MR. VIRMABHAI A PATEL, MUMBAI v. INCOME TAX OFFICER-19(3)(5), MUMBAI

ITA 5955/MUM/2018 | 2010-2011
Pronouncement Date: 26-11-2019 | Result: Partly Allowed

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Appeal Details

RSA Number 595519914 RSA 2018
Assessee PAN AKGPP3389B
Bench Mumbai
Appeal Number ITA 5955/MUM/2018
Duration Of Justice 1 year(s) 1 month(s) 10 day(s)
Appellant MR. VIRMABHAI A PATEL, MUMBAI
Respondent INCOME TAX OFFICER-19(3)(5), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2019
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 26-11-2019
Last Hearing Date 30-10-2019
First Hearing Date 30-10-2019
Assessment Year 2010-2011
Appeal Filed On 16-10-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 5955/MUM/2018(AY : 2010-11) SHRI VIRMABHAI A PATEL 159/6 MISTRY BLDG 2 ND KUMBHARWADA LANE MUMBAI 400 004 PAN : AKGPP3389B VS ITO-19(3)(5) MUMBAI APPELLANT RESPONDEDNT APPELLANT BY NONE RESPONDENT BY SHRI AKHTAR H ANSARI DATE OF HEARING 26-11-2019 DATE OF PRONOUNCEMENT 26 -11-2019 O R D E R PER PAWAN SINGH JM : 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-30 MUMBAI DATED 17-08-2018. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND N ON FERROUS METALS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 28- 09-2010 DECLARING TOTAL INCOME AT RS.3 19 660/-. T HE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT 1961. THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INF ORMATION RECEIVED FROM SALE TAX DEPARTMENT GOVERNMENT OF MA HARASHTRA THAT CERTAIN HAWALA OPERATORS ARE INDULGING IN PROV IDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOOD S. THE SALE TAX DEPARTMENT GOVERNMENT OF MAHARASHTRA REFERRED THE LIST OF SUCH 2 ITA 5955/MUM/2018 VIRMABHAI A PATEL HAWALA DEALERS AND THE BENEFICIARY TO THE DGIT (INV ESTIGATION) MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST O F BENEFICIARIES. THE ASSESSEE ALLEGEDLY MADE THE PURCHASES OF RS.1 1 4 97 076/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION T HE ASSESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESS EE ESCAPED ASSESSMENT THEREFORE RE-OPENED THE ASSESSMENT UND ER SECTION 147. NOTICE UNDER SECTION 148 DATED 14-07-2015 WAS ISSUE D TO THE ASSESSEE. THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT WAS ALSO SUPPLIED TO THE ASSESSEE. SUBSEQUENTLY THE A SSESSING OFFICER ISSUED A NOTICES U/S 143(2) AND 142(1) ALONG WITH A QUESTIONNAIRE AND SERVED UPON THE ASSESSEE. DURING THE ASSESSMEN T THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THE FOLLOWING PARTIES WHICH WAS DECLARED AS HAWALA DEA LERS BY THE SALE TAX DEPARTMENT GOVERNMENT OF MAHARASHTRA: NAME OF THE PARTIES BILL AMOUNT (RS.) 1 KONIKA TUBE INDUSTRIES 3 09 443 2 MAHADEV METAL INDUSTRIES 4 85 801 3 GLOBAL ENTERPRISES 16 99 317 4 RAJ IMPEX 10 04 536 5 RAGHUPATI TRADING PVT LTD 6 61 640 6 SUNRISE ENTERPRISES 4 64 907 7 RATANDEEP IMPEX 10 21 711 8 MANISH INDUSTRIAL CORPORATION 7 38 148 9 SURAJ ENTERPRISES 5 79 638 10 DHANERA METAL CORPORATION 4 46 973 11 SANDOZ STEEL 14 82 731 12 VIJAY LAXMI TRADING CO 9 16 992 13 SHREE RA JARAM STEEL & ENGG. CO 16 85 239 3 ITA 5955/MUM/2018 VIRMABHAI A PATEL TOTAL 11 14 97 076 3. IN ORDER TO VERIFY THE TRANSACTIONS OF PURCHASES T HE ASSESSING OFFICER ISSUED NOTICES U/133(6) TO THE ABOVE PARTIES HOWEV ER ALL THE NOTICES RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH TH E REMARK LEFT. