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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) Both these appeals are by the Revenue against the impugned orders both dated 15/05/2015 of the Ld. First Appellate Authority, Mumbai. First, we shall take up the appeal for Assessment Year 2010-11 ( Revenue pertains to restricting the net addition to 7.50 of the purchases from the parties, which were not proved to be genuine, disregarding unaccounted investment from unknown sources.
During hearing, Shri Rajesh Kr. Yadav, ld. DR, defended the addition made by the Assessing Officer by submitting that notice issued u/s 133(6) of the Income Tax Act, 1961 (hereinafter the Act), nobody appeared. It was also contended that no evidence was produced by the assessee for such purchases, thus, the onus was not discharged. On the other hand, the ld. counsel for the assessee, Ms. Nimisha Bothra, defended the impugned order by contending that a well reasoned order has been passed by the Ld. Commissioner of Income Tax (Appeal) and the onus caste upon the assessee was duly discharged.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a proprietor of M/s Anupam Metals (India), carrying on business in supply of ferrous and non-ferrous metal, iron and steel, alloys and fitting etc, declared income of Rs.14,59,700/- in his return filed on 29/09/2011. The return was processed u/s 143(1) of the Act. Statutory notice u/s 143(2) of the Act were issued to which the assessee attended from time to time. To ascertain the genuineness of the purchases, the Ld. Assessing Officer issued notices u/s 133(6) to various parties. As per the Revenue, these parties were not appeared and on some of the address, the notices could not be served as the postal authorities returned such notices with the remark ‘not known’ and ‘left’. The ld. Assessing Officer was of the view that the onus caste upon the assessee was not discharged. It was also noticed by the Assessing Officer that the Sales Tax Department of Maharashtra State Government made detailed investigation in the cases of certain dealers and found that they were issuing bogus purchase bills. The assessee was asked to produce these parties or to establish the genuineness of the purchases. The Ld. DR, during hearing, contended that some of the parties have admitted, before the Sales Tax Authorities, that they were issuing bogus bills. The Ld. Assessing Officer made the addition to the total income of the assessee.
2.2. On appeal before the Ld. Commissioner of Income Tax (Appeal), the assessee vide submissions dated 07/02/2013, contended that he maintains day to day stock register, having all invoices of purchases and sales, which are passed through stock registers. The Ld. Commissioner of Income Tax (Appeal) considered the factual matrix, relied upon the decision like Durga Prasad More 82 ITR 540(SC), Sumati Dayal vs CIT 214 ITR 801, Jamuna Prasad Kanhaiya Lal vs CIT 130 ITR 244 (SC), Minakshi Mills Ltd. 63 ITR 609 (SC), McDowells & Co. 154 ITR 148 (SC), Daulat Ram Rawatmal. 87 ITR 349, Chuhar Mal vs CIT 172 ITR 205 (SC), Nikunj Eximps, of 2010 (Bom.), Killick Nixon ltd. vs DCIT (2012) 20 taxman.com 703 (Bom.), Shri Ganesh Rice Mills vs CIT (2007) 294 ITR 316 (All.), Khandelwal Trading Company vs ACIT 55 TTJ 261(JP) and various other judicial pronouncements, as mentioned in the impugned order along with similar issue adjudicated in the case of the assessee, estimated the embedded income at the rate of 12.5% of the total purchases. Since, the assessee had already offered and average gross of profit of 5% during the last few years, the net addition was confirmed to 7.50% (12.5% - 5%). The Revenue is aggrieved and is in appeal before this Tribunal.
2.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, this factual matrix was not controverted by the Revenue that in earlier Assessment Years, the income was estimated at 12.5% of the total purchases and the assessee had already offered average gross of 5% during the last five years. However, the fact remains that the observation made in the assessment order were not contrverted by the First Appellate Authority in the impugned order. At the same time, the basis for reducing the addition from 12.5% to 7.5% is also hypothetical and the same is not justified ground for making the reduction. It is also a fact that notices issued to the parties were either not served or were returned unserved by the postal authorities. Thus, the onus caste upon the assessee remained to be discharged. At the same time, to put an end to the litigation, under the facts, and the circumstances narrated in the assessment order as well as in the impugned order, the addition is reduced to 10% against the estimation of 12.5% of the purchases and consequently, increased to the same figure against 7.50% reduced by the Ld. Commissioner of Income Tax (Appeal). The Ld. Assessing Officer is directed to adopt the net profit at the rate of 10% of the total purchases made by the assessee, thus, this appeal of the Revenue is partly allowed.
Now, we shall take up the appeal for Assessment Year 2011-12 (ITA No.4503/Mum/2015), where also identical ground has been raised. Since, the facts and the issue is identical, therefore, our aforesaid direction/conclusion, will also apply to the present appeal also, thus, the appeal of the Revenue is partly allowed.
Finally, both the appeals of the Revenue are partly allowed.
This order was pronounced in the open in the presence of ld. representative from both sides at the conclusion of the hearing on 19/04/2017.