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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE
Assessee by : Shri Shri.S. L Jain.AR Revenue by : Shri G.J. Ninawe. Sr. DR Date of Hearing 02.11.2023 Date of Pronouncement 06.11.2023 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/sec 144 and U/sec 250 of the Ac. The assessee has raised the following grounds of appeal:
(1) On the Facts of the case is without jurisdiction and unjustified. (2) On the Facts and circumstances of case Learned Assessing officer and CIT (A) erred in making addition of 1875390/- as a bogus Purchases, which is unjustified and Arbitrary.
Mr. Jafarali Anwarullah Khan, Mumbai. - 2 -
(3) On the Facts and circumstances of the case Assessing officer erred in Law leaving Interest under section 234A, 234B AND 234C (4) On the Facts and circumstances of case Assessing officer and CIT (A) erred in Law initiating penalty proceeding under section 271 (1) (C). (5) The Appellant craves to leave, add, amend, alter any of the ground of Appeal: 2. The brief facts of the case that, the assessee is a engaged in the proprietary business. The assessee has filed the return of income for the A.Y 2010-11 on 15.10.2010 disclosing a total income of Rs. 2,90,400/- and the return of income was processed u/sec 143(1) of the Act. The assessing Officer(AO) has received information from the Maharashtra sales tax department that, the assessee has obtained accommodation entries from three parties aggregating to Rs.18,75,390/- and is a beneficiary. The AO has reason to believe that the income has escaped assessment and after recording the reasons for reopening of assessment has issued notice u/sec 148 of the Act and there was no compliance from the assessee. Subsequently the AO has issued notice u/s 143(2) and 142(1) of the Act to produce the register, mode of payment, transportation bills and delivery challans. The AO found that the assessee has not submitted the information in spite of providing
Mr. Jafarali Anwarullah Khan, Mumbai. - 3 - adequate opportunity of hearing. Finally the AO has made best judgment assessment and relied on the information available on record and made disallowance of alleged bogus purchases of Rs.18,75,390/- and assessed the total income of Rs. 21,65,790/- and passed the order u/sec 144 r.w.s 147 of the Act dated 29.02.2016.
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 additions made by the AO irrespective of the facts that the assessee has submitted the partial information available with the lower authorities in the proceedings. The Ld. AR submitted that the profit element from the assessee’s business transactions is less than the addition made by the AO. Further Ld. AR substantiated the submissions with the range of Gross profit ratio between 13.48 % to 12.76% maintained as per the A Mr. Jafarali Anwarullah Khan, Mumbai. - 4 - books of Accounts and the return of income was filed for earlier and subsequent years on the same basis and prayed for opportunity before the lower authorities and substantiated the submissions with factual paper book and prayed for allowing the appeal.
5. Contra, the Ld. DR submitted that the assessee has not proved the genuineness of the purchases transactions and failed to produce parties and the Ld.DR relied on the order of the CIT(A).
6. 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). On perusal of the Assessment Order, the Assessing Officer has made addition of the purchases as there is no compliance. Whereas the assessee has made bogus purchases from the dealers and in turn it provides savings to the assessee in nonpayment of state taxes. Hence considering 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 estimating the profit element embedded on such transactions are considered. Further the assessing officer has made addition of bogus purchases and passed the order
Mr. Jafarali Anwarullah Khan, Mumbai. - 5 - U/sec144 r.w.s 147 of the Act. Hence considering the facts, circumstances and principles of natural justice shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the Assessing Officer along with the evidences to adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes..
Order pronounced in the open court on 06.11.2023.