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Income Tax Appellate Tribunal, “G”
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The above mentioned appeals have been filed by the assessee against the different order passed by the Commissioner of Income Tax (Appeals)- 29, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys.2010-11 & 2011-12. & 6208/M/2018 A.Ys. 2010-11 & 2011-12 ITA. NO.6407/M/2018:- 2. The assessee has filed the present appeal against the order dated 05.07.2018 passed by the Commissioner of Income Tax (Appeals)-29, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2010- 11. 3. The assessee has raised the following grounds: -
The Ld. CIT(A) erred in confirming the reopening of case u/s “1 147 of the Act.
2. The Ld. CIT(A) erred in confirming the addition of 12.5% of alleged purchase Rs.99,21,961/-.”
4. The brief facts of the case are that the assessee filed its return of income on 30.08.2010 declaring total income to the tune of Rs.6,91,780/-. The return was processed u/s 143(1) of the I.T. Act. The assessee is a Dealer of ferrous and non-ferrous metals. An information received from the DGIT(Inv.), Mumbai, to the effect that the assessee has taken the accommodation entries for purchase of material. The assessee has taken the bogus entry of purchase from the following 9 parties: - Sr. No Name of the „hawala parties Bill Amount (in Rs.) 1 Asian Tube Trading 5,688 2 Kiran Sales Corporation/Nidhi Impex India 11,40,391 3 Ratandeep Impex 6,14,275 4 Dhanera Metal Corporation 18,14,492 5 P.M. Steel Alloys 27,56,228 6 Manish Industrial Corporation 30,75,934 7 Shree Yamuna Impex 60,166 8 Manibhadra Impex (India) 2,20,781 9 Matrix Corporation 2,34,006 ITA. Nos.6407 & 6208/M/2018 A.Ys. 2010-11 & 2011-12 Total 99,21,961
5. Thereafter, the case of the assessee was reopened u/s 147/148 of the Act. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee and after the reply of the assessee, the AO raised the addition @ 12.5% of the total bogus purchase. The sum of Rs.12,40,245/- was added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.19,32,030/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.
ISSUE NO.1 6. Under this issue the assessee has challenged the reopening u/s 147 of the Act. The assessee did not press this issue at the time of arguments, therefore, this issue is being decided in favour of the revenue against the assessee being not pressed ISSUE NO.2 7. Issue no. 2 is in connection with the restricting the addition to the extent of 12.5% of the total bogus purchase by the CIT(A). The Ld. Representative of the assessee has argued that the assessee is the dealer of ferrous and non-ferrous metal in which the margin is very low, therefore, restricting the addition to the extent of 12.5% of the total bogus purchase is highly unjustifiable specifically in the circumstances, when the sale is not disputed and books of account has not been rejected, therefore, the addition is liable to be restricted to the extent of 3% of the bogus purchase if any in the interest of justice. On the other hand, the Ld. Representative of the & 6208/M/2018 A.Ys. 2010-11 & 2011-12 revenue has refuted the said contention. It is not in dispute that the case of the assessee was reopened u/s 147/148 of the Act on receipt of the letter from DGIT(Inv.), Mumbai in which it was conveyed that the assessee has taken the bogus purchase entry from 9 parties total in sum of Rs.99,21,961/-. The AO issued the notices u/s 133(6) to the parties which were not served, therefore, the AO restricted the addition to the extent of 12.5% of the bogus purchase of Rs.99,21,961/- i.e. 12,40,245/-. The books of account in the present case has not been rejected by the AO. The sale is also not disputed. In the similar facts and circumstances of the case, the Hon‟ble ITAT has passed the order in ITA. No.2079 &2080/M/2018 titled as ITO Vs. Madhuben Prakash for the A.Y.2009-10 & 2010-11 dated 07.06.2019. The relevant finding has been given as under.:-
“All the issues are in connection with the restricting the addition to the extent of 6.5% of the total bogus purchase by the CIT(A). The Ld. Representative of the revenue has argued that the total bogus purchase is required to be added to the income of the assessee and the AO has also failed to find the parties, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable and is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - “7.3 1 have carefully considered the rival contentions on the issue 01) hand. On perusal of the material on record it is noticed that, in the appellant's case, Ld. AO, made independent verifications by issuing notices u/s. 133(6) of the I.T. Act, which could not be served as the parties were not available at the given address, and there was an overwhelming evidence in the form of statements of some of the suppliers given before the Sales tax authorities that it was engaged only in issuing hawala bills and no goods were ever supplied by them. 7.4 After weighing the evidence pros and cons, I find that the appellant has not reconciled the purchases with the items sold and failed to reconcile one to one of the items purchased and sold. Onus was always on the appellant to prove as to how the material purchased was firstly obtained. Thus, it can be 'safely presumed that & 6208/M/2018 A.Ys. 2010-11 & 2011-12 either they are non-existent or even if they do exist, they were not backed by sufficient evidence to undergo the test of scrutiny. 