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Income Tax Appellate Tribunal, “SMC”, BENCH
Before: SHRI R.C.SHARMA, AM & SHRI VIKAS AWASTHY, JM
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC”, BENCH MUMBAI
BEFORE SHRI R.C.SHARMA, AM & SHRI VIKAS AWASTHY, JM
ITA Nos. 5201, 5202 & 5203/Mum/2018 (Assessment Year: 2009-10, 2010-11 & 2011-12)
Vijay J. Pithadia, Vs. A.C.I.T. 144, V.T. Mension, Perin Range-17(3), Mumbai. Nariman Street, Fort, Mumbai-400001. PAN/GIR No.AABPP 6266 A (Appellant) .. (Respondent)
Assessee by Ms. Aarti Sathe (AR) Revenue by Shri R. Bhoopathi (DR) Date of Hearing 13/12/2019 Date of Pronouncement 13/12/2019 आदेश / O R D E R
PER: BENCH These are the appeals filed by the assessee against the
composite order of the ld. CIT(A)-28, Mumbai dated 22/06/2018 for the
A.Ys. 2009-10, 2010-11 and 2011-12 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).
All these three appeals have common issues, therefore, they are
clubbed together for hearing and for the sake of convenience and
brevity, a common order is being passed.
2 ITA No. 5201 to 5203/Mum/2018 Vijay J. Pithadia Vs ACIT 3. Common grievance of the assessee in all these three appeals
relate to reopening of assessment and addition made on account of
bogus purchases by estimating profit on such bogus purchases.
Rival contentions have been heard and record perused. Facts in
brief are that the assessee is engaged in jobwork of false ceiling,
ducting, insulation etc. The A.O. got information from the Sales Tax
Authority about some of the dealers under Mvat Act, 2002 indulging in
the practice of providing accommodation entries in the form of issuing
bogus sales bills. After recording due reasons, the A.O. reopened the
assessment by issuance of notice U/s 148 of the Act. As per the
reasons recorded, we found that the A.O. was justified in reopening the
assessment since there was sufficient reason to believe that the income
to the extent of bogus purchases has escaped assessment. Accordingly,
we uphold the reassessment made U/s 147 of the Act.
With regard to merit of the addition, we found that during the
course of reassessment proceedings, the A.O. has observed that the
assessee could not file vital documents such as delivery challans,
transport receipts, octroi receipt for payment of octroi duty, receipt of
weighbridge for weighment of goods, excise gate pass etc. After
making enquiry, the A.O. held that the assessee purchased goods from
some other suppliers without bill and taken bill from Hawala dealers.
3 ITA No. 5201 to 5203/Mum/2018 Vijay J. Pithadia Vs ACIT Thereafter the A.O. estimated extra profit of 22.68%, 23.22% and
20.46% for the A.Y. 2009-10 to 2011-12 respectively in respect of
alleged bogus purchases and added the same in assessee’s income.
Before the ld. CIT(A), the assessee filed additional evidence
under Rule 46A of the Income Tax Rules, 1962 (in short, the Rules)
which indicates that the evidence regarding price comprising of
purchase of various items made from alleged accommodation dealers
vis a vis purchases made from other dealers during the year. However,
the ld. CIT(A) has not admitted the additional evidence and without any
reasoning, rejected the same. As per the ld AR, all these bills goes to
the root of the issue for deciding the profit element embedded in such
purchases. She also invited our attention to the gross profit declared by
the assessee during the years under consideration which are ranging
between 15 to 20%. She also submitted that following details were
filed before the A.O.:
a. Quantitative details for purchases made from the parties specifically mentioned as bogus billers as referred in notice u/s 142(1)
b. Total list of purchase parties alongwith name, address and amount of purchases made during the year under reference.
c. Photocopies of bills for the alleged bogus purchases made.
d. Photocopies of delivery challans for the alleged bogus purchases made.
4 ITA No. 5201 to 5203/Mum/2018 Vijay J. Pithadia Vs ACIT e. Photocopies of bank statement evidencing the payment made towards the alleged bogus purchases made.
f. Allocation of purchases made towards various job work contracts in which the said alleged bogus purchases were utilized.
The ld. AR also relied on various judicial pronouncements in
support of the contention that after filing the above details, no addition
is warranted.
On the other hand, the ld DR has relied on the orders passed by
the authorities below and contended that the assessee could not prove
the genuineness of purchases and therefore, keeping in view the nature
of assessee’s business being contractor, the A.O. has very reasonably
estimated the profit after giving detailed finding in the order of
respective years.
We have considered the rival contentions and carefully gone
through the orders of the authorities below. We have also deliberated
on the judicial pronouncements referred by the lower authorities in
their respective orders as well as cited by the ld. AR during the course
of hearing before us. From the record we found that the assessee is is
engaged in jobwork of false ceiling, ducting, insulation etc. On getting
information from the Sales Tax Department that the assessee has taken
accommodation bill, the A.O. has reopened the assessment and
5 ITA No. 5201 to 5203/Mum/2018 Vijay J. Pithadia Vs ACIT thereafter made addition by estimating G.P. on the alleged purchases
which ranges from 20.46% to 23.22%.
From the record, we also found that before the lower authorities,
the assessee has filed quantitative details for purchases made from
these parties, list of purchase parties alongwith name, address and
amount of purchases, copy of delivery challans for alleged bogus
purchases, copy of bank statement evidencing the payment made
towards the alleged bogus purchases. The assessee has also filed
details of allocation of purchases made towards various job work
contract in which the said alleged bogus purchases were utilized. We
also found that the assessee has shown G.P. ranging from 15 to 20%,
therefore, keeping in the view the various judicial pronouncements and
facts and circumstances of the instant case, we modify the orders of
the lower authorities and direct the A.O. to restrict the addition to the
extent of 7% of the alleged bogus purchases. We direct accordingly.
In the result, all these three appeals are in allowed in part in
terms indicated hereinabove.
Order pronounced in the open court on 13th December, 2019.
Sd/- Sd/- (VIKAS AWASTHY) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 13/12/2019
6 ITA No. 5201 to 5203/Mum/2018 Vijay J. Pithadia Vs ACIT *Ranjan Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. स�या�पत ��त //True Copy// BY ORDER,
(Asstt. Registrar) ITAT, Mumbai