Income Tax Appellate Tribunal - Mumbai
Acit 24(1), Mumbai vs Dinesh R. Shah, Mumbai on 13 December, 2017
ITA.No.3528-29, 3989-90/Mum/2016 Dinesh R. Shah Assessment Years-2010-11 & 2011-12 आयकर अपीलीय अिधकरण "बी"
ायपीठ मुं बई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI ी डी.टी. गरािसया, ाियक सद एवं ी मनोज कुमार अ वाल, लेखा सद के सम ।
BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं ./I.T.A. No.3528-29/Mum /2016 (िनधा रण वष / Assessment Years: 2010-11 & 2011-12) Dinesh R. Shah Deputy Commissioner Of E-71,Bina Apartm ents बनाम/ Income Tax 20(2) Sir M.V.Road, Andheri(East) Vs. Mumbai Mumbai-400 069 थायी ले खा सं ./जीआइआर सं ./PAN/GIR No. AFXPS-5556-F (अ पीलाथ# /Appellant) : ($%थ# / Respondent) & आयकर अ पील सं ./I.T.A. No.3989-90/Mum /2016 (िनधा रण वष / Assessment Years: 2010-11 & 2011-12) Assistant Commissioner Of Dinesh R. Shah Income Tax 24(1) E-71,Bina Apartments बनाम/ Room No.402, Piramal Sir M.V.Road, Andheri(East) Chambers,6 t h Floor, Parel Vs. Mumbai-400 069 Mumbai-400 012 थायी ले खा सं ./जीआइआर सं ./PAN/GIR No. AFXPS-5556-F (अ पीलाथ# /Appellant) : ($%थ# / Respondent) Assessee by : Shashank Dundu,Ld.AR Revenue by : Suman Kumar, Ld. Sr. DR सु नवाई की तारीख / : 25/10/2017 Date of Hearing घोषणा की तारीख / : 13/12 /2017 Date of Pronouncem ent 2 ITA.No.3528-29, 3989-90/Mum/2016 Dinesh R. Shah Assessment Years-2010-11 & 2011-12 आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. The captioned appeals by Revenue as well as assessee for Assessment Years [AY] 2010-11 & 2011-12 assails the common order of Ld. Commissioner of Income Tax (Appeals)-36 [CIT(A)], Mumbai, Appeal Nos.CIT(A)-31/IT-204/DCIT-20(2)/14-15 & CIT(A)-31/IT- 205/Add. CIT-20(2)/14-15 dated 17/03/2016 qua addition on account of certain alleged bogus purchases. Since common issues are involved, we proceed to dispose-off the same by way of this common order for the sake of convenience & brevity. First, we take up cross appeals for AY 2010-11.
2.1 Facts leading to the same are that the assessee being resident individual engaged in the business of trading of pipes, tubes, iron & steel, was subjected to an assessment u/s 143(3) read with Section 147 for impugned AY on 28/03/2014 at Rs.1,85,26,950/- after addition of certain bogus purchases for Rs.1,08,51,371/-. The original return was filed on 14/10/2010 at Rs.75,62,760/- which was processed u/s 143(1). The solitary issue involved in the appeal is addition on account of bogus purchases.
2.2 The reassessment proceedings were initiated upon receipt of certain information from Sales Tax Department, Maharashtra regarding dealers indulging in bogus purchase bills and it was noted that the assessee stood beneficiary of such bogus purchase bills to the tune of Rs.1,08,51,371/- from two such parties. Consequently, notice u/s 148 3 ITA.No.3528-29, 3989-90/Mum/2016 Dinesh R. Shah Assessment Years-2010-11 & 2011-12 dated 28/03/2013 was issued to the assessee which was followed by statutory notices u/s 143(2) and 142(1). The assessee reflected gross purchases of Rs.18.98 crores.