7.5 The suppliers were in fact the appellant's witness and the Ld. A.0 was not required to force their attendance. It was for the appellant to produce them as per Civil Procedure Code which applies on all fours to the income-tax proceedings. It is trite that once a transaction is shown to be of the nature of income, the onus shifts to the assessee to show that the same was not taxable. It can thus be safely assumed that the appellant has grossly failed in its duty to mitigate the burden cast upon it in so far as proving the genuineness of the transaction from the said party is concerned. 7.6 In this regard it is also pertinent to mention that while dealing with the concept of burden of proof, onus of proving is always on the person who makes the claim and not on the Revenue. While dealing with the issue of deciding the burden of proof, Hon’ble Supreme Court in the cases of CIT Vs. Durgaprasad More 82 ITR 540 and Sumati Dayal Vs. CIT 214 ITR 801 has held that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that Taxing Authorities are entitled to look into surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. The Hon’ble court also held that, it is no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden to prove that it is not taxable because it falls within exemption provided by the, lies upon the assessee. In the case of Durgaprasad More (Supra), the Hon’ble Court went on to add that a party who relies on a recital in a Deed has to establish the truth of this recital, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party who relied on those recitals. If all that an assessee who wants to evade tax has to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. The Hon’ble Court further held that the Taxing Authorities were not required to put on blinkers looking at the documents produced before them. They were entitled to look the surrounding circumstances to find out the reality of the recitals made in those documents. 7.7. The onus to prove that apparent, is not the real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 and CIT v. Durga Prasad More (supra). In the latter case, it has been held by the Apex Court that though an apparent statement must be considered real until it was shown that there were reasons to believe that & 6208/M/2018 A.Ys. 2010-11 & 2011-12 apparent was not the real, in a case where an authority relied on self - serving recitals in documents, it was for the party to establish the proof of those recitals. 7.8 It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Therefore, onus is always on a person who asserts a proposition or fact, which is not self-evident. The onus, as a determining factor of the whole case can only arise if the Tribunal, which is vested with the authority to determine, finally all questions of fact, finds the evidence pro & con, so evenly balanced that it can come to no conclusion, then, the onus will determine the mattes, there cannot be any doubt that onus as a determining factor comes into play where, either there is no evidence on either side, or where it is equally worthless or where it is equally balanced. It is imperative to mention here that where such is not the case and all available evidence is considered, without reference to the onus and without relying on the circumstances that onus lies on a particular party, the issue is determined on facts and the onus cannot be said to have influenced the decisions. However, in the instant case, the appellant has miserably failed to lead evidence.”
On appraisal of the above said finding, we noticed that the CIT(A) has decided the matter of controversy on the basis of the decision of Gujarat High Court in the case of CIT Vs. Simit P. Sheth (356 ITR 451) (Guj). Profit embedded to the bogus purchase has been considered and accordingly CIT(A) has decided the matter of controversy. The CIT(A) has considered the copies of the invoices furnished by the appellant and also considered the VAT leviable upon the goods which was @ 4% and accordingly, the profit ratio was considered @ 2.5% of the profit margin. The CIT(A) has restricted the addition to the extent of 6.5% of the total bogus purchase. The CIT(A) has rightly considered the profit embedded to the bogus purchase specifically in the said circumstances, when the books of account has not been rejected and the sale is not disputed. The law relied by the Ld. Representative of the revenue is distinguishable on the facts and circumstances of the present case. Taking into account all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, these issues are decided in favour of the assessee against the revenue”
Since the facts of the present case is quite similar to the facts of the case narrated above, therefore, by relying upon the decision in case of Madhuben Prakash(supra), we restrict the addition to the extent of 6.5% of & 6208/M/2018 A.Ys. 2010-11 & 2011-12