHASE FROM SALES. ESTIMATION OF PROFIT RANGING FROM 12.5% TO 15% HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S SIMIT P SHETH 356 ITR 451 (GUJ.). RESPECTFULLY FOLLOWING THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXMAN 385 (GUJ) I DIRECT THE AO TO TAKE THE GP @ 12.5% O F THE PURCHASES. 6. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOW ED. ITA NO.5057/M/2017 FOR A.Y. 2010-11 7. IN THIS APPEAL DURING THE YEAR THE AO FOUND TH AT ASSESSEE HAD MADE PURCHASES FROM FOLLOWING PARTIES: SR. NO. NAME OF THE PARTY AMOUNT OF PURCHASE (RS) 1. SIDDHIVINAYAK STEEL 5 70 149/- 2. CHANCHAL TUBE CORPORATION 5 80 300/- 3. SURAT TUBE CORPORATION 4 50 024/- 4. ASIAN STEEL 8 00 829/- 5. GULAB TRADING CO. 1 04 000/- 6. LAXMI TRADING CO. 9 65 723/- 34 71 025/- ITA NOS.5056 & 5057/M/2017 SHRI NOORJAHAN NIYAZ AHMED KHAN 5 8. I FIND THAT THE ASSESSEE HAS TAKEN THE IDENTICAL GROUNDS IN ITA NO.5056/M/2017 FOR A.Y. 2009-10 AND THE SAME HAVE A LREADY BEEN DECIDED AS ABOVE. HENCE RESPECTFULLY FOLLOWING TH E DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S IMIT P. SHETH 38 TAXMAN 385 (GUJ) I DIRECT THE AO TO TAKE THE GP @ 12.5% OF THE PURCHASES. 9. IN THE RESULT BOTH THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI DATED: 30.11.2017. * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.