2.3 Notice u/s 133(6) issued to alleged bogus suppliers to confirm the purchase transactions remained un-served by postal authorities which was confronted to the assessee. The assessee, in support, submitted invoices, bank statements, ledger extracts etc. to substantiate the same and contended that the purchases were genuine. However, Ld. AO appreciated the statements of the impugned suppliers as recorded by the Sales Tax Department and also perused the bank statement of the alleged bogus suppliers where huge cash withdrawals were noted immediately after receipt of cheques. The Ld. AO also noted that the assessee failed to produce nexus between alleged bogus purchases and corresponding sales. It was further noted that cash was withdrawn from the bank immediately upon receipt of payment from the assessee. The physical inspection by the inspector revealed that none of the parties existed at the given addresses. Finally, not convinced, Ld. AO disallowed the impugned purchases and 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 17/03/2016 where the Ld. CIT(A) after appreciating the factual matrix and by placing reliance on several judicial pronouncements restricted the impugned additions to 12.5% of alleged bogus purchases. Aggrieved, the revenue as well as the assessee is in further appeals before us.
4ITA.No.3528-29, 3989-90/Mum/2016 Dinesh R. Shah Assessment Years-2010-11 & 2011-12
4. The Ld. Counsel for Assessee [AR] submitted that sufficient documentary evidences in the shape of invoices, bank statement, godown arrival report, delivery challans, weighment note, storage intimation slip of warehousing agency, unloading charges paid to labor board, transportation bill etc. were submitted by the assessee and therefore, the additions were not justified. The Ld. AR, in the alternative, pleaded for a reasonable estimation of the same keeping in view the assessee's nature of business. Reliance has been placed on several judicial pronouncement of this Tribunal for various contentions, the copies of which are placed on record.
5. Per Contra, Ld. DR pointed out that the assessee miserably failed to prove the purchases since no transportation bills could be submitted by him and none of the supplier existed at the given addressees. Further, mere possession of invoices and payment through banking channels was not sufficient to prove the said transactions. It was further pointed out that the assessee submitted additional evidences during appellate proceedings which were never confronted to the Ld. AO.
6. Heard and perused relevant material on record. We are of the considered opinion that there could be no sale without purchase of material since assessee was engaged in trading operations. The turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee, to some extent, produced details of purchase and corresponding sales before Ld. CIT(A). At the same time, the assessee could not produce any of the suppliers before lower authorities and the physical inspection at the given addresses revealed that none of the 5 ITA.No.3528-29, 3989-90/Mum/2016 Dinesh R. Shah Assessment Years-2010-11 & 2011-12 party existed there which cast a serious doubt on assessee's claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which Ld.CIT(A) has rightly done. However, keeping in view overall facts and circumstances, on factual matrix and in view of assessee's nature of business, products dealt with by him and documentary evidences adduced by him, we find the same to be on higher side. Therefore, we restrict the same to 5% of alleged bogus purchases of Rs.1,08,51,371/- which comes to Rs.5,42,568/-. The order of Ld. CIT(A) stand modified to that extent. Resultantly, the revenue's appeal stands dismissed whereas assessee's appeal stands partly allowed.
7. The assessee in AY 2001-12, under similar circumstances, has been saddled with additions of Rs.4,40,24,846/- in the quantum assessment which has been reduced to 12.5% by Ld. CIT(A). The order of Ld. CIT(A) is common for AY 2010-11 & 2011-12. Hence, taking the same view, we restrict the impugned additions to 5% of alleged bogus purchases which comes to Rs.22,01,242/-. Resultantly, the revenue's appeal stands dismissed whereas assessee's appeal stands partly allowed.
8. Finally ITA Nos. 3989-90/Mum/2016 stands dismissed whereas ITA Nos.3528-29/Mum/2016 stands partly allowed.
Order pronounced in the open court on 13th December, 2017.
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ITA.No.3528-29, 3989-90/Mum/2016
Dinesh R. Shah
Assessment Years-2010-11 & 2011-12
Sd/- Sd/-
(D.T. Garasia) (Manoj Kumar Aggarwal)
ाियक सद / Judicial Member लेखा सद / Accountant Member
मुंबई Mumbai; िदनां क Dated : 13.12 .2017 Sr.PS:- Thirumalesh आदे श की ितिलिप अ !े िषत/Copy of the Order forwarded to :
1. अपीलाथ# / The Appellant
2. $%थ# / The Respondent
3. आयकर आयु+(अपील) / The CIT(A)
4. आयकर आयु+ / CIT - concerned
5. िवभागीय $ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai
6. गाड. फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पं जीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai