SANJAY KAILASH GUPTA, KALYAN v. ITO WD 3(4), KALYAN

ITA 7076/MUM/2016 | 2009-2010
Pronouncement Date: 30-11-2017 | Result: Dismissed

Appeal Details

RSA Number 707619914 RSA 2016
Assessee PAN ADTPG0574H
Bench Mumbai
Appeal Number ITA 7076/MUM/2016
Duration Of Justice 11 month(s) 25 day(s)
Appellant SANJAY KAILASH GUPTA, KALYAN
Respondent ITO WD 3(4), KALYAN
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 30-11-2017
Last Hearing Date 09-11-2017
First Hearing Date 09-11-2017
Assessment Year 2009-2010
Appeal Filed On 05-12-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 7076/MUM/2016 ASSESSMENT YEAR: 2009 - 10 SHRI SANJAY KAILASH GUPTA 707 A7 KINGSTONE YOGIDHAM SHOP NO. 1 2 3 KASTURIGRAM S OCIETY KHADAKPADA KALYAN (WEST) PAN: ADTPG0574H VS. THE INCOME TAX OFFICER WARD 3(4) KALYAN MURBAD ROAD RANI MANSION KALYAN (WEST) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI M.C. OMI NINGSHEN (DR) DATE OF HEARING: 0 9 /11 /201 7 DATE OF PRONOUNCEMENT: 30 / 11 /201 7 O R D E R PER RAM LAL NEGI JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 13/07/2016 PASSED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) - 1 MUMBAI FOR THE A S S ESSMENT YEAR 2009 - 10 WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING IN STEEL AND SCRAP IN THE NAME OF HIS PROPRIETARY CONCERN M/S SHREE KAILASH ENGINEERING WORKS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARIN G THE TOTAL INCOME OF RS. 2 21 070/ - . THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR GENERAL INCOME TAX (INV.) MUMBAI TO THE EFFECT THAT DURING THE FINANCIAL YEAR RELEVANT TO THE ASSES SMENT YEAR UNDER CONSIDERATION 2 ITA NO. 7076 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FROM FOUR BOGUS ENTITIES TO INFLATE PURCHASES THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT. DURING THE REASSESSMENT PROCEEDINGS THE ASSESS EE WAS ASKED TO FURNISH THE DETAILS INCLUDING BOOKS OF ACCOUNT BILLS AND VOUCHERS AND OTHER DOCUMENTS TO VERIFY THE GENUINENESS OF THE TRANSACTION. IN RESPONSE THEREOF THE ASSESSEE FURNISHED SOME OF THE DOCUMENTS INCLUDING PURCHASE INVOICES COPIES OF BANK STATEMENTS STOCK REGISTER AND QUANTITATIVE TALLY ETC. AND SUBMITTED THAT THE SAID DOCUMENTS PROVE THE GENUINENESS OF THE TRANSACTION. HOWEVER THE AO AFTER TAKING INTO CONSIDERATION THE DETAILS SUBMITTED AND THE SUBMISSIONS MADE BY THE ASSESSEE TREATED T HE PURCHASES AMOUNTING TO RS. 50 30 121/ - AS BOGUS AND MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE THEREBY DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 52 62 950/ - (ROUNDED OFF). 3. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSE E CHALLENGED THE SAME BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT (A) AFTER HEARING THE ASSESSEE HELD THE TRANSACTION BOGUS HOWEVER RESTRICTED THE ADDITION TO 12.5% TAKING INTO CONSIDERATION THE ELEMENT OF PROFIT EMBEDDED IN THE SAID PURCHASES IN A CCORDANCE WITH THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN CIT VS. SIMIT P. SHETH 356 ITR 451 . STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 . THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CI T (A) BY RAISING THE FOLLOWING GROUND S : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER (A PPEALS) ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT ON THE FOLLOWING GROUNDS: 3 ITA NO. 7076 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 A. THE COMMISSIONER (A PPEAL) FAILED TO APPRECIATE THAT THE NOTICE UNDER SECTION 148 WAS ISSUED WITHOUT ANY VALID REASON FOR REOPENING. B. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD FAILED TO GIVE REASONS FOR REOPENING TO THE APPELLANT AND PROCE EDING WITH THE ASSESSMENT PROCEEDINGS WITHOUT AUTHORITY. C. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT A MERE MENTION OF NAME FROM WHOM THE APPELLANT HAD PURCHASED GOODS FROM CERTAIN PARTIES LIST BY SALES TAX DEPARTMENT DOES NOT BY ITSELF A INFORMA TION WITHIN THE MEANING OF SECTION 147 AND THEREBY A GROUND FOR REOPENING OF ASSESSMENT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER (APPEALS) ERRED IN ARRIVING AT A DISALLOWANCE BY ADOPTING A GROSS PROFIT RATIO OF 12.5 0% ON ALLEGED BOGUS PURCHASES WHICH IS WITHOUT ANY BASIS AND JUSTIFICATION AND THEREBY CONFIRMING THE ADDITION OF RS. 628 765/ - . THE SAID PERCENTAGE IS VERY HIGH AND IS ARRIVED ON AD - HOC BASIS. 