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Income Tax Appellate Tribunal, HYDERABAD BENCH “B”, HYDERABAD
Before: SHRI S.S. GODARA & SHRI LAXMI PRASAD SAHU
PER S.S. GODARA, J.M:
This appeal is filed by the assessee against the order of the Ld. CIT(A)-6, Hyderabad in case No.10210/2017-18/A3/CIT(A)-6, dated 02/06/2019 passed U/s. 143(3) r.w.s147 and U/s 250(6) of the Income Tax Act, 1961 (the Act) for the Assessment Year 2010-11.
Heard both the parties. Case file perused.
The assessee has raised the following substantive grounds in its appeal and they are extracted herein below for reference:
“1. The order of the Ld. CIT(A)-6 is contrary to law and facts. 2. The Ld. CIT(A) erred in holding that the notice U/s. 148 was issued after satisfying the conditions precedent for the issue of the said notice and that the notice is valid. 3. The Ld. CIT(A) erred in rejecting the appellant’s plea that the notice U/s. 148 was issued without any tangible material and without any live link between reasons recorded and belief that income chargeable to tax escaped assessment. 4. In the facts and circumstances of the case the notice issued U/s. 148 stands vitiated as the conditions precedent for the issue of said notice have not been fulfilled. 5. The Ld. CIT(A) erred in sustaining the addition of Rs. 42,18,510/- as fictitious or bogus purchases from Kangan Jewellers Pvt Ltd. 6. The Ld. CIT(A) erred in not appreciating the evidence on record in support that the purchases were genuine. 7. The Ld. CIT(A) erred in upholding the addition on the basis of assumptions, surmises and guess work. 8. The appellant contends that the jewellery purchased from Kangan Jewels Pvt Ltd of Rs. 42,18,510/- is genuine and both the Assessing Officer and Ld. CIT(A) erred in disallowing the purchases and in making the addition. 9. The appellant craves leave to add to amend or alter any of the above grounds as the occasion may require. 10. For these and other reasons that will be submitted at the time of hearing it is prayed that the appeal be allowed, reopening of assessment be quashed and also addition of Rs. 42,18,510/-.”
We have noticed at the outset that assessee’s instant appeal suffers from 55 days delay in filing. The Ld. Counsel submitted that due to ill health during the relevant period, Mr. Vijaykumar, Managing Partner of the assessee-company could not approach the Learned
Counsel and therefore there was a delay in filing the instant appeal before the Tribunal beyond the prescribed time limit. Case law Collector Land Acquisition vs. Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi vs. Union of India, Civil Appeal No.9488 & 9489/2019 dated 17th December, 2019, hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that assessee’s impugned delay of 55 is neither intentional nor deliberate but due to the circumstances beyond its control. The same stands condoned. Case is now taken up for adjudication on merits.
Coming to the assessee’s twin substantive grounds inter alia challenging validity of reopening as well as both the lower authorities’ action treating it’s purchases of Rs. 42,18,510/- from M/s. Kangan Jewellers Private Limited as bogus, it is noticed that the very issue had arisen it’s appeals ITA No. 755 to 757/Hyd/2017 decided partly in its favour on 18/08/2021 pertaining to preceding assessment years as follows:-
“3. It further emerges that the assessee which appellant’s pleadings are no different in latter twin appeals ITA Nos.756 & 757/Hyd/2017 as well the only distinction therein is that all the alleged bogus purchases amounts involved are of Rs.20,05,500/- and Rs.25,48,900/-; respectively. We therefore propose to decide all the instant appeals vide instant common adjudication. 4. Relevant identical facts involved in all the three instant appeals are in a very narrow compress. The assessing authority(ies) herein had received information from the department’s Investigation Wing, Mumbai that the assessee had sourced its purchases involving varying sums (supra) from M/s. Bhanwarlal Jain group concerns namely M/s. Prime Star in these three assessment years. And that the department had carried out a search and seizure operation in the said group on 03-10-2013 wherein
its authorised person(s) had admitted to have been providing bogus sales entries. This made the Assessing Officer to take recourse to Section 148 and 147 mechanism culminating in the impugned bogus purchases disallowances affirmed upto the CIT(A)’s order(s) under challenge. 5. Learned counsel’s first and foremost vehement contention seeks to quash the impugned reopening without recording the reasons based on tangible material which could even indicate assessee’s taxable income to have declared assessment. We find no merit in the instant argument in view of the Assessing Officer’s as well as the CIT(A)’s respective detailed discussions justifying the impugned re-opening(s) based on the Investigation Wing, Mumbai’s information pinpointing the specific inputs in search proceedings including M/s. Bhanwarlal Jain group authorised persons statement(s) to have been providing bogus accommodation entries. We therefore hold that the Assessing Officer had rightly initiated the impugned re-opening process in all these three cases. The assessee fails in its identical first and foremost ground therefore. 6. Next comes equally important aspect of quantification of the impugned bogus purchases disallowances/additions of Rs.9,04,500/-, 20,05,500/- and Rs.25,48,900/-; respectively. The assessee’s argument before us is that once its corresponding sales have been assessed as ‘business income’, disallowance of the impugned purchases would result in abnormally high profit rate which is not possible in the regular course of business in jewellery, gold, silver ornaments and some precious stones. This clinching aspect has gone unrebutted from the departmental side which has primarily relied on the Investigation Wing information furnished to the Assessing Officer herein. 7. We have considered the foregoing rival submissions and find no reason to delete the impugned bogus purchases disallowance/addition in entirety in all these three assessment years. This is for the precise reason that going by the circumstances before us, it can be safely inferred that the assessee obtained bogus purchase invoices from M/s.Bhanwarlal Jain group and further sourced its purchases from other suppliers. We next note that this tribunal’s coordinate bench in ITA Nos.3451 & 3454/Mum/2017 ITO Vs. M.Shailesh and Co. dt.22-01-2019 (in case of the very search) as well as various other similar orders hold that only a percentage of such purchases than the entire amount(s) thereof has to be disallowed. The fact also remains that such an estimation depends on facts of each and every case than involving any legal interpretation which could be treated as a valid precedent as per the hon'ble jurisdictional high court’s decision in CIT Vs. B.R.Constructions (1993) 202 ITR 222 (AP). Faced with this situation, we deem it appropriate in larger interest of justice that the impugned bogus purchases in all these three year(s) deserve to be restricted to disallowance @8% only in the given facts and circumstances with a rider that the same shall not be taken as a precedent in any other case. Necessary computation shall follow as per law.”
We adopt judicial consistency on account of the fact that there is no distinction except the amount of addition in all these assessment
years and direct the Assessing Officer to finalise his computation in the very terms.
No other ground has been pressed before us.
This assessee’s appeal is partly allowed in above terms.
Order pronounced in the open court on 27th October, 2021.
Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 27th October, 2021. OKK Copy to:-
1) Vithaldas & Co., 6-3-1090/2, Raj Bhavan Road, Somajiguda, Hyderabad, Telangana-500 082. 2) Dy. Commissioner of Income Tax, Circle-6(1), Hyderabad. 3) The Ld. CIT(A)-6, Hyderabad. 4) The Principal Commissioner of Income Tax-6, Hyderabad. 5) The DR, ITAT, Hyderabad 6) Guard File