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE BY T HE ASSESSING OFFICER. IN RESPONSE TO THE NOTICES ISSUED BY THE ASSESSING OFF ICER THE REPRESENTATIVE OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS BEFORE ASSESSING OFFICER AND FURNISHED VARIOUS DETAILS SUCH AS COPI ES OF PURCHASE INVOICES OF THE SPECIFIED PARTIES; COPIES OF BANK STATEMENTS EVIDENCING PAYMENTS MADE THROUGH BANKING CHANNELS; CHART SHOWING THE DE TAILS OF PURCHASES OF THE ALLEGED PARTIES; AND DETAILS IN RESPECT OF P URCHASES FROM THE PARTIES AND THE CORRESPONDING SALES MADE OUT OF IT. 4. THE ASSESSING OFFICER HOWEVER DID NOT IMPRESS WIT H THE EVIDENCES FILED BY THE ASSESSEE; HE OBSERVED THAT THE INTENTION OF INDULGING IN SUCH ACTIVITY IS TO SUPPRESS THE TRUE PROFITS AND TO RED UCE THE TAX LIABILITY. THEREFORE RELYING UPON THE JUDGEMENT OF HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH (2013) 356 ITR 451 (GUJ) AND ALSO GIVING CREDENCE TO THE FACT THAT ASSESSEE HAS RECOR DED SUCH PURCHASES IN THE BOOKS OF ACCOUNT THE ASSESSING OFFICER HELD TH AT IT WOULD BE FAIR AND JUST TO BRING THE PROFIT ELEMENT EMBEDDED IN SUCH P URCHASES TO TAX. HE THEREFORE MADE ADDITION OF RS.14 37 135/- BEING 1 2.5% OF THE AMOUNT 4 ITA 5955/MUM/2018 VIRMABHAI A PATEL OF ALLEGED BOGUS PURCHASES TO THE TOTAL INCOME ELEM ENT EMBEDDED IN SUCH PURCHASES. 5. ON APPEAL THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. FURTHER AGGRIEVED THE ASSESSEE FILED THE PRESENT A PPEAL BEFORE US. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPE AL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT (A) ERRED IN MAKING DISALLOWANCE OF NON GENUINE PURCHASE CLAIMS OF RS. 14 37 1357- ON THE BASIS OF G.P RATIO @12.5% ON PURCHASE (TOTAL ALLEGED PURCHASE RS. 1 14 97 0767-) UNDER THE INCOME TAX ACT 1961 WITHOUT CONSIDERING THE FACTS OF THE CASE. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE US. THE NOTICE OF HEARING WAS SENT BY RPAD FOR TWO OCCASIONS. THEREF ORE WE ARE LEFT WITH NO ALTERNATIVE BUT TO HEAR THE LD. DR FOR THE REVENUE AND DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RE CORD. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF THE LOWER AUTHOR ITIES. THE LD. DR SUBMITS THAT THE INVESTIGATION WING OF DEPARTMENT M ADE FULL-FLEDGED INVESTIGATION AND CAME TO THE CONCLUSION THAT THE H AWALA OPERATORS WERE INDULGING IN PROVIDING MERE ENTRY WITHOUT DELIVERY OF ACTUAL GOODS. THE LD. DR FURTHER SUBMITS THAT THE ASSESSEE IS ALREADY GRANTED SUFFICIENT RELIEF BY THE LOWER AUTHORITIES AND THE APPEALS OF THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR FO R THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSES SING OFFICER MADE 5 ITA 5955/MUM/2018 VIRMABHAI A PATEL ADDITIONS @ 12.5% OF THE ALLEGED PURCHASES SHOWN FR OM THE HAWALA DEALERS BY FOLLOWING THE DECISION OF THE HONBLE GU JARAT HIGH COURT IN CIT VS SIMIT P SHETH (356 ITR 451 GUJ) . WE HAVE NO TED THAT THE LOWER AUTHORITIES HAVE NOT DOUBTED THE SALES OF THE ASSES SEE. THE LOWER AUTHORITIES HAVE NOT EXAMINED THE GROSS PROFIT (GP) DECLARED BY THE ASSESSEE DURING THE PREVIOUS OR SUBSEQUENT ASSESSME NT YEARS. WE ARE OF THE CONSIDERED OPINION THAT UNDER INCOME TAX ACT ON LY REAL INCOME CAN BE TAXED BY THE REVENUE. WE MAY FURTHER CONCLUDE TH AT EVEN IF THE TRANSACTION IS NOT VERIFIABLE THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT THE ENTIRE TRANSACTION. AND AFTER CONSIDERING THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS OF THE PARTIE S WE ARE OF THE OPINION THAT IN ORDER TO FULFIL THE GAP OF REVENUE LEAKAGE THE DISALLOWANCE OF REASONABLE PERCENTAGE OF SUCH PURCHASES WOULD MEET THE END OF JUSTICE. 8. CONSIDERING THE FACTS THE ASSESSEE IS DEALING IN TR ADING OF METALS WHEREIN THE MARGIN OF PROFIT IS NOT VERY MUCH THER EFORE CONSIDERING THE BUSINESS ACTIVITIES OF THE ASSESSEE WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITIONS / DISALLOWANCE ON ACCOUNT OF THE ALLEGED BOGUS PURCHASE @12.5 % MINUS GP DECLARED BY THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. NO OTHER CONTRARY FACT OR DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR FOR THE REVENUE. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6 ITA 5955/MUM/2018 VIRMABHAI A PATEL ORDER PRONOUNCED IN THE OPEN COURT ON 26-11-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI DT : 26 TH NOVEMBER 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR ITAT MUMBAI