Ranjan Ramesh Doshi v. ITO-27(3)(1), Navi Mumbai
[Citation -2019-LL-0930-106]

Citation 2019-LL-0930-106
Appellant Name Ranjan Ramesh Doshi
Respondent Name ITO-27(3)(1), Navi Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 30/09/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags accommodation bill • additional income • g.p. rate • hawala operator
Bot Summary: The brief facts of the case are that assessee is an individual, engaged in the business of Supplier of Industrial goods and Item. Subsequently, on the basis of information received from the Investigation Wing, Mumbai, with regard to the assessee having taken accommodation bill for purchase through parties declared as hawala operators by Maharashtra Sales Tax Department, the case was re-opened by issuing notice u/s. In response to the said notice, the assessee vide letter dated 01.04.2014 has submitted that the return of income has already filed on 29.09.11 may be treated as return filed in response to notice u/s. In the present case, as noted above, the assessee was a trader of fabrics. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. In fact in paragraph 8 of the same Judgment the Court held and observed as under- So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Since the case are different from case to case basis and there is no dispute that assessee has paid VAT to the alleged suppliers of material there is no record to complement that the VAT was actually paid to Govt.


IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, AM & SHRI RAM LAL NEGI, JM I.T.A. No. 5750/Mum/2018 (Assessment Year: 2011-12) Shri Ranjan Ramesh ITO-27(3)(1), Doshi, Room No. 1, 3rd floor, a/501, Shankeshwar Tower No. 6 Vashi Tower, Sudha Park, Santi Vs. Railway Station Path, Ghatkopar (E), Commercial Complex, Mumbai-400 077 Vashi, Navi Mumbai-77 PAN No. AEMPD3478F (Appellant) (Respondent) Appellant Mrs. Ruchi M. Rathod, AR by Respondentby Shri C. S. Sharma, DR 26.09.2019 Date of Hearing 30.09.2019 Date of Pronouncement ORDER Per S. Rifaur Rahman, Accountant Member: present Appeal has been filed by assessee against order of Ld. Commissioner of Income Tax (Appeals) - 25 in short referred as Ld. CIT(A) , Mumbai, dated 12.07.18 for Assessment Year (in short AY) 2011-12. 2 I.T.A. No. 5750/Mum/2018 Shri Ranjan Ramesh Doshi, 2. brief facts of case are that assessee is individual, engaged in business of Supplier of Industrial goods and Item. Assessee filed its return of income for AY 2011- 12 on 29.09.11 declaring total income at Rs. 5,02,378/-. Subsequently, on basis of information received from Investigation Wing, Mumbai, with regard to assessee having taken accommodation bill for purchase through parties declared as hawala operators by Maharashtra Sales Tax Department, case was re-opened by issuing notice u/s. 148 on 24.03.2016. In response to said notice, assessee vide letter dated 01.04.2014 has submitted that return of income has already filed on 29.09.11 may be treated as return filed in response to notice u/s. 148. order u/s 143(3) r.w.s. 147 of Act was passed on 24.03.15 determining total income of assessee at Rs. 21,66,480/- after making addition of Rs. 16,64,103/-, being profit element calculated @ 12.5% embedded in purchases of Rs. 1,33,12,823/- treated as bogus. 3. Aggrieved with above order, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A), after considering 3 I.T.A. No. 5750/Mum/2018 Shri Ranjan Ramesh Doshi, submission of assessee as well order passed by AO, had sustained disallowance made by AO @ 12.5%. 4. Aggrieved with above order, assesse has preferred appeal before us. 5. Ld. AR submitted that Ld. CIT(A) has sustained addition made by AO on estimating @ 12.5% of alleged bogus purchases overlooking that assessee has already declared GP ratio. He submitted chart of gross profit at time of hearing, which is placed on record. Accordingly, he submitted that 12.5% estimated by Ld. CIT(A) is too high and he relied upon judgment passed by Hon ble Jurisdictional Bombay High Court in ITA No. 1004 of 2016 in case of Pr.CIT vrs. M/s Mohommad Haji Adam & Co. 6. On other hand, Ld. DR relied upon orders passed by revenue authorities and submitted that estimation made by Ld. CIT(A) should be sustained. 4 I.T.A. No. 5750/Mum/2018 Shri Ranjan Ramesh Doshi, 7. Considering rival contentions and material placed on record, we notice that Hon ble Jurisdictional Bombay High Court in ITA No. 1004 of 2016 in case of Pr.CIT vrs. M/s Mohommad Haji Adam & Co, wherein it was held as under:- 8. In present case, as noted above, assessee was trader of fabrics. A.O. found three entities who were indulging in bogus billing activities. A.O. found that purchases made by assessee from these entities were bogus. This being finding of fact, we have proceeded on such basis. Despite this, question arises whether Revenue is correct in contending that entire purchase amount should be added by way of assessee's additional income or assessee is correct in contending that such logic cannot be applied. finding of CIT(A) and Tribunal would suggest that department had not disputed assessee's sales. There was no discrepancy between purchases shown by assessee and sales declared. That being position, Tribunal was correct in coming to conclusion that purchases cannot be rejected without disturbing sales in case of trader. Tribunal, therefore, correctly restricted additions limited to extent of bringing G.P. rate on purchases at same rate of other genuine purchases. decision of Gujarat High 5 I.T.A. No. 5750/Mum/2018 Shri Ranjan Ramesh Doshi, Court in case of N.K. Industries Ltd. (supra) cannot be applied without reference to facts. In fact in paragraph 8 of same Judgment Court held and observed as under- " So far as question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by Assessing Officer despite fact that said sales had admittedly been recorded in regular books during Financial Year 1997-98 is concerned, we are of view that assessee cannot be punished since sale price is accepted by revenue. Therefore, even if 6 % gross profit is taken into account, corresponding cost price is required to be deducted and tax cannot be levied on same price. We have to reduce selling price accordingly as result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs.3,70,78,125/- which comes to Rs.20,98,621.88 we think it fit to direct revenue to add Rs.20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, said question is answered partially in favour of assessee and partially in favour of revenue." 6 I.T.A. No. 5750/Mum/2018 Shri Ranjan Ramesh Doshi, 9 In these circumstances, no question of law, therefore, arises. All Income Tax Appeals are dismissed, accordingly. No order as to costs. 8. Therefore, respectfully following aforesaid decision, we notice that since assessee has already declared GP ratio and products which falls in slab rate of 4%, which is placed on record. Since case are different from case to case basis and there is no dispute that assessee has paid VAT to alleged suppliers of material, however, there is no record to complement that VAT was actually paid to Govt. account. Therefore, we are inclined to estimate income @ 5%. Accordingly, we direct AO to estimate income of assesee @ 5% of alleged purchases. 9. In net result, appeal filed by assessee stands partly allowed. Order pronounced in open court on 30th Sept 2019. Sd/- Sd/- (Ram Lal Negi) (S. Rifaur Rahman) Judicial Member Accountant Member Mumbai Dated 30.09.2019 Sr.PS. Dhananjay 7 I.T.A. No. 5750/Mum/2018 Shri Ranjan Ramesh Doshi, Copy of Order forwarded to 1. Appellant 2. Respondent 3 CIT(A) 4. CIT- concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy.Asstt.Registrar) ITAT, Mumbai Ranjan Ramesh Doshi v. ITO-27(3)(1), Navi Mumbai
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