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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of National Faceless Appeal Centre (for short “NFAC”) dated 27.12.2022 u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2011-12. The assessee has raised the following grounds of appeal:-
The learned CIT (A) has erred in directing that the disallowance of the purchases of Rs. 5,66,87,646/- be retained to the extent of 12.5% which works out to Rs. 70, 85, 955/- by incorrectly observing that appellant had made bogus purchase from 10 parties as mentioned in the assessment order.
2. The learned CIT (A) has erred in confirming the disallowance of Rs. 70,85,955/- being 12.5% of Rs. 5,66,87,646/- of purchases by treating them as bogus purchase by merely relying on observation made by the learned assessing officer that he had received information from sales tax department and DGIT (Investigation) that the assessee has accepted bogus accommodation entry which is incorrect and ignoring the fact these are merely internal enquiries carried out by Sale Tax Authorities, in respect of third parties.
3. The learned CIT (A) has erred in confirming the disallowance without appreciating the fact that addition has been made merely on presumptions and without bringing any adverse material on record and conclusive findings to prove that purchases are non genuine.
4. The learned CIT (A) has erred in confirming the disallowance without appreciating the fact that sales reported by the appellant have not been suspected by the learned assessing officer. The A.O. has also not doubted the books of accounts which are audited which are placed on record with the assessing officer and hence purchases ought to have been treated as genuine.
5. The learned CIT (A) has erred in confirming the disallowance of Rs. 70,85,955/- being 12.5% of Rs. 5,66,87,646/- of purchases without making any reference to the details submitted by the appellant during assessment proceedings. Your appellant
had submitted Purchase and sale bills, quantitative details of purchase, sale and closing stock, bank statement evidencing payment made.
6. The learned CIT (A) has erred in confirming the disallowance of Rs. 70 ,85,955/- being 12.5% of Rs. 5,66,87,646/- of purchases without appreciating the fact that addition has been made by the assessing officer by merely relying on the information received from sales tax department and DGFT (Investigation Wing) without making any independent enquiry by himself. He has further required your appellant to produce parties and their books of accounts which is also one of the reason why purchases have been treated as bogus. Your appellant has no access to books of accounts third parties and merely because suppliers had not appeared before AO, the purchase could not be treated as bogus. The disallowance of Rs.70,85,955/- was based solely on third party information, which was not subjected to further scrutiny.
7. The learned CIT (A) has erred in confirming the disallowance of Rs. 70,85,955/- being 12.5% of Rs. 5,66,87,646/- of purchases without appreciating the fact that no copies of materials/ information/evidences, on the basis of which the AO has formed his opinion to make disallowance of above referred purchases have been furnished to the appellant even though same has been used against the appellant.
The learned CIT (A) has failed to appreciate the fact that all the notices of hearing have been issued during COVI-19 period and the consultant who had submitted the form 35 has not appraised the appellant of any of such notices issued to the appellant. The appellant was not at all aware of non attendance by the consultant.
That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary.
The brief facts of the case are that assessee filed his original return of income on 30.09.2011, declaring total income at Rs. 3,61,972/-. The Information was received by this office of the undersigned from the Sales Tax Department and DGIT (Investigation), Mumbai that some businessmen had indulged in the acceptance of bogus purchase bills from the bogus hawala bill providers. As per the Information received the name of the assessee also appeared as one of the beneficiaries of such bogus purchase bills during the previous year relevant to assessment year under consideration. Accordingly, it was construed that the income to the extent of purchase from such parties has escaped assessment within the meaning of section 147 of the Act, which entail Into invoking of provisions of section 147 followed by issuance of notice u/s 148 of the Act after recording the reasons for such reopening of assessment as required under these provisions. Accordingly, notice u/s 148 dated 04.02.2016 was Issued and served upon the assessee. According to the Information received from the office of DGIT (Inv), Mumbai, the assessee has accepted entries in respect of bogus purchases from the following parties
SR.NO NAME OF THE HAWALA PARTY AMOUNT (Rs) 1 DAKSHA ENTERPRISES 26, 72, 991 2 SUNIDHI METAL 37, 67, 910 3 VEER INDUSTRIES 58,63,461 4 SUNSHINE ENTERPRISES 65,37,330 5 RATANDEEP TUBES 105,49,653 6 GURURAJ ENTERPRISES 24,91,437 7 RJ CORPORATION 9,89,087 8 RAJ METAL INDUSTREES 54, 47, 850 9 DEV DEEP STEEL 70,73,639 10 JINKUSHAL METAL 112,94,288 CORPORATION TOTAL 566,87,646
During the course of assessment proceedings, the assessee was appraised about the information received from the sales tax department and the DGIT (INV) Mumbai. In the backdrop of this fact assessee was asked to furnish supporting evidences in respect of the purchases made from the above entities. The assessee was specifically required to provide all the material evidences in support of the purchases made from the impugned parties to prove their genuineness. Further the assessee was also required to submit the explanation in writing as to why the purchases from these parties should not be held as unproved purchases and accordingly the variation should not be made in returned total income. He was also specifically required to produce the aforementioned parties for verification alongwith their books of accounts.
Case of the assessee was reopened and statutory notices were issued. The date fixed for hearing were not complied by the assessee and even no adjournment was taken by assessee. In that situation, AO made assessment u/s. 144 r.w.s. 147 of the Act. AO made an addition of Rs. 70,85,956/- being 12.5% on the total purchases of Rs. 5,66,87,646/-. Assessee being aggrieved with this order of AO preferred an appeal before the Ld. CIT (A), who in turn confirmed the order of AO as assessee never turned up to attend the matter and again appeal also dismissed as ex-parte.
Various notices of hearing under section 250 of the Act were issued to the appellant i.e. on 25.02.2020, 17.03.2020, 22.01.2021, 11.01.2022, and 08.12.2022 under section 250 of the Act vide which the assessee was requested to furnish written submissions online on or before 06.03.2020, 31.03.2020, 27.01.2021, 18.01.2022 and 15.12.2022 respectively. However, no reply has been filed by the assessee in the appeal proceedings. It is also important to mention that the notices were sent to the email provided by the appellant in its appeal. However, on no receipt of reply, the department's database was looked into to find out if there is any other email available for communication with the appellant. However, nothing other than the details given by the assessee was found.
In view of the above, it is observed that matter was never adjudicated on merits of the case as assessee never turned up before the AO as well as Ld. CIT (A). On both the forums matter was decided ex-parte. Hence, we deem it fit to restore the matter back to the file of jurisdictional AO and direct to give proper opportunity of being heard to the assessee. On the other hand, it is directed to the assessee to appear before the AO with relevant books of accounts, confirmations, etc. without fail and no adjournment seeking time as the matter pertains to AY 2011-12 and it is presumed that all the information relevant to the matter is already in possession of assessee.
Technically speaking, we do not find any force in the grounds raised by the assessee, as he never cooperated and participated in the proceedings before the authorities below and even before us also, no evidences also were filed based on which we can take cognizance of the matter. Still, as a matter of final opportunity to the assessee, we restore the matter back to the file of Jurisdictional AO where an afresh proceedings on this issue can be carried out and assessee is supposed to be cooperative and participative this time. In the result, grounds of the assessee are allowed for statistical purposes.