RITESH KANTILAL BAFNA,MUMBAI vs. ITO WD 19(2)(2), MUMBAI

O R D E R PER RAJESH KUMAR, A.M:

This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax(Appeals)-30, Mumbai, dated 16-02-2017.

2.1. The facts in brief are that, the assessee, an individual, is engaged in the business of dealing in iron and steel and other related items. The assessment u/s.143(3) of the Act was framed by the AO on 31-10-2011, assessing the income at Rs.5,18,580/- as against the returned income of Rs. 3,36,110/-. The AO reopened the case of assessee u/s.147 of the Act by issuing notice u/s.148 of the Act on 26-02-2014 after receiving information from DGIT(Inv.) Wing, Mumbai that assessee is a beneficiary of Hawala purchase entries to the tune of Rs.11,44,23,300/- from six parties the details whereof were given on page No.2 of the assessment order. Thereafter, statutory notices were issued and duly served on assessee, calling upon to furnish the evidences to prove the genuineness of the said purchases. In response, the assessee furnished bills and vouchers pertaining to purchases and sales and the books of account etc in order to prove the genuineness of the purchases. The AO also issued notices u/s.133(6) of the Act however there was no responses from the suppliers and notices have been returned by the postal authorities. Finally, AO came to the conclusion that the said purchases were Hawala purchases, and the assessee was indulging in such activities to suppress the true profits and to reduce the tax liability. The AO thought it reasonable to make addition on percentage basis by following the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Simit P. Sheth [356 ITR 451] (Guj). The AO estimated the Profit on the said purchases @ 12.50% thereby making an addition of Rs.1,43,02,913/- by making assessment u/s.143(3) r.w.s.147 of the Act, vide order dt.18-03-2015.

2.2. In the original assessment proceedings, AO has basically raised a query for furnishing the details of sale and purchases above Rs.50,000/- vide letter dt.08-09-2011 and also sought the details of Sundry Creditors outstanding which was replied by assessee vide written submissions dt.18-10-2011, wherein the assessee has attached party-wise purchases and sales the details thereof are attached at pages 50 to 52 of the Paper Book. We find that in the details of purchases submitted by the assessee as filed at page 51, all these parties, which were stated to be Hawala parties were duly furnished before the AO. Now the assessee has challenged the reopening proceedings on ground that the same was based on the same material which was before the in the original assessment proceedings and thus amounted to change of opinion.

“5.13. In view of the above factual and legal analysis, I am of the considered opinion that there was no infirmity in the action of the Ld.AO, in reopening the case and reopening is not on mere suspicion and there is specific material received from the investigation wing which in turn received from the Sales Tax Department, Government of Maharashtra, which was not verified in the original assessment by the AO. Resultantly, Grounds raised against the reopening of the appeal are ‘Dismissed.’”