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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: Shri Joginder Singh, & Shri N.K. Pradhan
ुनवाई की तायीख / Date of Hearing : 14/02/2017 आदेश की तायीख /Date of Order: 14/03/2017 आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is in appeal for Assessment Year 2010-11 (ITA No.7206/Mum/2014), whereas, the assessee has preferred Cross Objection (C.O. No.94/Mum/2016). The assessee is also in appeal for Assessment Year 2009-10 (ITA 3 Shri Suresh H. Panchal CO No.94/Mum/2016 and ITA Nos.5239 & 5240/Mum/2016 No.5239/Mum/2016) and for Assessment Year 2011-12 (ITA No.5240/Mum/2016), challenging the order of the Ld. First Appellate Authority, Mumbai.
First, we shall take up the appeal of the Revenue for Assessment Year 2010-11 (ITA No.7206/Mum/2014), wherein, the addition of Rs.55,97,308/-, made on account unexplained purchases from M/s Siddhivinayak Steel, M/s Asian Steel, M/s O.B. Steel Traders, M/s S.M. Steel Traders, M/s Ravi Enterprises and M/s Metro Hardware was deleted, ignoring the fact that the addition was made on the basis of information received from Sales Tax Department that these parties are not doing any genuine business. It was contended that verification were carried out by the Assessing Officer and the notices sent u/s 133(6) of the Income Tax Act, 1961 (hereinafter the Act) were returned unserved by the postal authority. It was also pleaded that the assessee did not provide latest addresses of the parties from whom bogus purchases were made. 2.1. During hearing, the crux of argument advanced by Shri B.S. Bist, Ld. DR, is identical to the ground raised
by contending that the onus lies upon the assessee was not discharged and the concerned parties from whom purchases were claimed to be made were not produced by the assessee. The adoption of G.P. by the Assessing Officer was defended. On the other hand, the ld. counsel for the assessee, Shri S.S. Phadkar, defended the conclusion of the Ld. Commissioner of 4. Shri Suresh H. Panchal ITA No.7206/Mum/2014, CO No.94/Mum/2016 and ITA Nos.5239 & 5240/Mum/2016 Income Tax (Appeal). It was explained that the net profit rate in such type of business is 5.7% and the gross profit is 21.77%. It was pleaded by the ld. counsel that the gross profit may be reduced to 12.5% of the total purchases. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, an individual, at the relevant time, was in the business of manufacturing dies and engineering goods. For manufacturing activities, the assessee used to purchase steel of various sizes. During the relevant year, the assessee showed turnover of Rs.1,40,65,334/- and purchases at Rs.98,61,652/- and consequently returned the gross profit at 21.77%. The assessee declared income of Rs.7,98,680/- on 27/09/2010, which was accompanied by audited statement u/s 44AB of the Act. The assessee attended the proceedings from time to time. The ld. Assessing Officer received information from the Sales Tax Department that certain dealers have confessed before the Sales Tax Authorities that they were carrying on hawala business and no genuine transaction were affected by this dealer. The Assessing Officer issued notice u/s 133(6) of the Act to certain dealers from whom the assessee claims to have purchased steel. The Assessing Officer asked the assessee to furnish the necessary details including their addresses from whom purchases have been made. Notices were issued to following Parties:-
5 Shri Suresh H. Panchal CO No.94/Mum/2016 and ITA Nos.5239 & 5240/Mum/2016 Sl. No. Name of the Party Amount in Rs.
M/s Siddhivinayak Steel 12,12,005 2. M/s Asian Steel 6,38,742 3. M/s O.B. Steel Traders 25,50,370 4. M/s S.M. Steel Traders 6,74,057 5. M/s Ravi Enterprises 2,49,946 6. M/s Metro Hardware 2,72,188 Total 55,97,308 The notices issued to the parties were returned back unserved by the postal authorities. In the absence of new addresses from the assessee, the ld. Assessing Officer made addition of Rs.55,97,308/-. 2.3. On appeal before the Ld. Commissioner of Income Tax (Appeal), the addition made as unexplained expenditure for alleged bogus purchases was deleted. The Revenue is aggrieved and is in appeal before this Tribunal. 2.4. 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, as mentioned earlier, the turnover, booked by the assessee, as per profit & loss account, is Rs.1,40,65,334/- showing the net profit of Rs. 8,04,51,577/-, which comes after debiting the various expenditure. To verify the genuineness of the claim, notices u/s 133(6) of the Act were issued to certain parties. In the meantime, information came from certain suppliers, who were indulged in providing accommodation bills to various 6 Shri Suresh H. Panchal ITA No.7206/Mum/2014, CO No.94/Mum/2016 and ITA Nos.5239 & 5240/Mum/2016 customers without effecting the real delivery of goods, the assessee happens to be one of the beneficiaries of the said parties / party. Without going to much deliberation we find that the Tribunal had been taking consistent strand by adopting a particular gross profit rate in such type of cases where either the parties are not traceable or the assessee had been indulged in non-genuine transactions. The assessee thought produced the purchase bills in the form of sample for making the purchases from aforesaid six parties but these parties were neither produced nor any confirmation was filed by the assessee before the Assessing Officer. At the same time, these parties were claimed to be registered with the VAT / CST authorities and VAT has been shown to be collected on these transactions. No useful purpose will be served in sending these appeals to the file of the Assessing Officer as the precious time of the authorities will be wasted, therefore, considering the totality of material facts, assertion made before us from both sides it will be appropriate if the addition is made @15% of the gross profit. The learned Assessing Officer is accordingly directed to quantify the tax on all the appeals.
So far as, the cross objection of the assessee (CO.No.94/Mum/2016 arising out of is concerned, since we have adopted the gross profit @15%, therefore, this cross objection of the assessee is automatically disposed of.
7 Shri Suresh H. Panchal CO No.94/Mum/2016 and ITA Nos.5239 & 5240/Mum/2016 Finally, the appeals of the assessee / revenue and the cross objection of the assessee are disposed of in terms indicated hereinabove. This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 14/02/2017.