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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & MS. PADMAVATHY SShriGhevarchand.M.Surana
Assessee by : Shri.Shashank Mehta.AR Revenue by : Shri.Joginder Singh.Sr.DR Date of Hearing 16.11.2023 Date of Pronouncement 20.11.2023 आदेश / O R D E R
PER PAVAN KUMAR GADALE JM:
The appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) Delhi /CIT(A) passed u/sec143(3)r.w.s147 and u/sec 250 of the Ac. The assessee has raised the following grounds of appeal:
Ghevarchand M Surana, Mumbai. - 2 -
1. In the facts and circumstances of the case and in law, the Ld. National Faceless Assessment Centre - CIT(A) has erred in confirming the action of the Ld. Assessing Officer of completing the assessment u/s 143(3) r.w.s. 147 without providing any opportunity of cross-examination of the witnesses or documents relied upon by the Ld. Assessing Officer and thus violating the law laid down by the Honourable Supreme Court in the cases of Kishanchand Chellaram v. CIT (1980) 125 ITR 713 and Andaman Timber Industries v. Commissioner of Central Excise (Civil Appeal No. 4228 of 2006).
2 In the facts and circumstances of the case and in law the LdNational Faceless Assessment Centre - CIT (A) has erred in confirming the action Ld. assessing officer of disallowing the purchases of Rs. 12,31,117/- by arbitrarily ignoring various submissions made by the appellant
3 In the facts and circumstances of the case and in law the LdCIT(A) has erred in sustaining the disallowance of alleged bogus purchases of Rs. 12,31,117 ignoring the fact that the said amount was offered to tax in AY 2015-16 thereby resulting in double taxation.
The appellant craves leave to add, alter, delete or modify all or any of the above grounds of appeal. All the above grounds are without prejudice to each other.
The brief facts of the case are that, the assessee is engaged in the business of trading in marble and granite.
Ghevarchand M Surana, Mumbai. - 3 - The assessee has filed the return of income for the A.Y 2009-10 on 30.09.2009 disclosing a total income of Rs Nil and the return of income was processed u/sec 143(1) of the Act. Subsequently the Assessing Officer (AO) has received the information from DGIT(Inv) and the Sales Tax department, Maharashtra that the assessee has obtained bogus purchase bills from three entities aggregating to Rs.1231,117/- and is a beneficiary. The AO has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. The assessee has filed a letter to treat the return of income filed on 30.09.2009 as due compliance to notice. Subsequently, the Assessing Officer has issued notice u/sec143(2) and U/sec142(1) of the Act. The Ld.AR of the assesse has submitted financial statements, Tax Audit report and bank statements in support of the return of income filed. Further the A.O has called for the information/ evidences in support of purchases i.e transportation bills, inward register, weighing slips and octroi receipts etc. Whereas the Assessing Officer found that the assessee has furnished the partial information and to test check the genuineness of the transactions has issued notice u/sec 133(6) of the Act on the parties and were returned un served by the postal authorities. Further the AO has issued a show cause notice for submitting the additional information but Ghevarchand M Surana, Mumbai. - 4 - the assessee could not substantiate with proper evidences and to produce the parties. Finally, the AO was not satisfied with the explanations of the assessee and observed that the genuineness of the transactions could not be established and made disallowance of alleged bogus purchases of Rs. 12,31,117/- and assessed the total income of Rs.15,47,077/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 23.03.2016.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal
, submissions of the assessee and findings of the AO but was not satisfied with the explanations and sustained the addition by the A.O and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Hon’ble Tribunal.
4. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the addition made by the AO irrespective of the facts that the assessee has submitted the information available with the lower authorities in the proceedings. The Ld. AR submitted that the profit element from the assessee’s business transactions is very much less than the addition and relied on the factual paper book and prayed for allowing the appeal.
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Per Contra, the Ld. DR submitted that the assessee has not proved the genuineness of the purchases transactions and failed to produce parties on whom the notice under section 133(6) of the Act was issued and were returned unserved by the postal authorities and the Ld.DR relied on the order of the CIT(A).
We heard the rival submissions and perused the material available on record. The sole disputed issue is in respect of addition of bogus purchases made by the A.O. and confirmed by the Ld.CIT(A). We find on perusal of the Assessment Order, the Assessing Officer has made addition of the purchases as there is no compliance to the notice u/s. 133(6) of the Act. Whereas the assessee has made bogus purchases from the dealers and in turn it provides savings to the assessee in nonpayment of state taxes. We considered the facts and circumstances and the decisions of the Hon’ble High Court and the Hon’ble Tribunal in the identical cases and the judicial precedence were the profit element embedded estimated in the bogus purchases was accepted. We find that the assessing officer has not doubted the sales and we rely on the ratio of decision of Hon'ble Jurisdictional High Court in the case of CIT v. Nikunj Eximp (216 Taxman.com 171)) and Hon’ble Gujarat High court in CIT Vs. Simit P Sheth (2013) (356 ITR 451). Accordingly, to meet the ends of justice, we set- aside the order of the CIT(A) and direct the assessing officer
Ghevarchand M Surana, Mumbai. - 6 - to estimate the income @7% on unapproved/ bogus purchases and partly allow the grounds of appeal in favour of the assessee.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 20.11.2023.