5. THIS CASE WAS FIXED FOR HEARING ON 09/011/2017 . ON THE SAID DATE WHEN THE CASE WAS CALLED FOR HEARING NEITHER THE ASSESSEE IN PERSON NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE BENCH NOR ANY APPLICATION FOR ADJOURNMENT OF CASE WAS RECEIVED ON BEHALF OF THE ASSESSEE. SINCE THE ASSESSEE DID NOT APPE AR DESPITE SERVICE OF NOTICE WE DECIDED TO DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL ON RECORD AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE (DR). 6. THE LD. DR RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT THE LD. CIT (A) HAS RI GHTLY RESTRICTED THE ADDITION TO 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE DURING THE YEAR RELEVANT TO THE 4 ITA NO. 7076 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. DR FURTHER POINTED OUT THAT THE FINDINGS OF THE LD. CIT (A) ARE BASED ON THE DEC ISION OF THE HONBLE GUJARAT HIGH COURT RENDERED IN CIT VS. SIMIT P. SHETH (SUPRA). THEREFORE THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE AND THE SAME IS LIABLE TO BE DISMISSED. 7. WE HAVE CAREFULLY GONE THROUGH THE ORDERS PASSED BY THE AUTHORITIES B ELOW. BASICALLY THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON TWO GROUND S I.E. 1 THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED REOPENING TH E ASSESSMENT U/S 147 OF THE ACT BECAUSE THE NOTICE U/S 148 OF THE ACT WAS ISSUED BY THE AO WITHOUT ANY VALID REASON S AND THAT THE AO HAS FAILED TO GIVE REASONS FOR REOPENING OF THE ASSESSMENT AND THAT MERE MENTION OF NAMES OF THE ENTITIES FROM WHOM THE APPELLANT HAD PURCHASED GOODS BY SALES TAX DEPARTMENT DOES NOT CONSTITUTE AN INFORMATION WITHIN THE MEANING OF SECTIO N 147 OF THE ACT. 2. THAT T HE LD. CIT (A) HAS WRONGLY SUSTAINED THE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES . 8. WE DO NOT FIND ANY INFIRMI T Y IN THE FINDINGS OF THE LD. CIT(A) ON THE ISSUE OF REOPENING OF THE ASSESSMENT. IN OUR CONSIDERED OPINION INFORMATION FROM DGIT WAS SUFFICIENT FOR THE AO TO FORM THE BELIEF THAT PART OF THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE FACT THAT DURING REASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION CO NFIRMS THAT THE BELIEF OF THE AO WAS BASED ON TANGIBLE MATERIAL. HENCE WE UPHOLD THE FINDINGS OF THE LD CIT(A) ON THIS ISSUE AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 9. SO FAR AS THE SECOND ISSUE WHICH PERTAINS TO ADDITION OF 12.5% OF THE AMOU NT OF BOGUS PURCHASES IS CONCERNED W E NOTICE THAT T HE LD. CIT (A) HAS BASED HIS FINDINGS ON THE DECISIONS RENDERED BY THE VARIOUS BENCHES OF THE INCOME TAX APPELLATE TRIBUNAL AND THE HONBLE HIGH COURT OF GUJARAT RENDERED 5 ITA NO. 7076 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 IN CIT VS. SIMIT P. SHETH (SUPRA) . SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION THE LD. CIT (A) HAS RIGHTLY HELD THE PURCHASES IN QUESTION AS BOGUS. ON THE OTHER HAND THE AO HAS NOT DISPUTED THE SALE THE ENTIRE AMOUNT OF PURCHASES IN QUESTION CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE AS THERE CANNOT BE SALE WITHOUT ANY PURCHASES. UNDER THESE CIRCUMSTANCES IT CAN BE CONCLUDED SAFELY THAT IF THE ASSESSEE HAD NOT PURCHASED THE GOODS FROM THE PARTIES MENTIONED IN THE BOOKS OF ACCOUNT THE GOODS WERE PU RCHASED FROM GREY MARKET AND EVADED THE SALES TAX/ VAT APPLICABLE DURING THE RELEVANT PERIOD . HENCE IN ACCORDANCE WITH THE PRINCIPLES LAW LAID DOWN BY THE HONBLE GUJRAT HIGH COURT IN CIT VS. SIMIT P. SHETH (SUPRA) AND RIGHTLY RESTRICTED THE ADDITION TO 1 2.5% OF THE BOGUS PURCHASED MADE BY THE ASSESSEE DURING THE RELEVANT FINANCIAL YEAR KEEPING IN VIEW THE TAXES EVADED BY THE ASSESSEE AND THE PROFIT EARNED FORM THE BOGUS PURCHASES . HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) TO INTERFERE WITH. WE ACCORDINGLY UPHOLD THE FINDINGS OF THE LD. CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. IN THE RESULT APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2009 - 2010 IS DISMISSED . ORDER PRONOUNCED IN THE OP EN COURT ON 30 TH NOVEMBER 2017 . SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 30 / 11 / 2017 ALINDRA PS 6 ITA NO. 7076 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . / BY ORDER //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI