Income-tax Officer – 24(1)(5), Mumbai v. Dinesh Mahavir Prasad Bhartia
[Citation -2019-LL-0918-112]

Citation 2019-LL-0918-112
Appellant Name Income-tax Officer – 24(1)(5), Mumbai
Respondent Name Dinesh Mahavir Prasad Bhartia
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 18/09/2019
Assessment Year 2013-14
Judgment View Judgment
Keyword Tags estimation of profit • bank statement • gross profit • grey market • low tax effect • bogus purchase • issuance of notice • delivery of goods • disallowance of purchases • ends of justice
Bot Summary: 133(6) of the Act sent and served to yet another party i.e. Sovereign Silk Mills wherein the purchases were made to the tune of Rs.55,44,063/- by the assessee, no 4 ITA No.1679/Mum/2018 CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia reply was received from the said party in response to notice u/s.133(6) of the Act. With regard to total purchases made from aforesaid four parties to the tune of Rs.59,06,741/- the assessee stated that there was some dispute with the said parties and hence, they are not cooperating by filing the necessary reply before the ld. AO requested the assessee to produce the proof of delivery of goods by the said suppliers to the assessee such as transportation bills etc together with confirmation from the said parties for having supplied the goods and also produced those parties for his examination. In response to the same, the assessee submitted the ledger copy along with his bank statements duly highlighting the payment made to those parties from time to time through regular banking channels in respect of aforesaid parties. CIT(A) gave a categorical finding that the said goods that were purchased from the aforesaid five parties were actually sold by the assessee and hence only profit could be estimated as income of the assessee thereon. AO. a. Copy of confirmation of account of the five parties b. Bank statements reflecting payments made to the aforesaid five parties 5 ITA No.1679/Mum/2018 CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia c. Ledger account of the aforesaid five parties as appearing in the books of assessee. CIT(A) gave a categorical finding that since the goods purchased from the aforesaid suppliers were duly sold by the assessee and the sales reflected by the assessee were not disputed by the ld.


IN INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI RAM LAL NEGI, JM ITA No.1679/Mum/2018 (Assessment Year 2013-14) Income Tax Officer Vs. Shri Dinesh Mahavir Prasad 24(1)(5), Bhartia th R.No.523, 5 Floor Nand Bhavan 3, Piramal Chambers J.P.Road Lalbaug, Parel Andheri (W) Mumbai -400 012 Mumbai 400 053 PAN/GIR No. AETPB8761J (Appellant) (Respondent) CO No.151/Mum/2019 (Arising out of ITA No.1679/Mum/2018) (Assessment Year 2013-14) Shri Dinesh Mahavir Vs. Income Tax Officer 24(1)(5), Prasad Bhartia R.No.523, 5th Floor Nand Bhavan 3, Piramal Chambers J.P.Road Lalbaug, Parel Andheri (W) Mumbai -400 012 Mumbai 400 053 PAN/GIR No. AETPB8761J (Appellant) (Respondent) Revenue by Shri J. Saravanan Assessee by Shri Vimal Punmiya Date of Hearing 28/08/2019 Date of Pronouncement 18/09/2019 ORDER PER M. BALAGANESH (A.M) 2 ITA No.1679/Mum/2018 & CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia This appeal in ITA No.1679/Mum/2018 & Cross Objection No.151/Mum/2019 for A.Y.2013-14 arise out of order by ld. Commissioner of Income Tax (Appeals)-36, Mumbai in appeal No.CIT(A)- 36/IT-217/ITO-24(1)(5)/2016-17 dated 18/12/2017 (ld. CIT(A) in short) against order of assessment passed u/s.143(3) of Income Tax Act, 1961 (hereinafter referred to as Act) dated 23/03/2016 by ld. Income Tax Officer 24(1)(5), Mumbai (hereinafter referred to as ld. AO). ITA NO.1679/Mum/2018 2. Both parties before us mutually agreed that this revenue appeal is to be dismissed as not maintainable in view of recent Circular issued by CBDT dated 08/08/2019 wherein revenue has been directed to withdraw appeal preferred by it before Tribunal if tax effect on disputed issues is less than or equal to Rs.50,00,000/-. It is well settled that this Circular is binding on revenue authorities. 3. Respectfully following said Circular, appeal filed by revenue is dismissed as not maintainable. 4. Incase, if revenue is able to provide evidence that case falls under any of exceptions provided in circular issued by CBDT, then revenue may prefer miscellaneous application for recalling of this order, if they so desire, in which circumstance this order shall be recalled by this Tribunal. 3 ITA No.1679/Mum/2018 & CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia 5. In result, appeal filed by revenue is dismissed as not maintainable. CO No.151/Mum/2019 6. only ground to be decided in this Cross Objection by assessee is as to whether ld. CIT(A) was justified in estimating profits at 12.5% on alleged bogus purchases of Rs.1,14,50,804/- in facts and circumstances of case. 7. We have heard rival submissions and perused material available on record. We find that assessee is engaged in business of trading in textiles and derived income from business as well as income from other sources. ld. AO observed that assessee had made purchases totalling to tune of Rs.8,64,06,901/- during year under consideration and sought to verify same on test check basis from details of purchases furnished by assessee. notice u/s.133(6) of Act were issued to some parties by ld. AO and said notice were returned unserved by postal authorities in respect of following parties:- Praveen Textiles - Rs.13,31,030/- Durga Textiles - Rs.13,13,910/- Kavita Textiles - Rs.10,18,256/- Sharp Textiles - Rs.22,43,545/-__ Total Rs.59,06,741/- ========= 7.1. ld. AO observed that in respect of notice u/s. 133(6) of Act sent and served to yet another party i.e. Sovereign Silk Mills wherein purchases were made to tune of Rs.55,44,063/- by assessee, no 4 ITA No.1679/Mum/2018 & CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia reply was received from said party in response to notice u/s.133(6) of Act. ld. AO confronted assessee with regard to above mentioned deficiencies. With regard to total purchases made from aforesaid four parties to tune of Rs.59,06,741/- assessee stated that there was some dispute with said parties and hence, they are not cooperating by filing necessary reply before ld. AO. ld. AO requested assessee to produce proof of delivery of goods by said suppliers to assessee such as transportation bills etc together with confirmation from said parties for having supplied goods and also produced those parties for his examination. ld. AO also requested assessee to produce stock statements to evidence receipt of materials from said suppliers together with ledger account and bank statement of those parties reflecting payments received from assessee. In response to same, assessee submitted ledger copy along with his bank statements duly highlighting payment made to those parties from time to time through regular banking channels in respect of aforesaid parties. ld. AO for want of evidence proceeded to disallow entire purchases in sum of Rs.1,14,50,804/- (Rs.5906741/- + 5544063/-) in assessment as not proved by assessee. ld. CIT(A) gave categorical finding that said goods that were purchased from aforesaid five parties were actually sold by assessee and hence only profit could be estimated as income of assessee thereon. ld. CIT(A) also observed that assessee had submitted following details before ld. AO. a. Copy of confirmation of account of five parties b. Bank statements reflecting payments made to aforesaid five parties 5 ITA No.1679/Mum/2018 & CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia c. Ledger account of aforesaid five parties as appearing in books of assessee. d. Name and address of aforesaid parties together with their PAN. 7.2. ld. CIT(A) gave categorical finding that since goods purchased from aforesaid suppliers were duly sold by assessee and sales reflected by assessee were not disputed by ld. AO and that, without receipt of goods, there could not be any sales that could be made by assessee and accordingly concluded that assessee at best be accused of making purchases in grey market so as to avoid sales tax etc., With these observations and placing reliance on certain decisions of this Tribunal and various Courts, ld. CIT(A) estimated profit of assessee at 12.5% on alleged bogus purchases and restricted addition to 14,31,350/-. 8. Aggrieved, assessee is in appeal before us. 9. We find that gross profit declared by assessee is 8.76%. For undisputed purchases, gross profit declared by assessee is 5.85% which has been accepted by revenue. ld. AR submitted that for alleged bogus purchases that are in dispute before us, gross profit was declared at 25.90% by assessee and hence, there is no need to make any further addition in facts of instant case. We find by considering totality of facts and circumstances of instant case and considering GP declared by assessee at 8.76%, estimation of profit at 10% on alleged bogus purchases would meet ends of justice. Accordingly, grounds raised by assessee in its cross objections is partly allowed. 6 ITA No.1679/Mum/2018 & CO No.151/Mum/2019 Shri Dinesh Mahavir Prasad Bhartia 10. In result, appeal of Revenue is dismissed as not maintainable and Cross Objection of assessee is partly allowed. Order pronounced in open court on this 18/09/2019 Sd/- Sd/- (RAM LAL NEGI) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 18/09/2019 KARUNA, sr.ps Copy of Order forwarded to 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. True Copy BY ORDER, (Asstt. Registrar) ITAT, Mumbai Income-tax Officer 24(1)(5), Mumbai v. Dinesh Mahavir Prasad Bhartia
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