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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
Before: SHRI PAVAN KUMAR GADALE & MS. PADMAVATHY S
सुनवाई की तारीख / Date of Hearing 24/05/2023 घोषणा की तारीख /Date of Pronouncement 2505/2023 आदेश / ORDER
PER PAVAN KUMAR GADALE - JM:
The assessee has filed the appeal against the order of Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”] passed under section 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year (“AY”) 2010-11. The assessee has raised following grounds of appeal:- 1. "On the facts and circumstance of the case, the National Faceless Appeal Centre erred in by passing an order as dismissed in limine, without appreciating that the appellant had physically/manually filed an appeal 2 Arif Noor Mohammed Basathia before CIT(A)-42, Mumbai on 15/03/2016, within the prescribed period of limitation, i.e., 30 days from the date of receipt of Assessment Order. Hence, there is no question to dismiss the appeal on the ground of non- filing of condonation application for 1168 days delay along with appeal. Hence, the Order passed by the National Faceless Appeal Centre may be set aside, appeal be admitted as filed in time and directions may be given to decide on merits.
2. On the facts and circumstance of the case and in law, the CBDT instructions, vide Notification No. SO 637(E) [No. 11/2016 (F. No. 149/150/2015-TPL)], dated 1-3- 2016,mandating e-filing of appeal to CIT(A) is not applicable to Orders passed prior to 1-3-2016and Commissioner (Appeals) could not reject an appeal filed by appellant on a technical ground that same was not 'e-filed' within period of limitation prescribed under Circular no. 20/2016based on judicial precedents. Hence, the Order passed as dismissed in limine by the National Faceless Appeal Centre may be set aside, appeal be admitted as filed in time and directions may be given to decide on merits.
3. On the facts and circumstances of the case, the learned CIT(A)-42, Mumbai vide Notices dt.09/4/2019 & 01/05/2019 asked appellant details to be submitted and attend hearing in person. However, due to the 3 Arif Noor Mohammed Basathia faceless appeal scheme as well as directions by the CIT(A), the appellant e-filed Form 35 again on 28/05/2019 with same grounds. Hence, there is no delay in filing an appeal and the Order passed as dismissed in limine by the National Faceless Appeal Centre is erroneous and bad-in-law and thereby Order may be set aside, appeal be admitted as filed in time and directions may be given to decide on merits.
On the facts and circumstances of the case, the National Faceless Appeal Centre erred in dismissing the Order in limine, failing to appreciate that it had sought submissions and evidences in support of grounds of appeal
e-filed vide its Notice dated 18 January 2021 and the appellant had duly e-filed submissions in December 2021, whereby the appellant presumed that the appeal was duly admitted and no further action was necessary. Hence, the Order passed by the National Faceless Appeal Centre may be set aside, appeal be admitted as filed in time and directions may be given to decide on merits.
5. Without prejudice to the above, the National Faceless Appeal Centre erred in not adjudicating the grounds of appeal raised by the appellant on merits in the interest of justice. Hence, the Order passed by the National Faceless Appeal Centre may be set aside and one more opportunity may be given to appellant.
4 Arif Noor Mohammed Basathia II. Additions surrounding purchases alleged to be unproven / bogus purchases: Rs.6.36,037 (GP Addition and Unexplained Cash Expenditure) 6. On the facts and circumstances of the case and in law, the Assessing Officer has erred in making additions by adopting higher gross margin at 12.5% alleged to be embedded in the impugned purchases, failing to appreciate that the appellant had declared gross margin on sales at 19.92% (after considering the impugned purchases) in line with the gross margin maintained in past year(s).
On the facts and circumstances of the case and in law, the Assessing Officer has failed to apply the ratio laid down by Hon'ble Mumbai ITAT in M/s. Max Realities LLP v. DCIT, (Mumbai) and Ahmedabad ITAT (upheld by Gujarat High Court) in Shri Simit P. Sheth v. ITO, ITA No. 3238 and 3293/Ahd/2009, which have held that the margin is to be computed with reference to sales-tax savings on such impugned purchases and incidental margin involved in such transactions. The appellant prays that the addition at gross margin of 12.5% is simply exorbitant, arbitrary, unreasonable, excessive and be considered at a reasonably lower percentage around 5% (sales-tax savings 4% and incidental margin 1%).
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The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal
.”
2. The brief facts of the case are that the assessee is engaged in the business and filed the return of income for A.Y.2010-11 on 05.102.2010, disclosing a total income of Rs.3,15,600/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the Assessing Officer (“AO”) received information from Sales Tax Department, Mumbai and office of DCIT(Inv.), Mumbai that the assessee was engaged in obtaining the accommodation entries/ bogus purchase bills of Rs.26,38,295/- from the dealers and is a beneficiary. The AO has reason to believe that the income has escaped the assessment and issued notice u/s 148 of the Act. Subsequently, notice u/s 142(1) of the Act was issued calling for various information. In compliance, the Ld.AR of the assessee appeared from time to time and submitted the details. The AO on perusal of the financial statements observed that the assessee has debited purchases of Rs.52,07,489/- and sales of Rs.65,03,515/- in the Profit & Loss Account. The AO found that the assessee has obtained bogus purchases bills from Ghatalia Steels/Divine Enterprises of Rs.26,38,295/-.
3. The AO has called for detailed information on the purchase transactions and in order to test check the genuineness of the transaction, the AO has called for the production of the parties. The assessee has submitted the details of cash 6 Arif Noor Mohammed Basathia payment, vouchers, cheque payments etc and subsequently the AO has issued a show cause notice. The assessee has filed a letter in reply to the show cause notice referred at Para 4.6 of the assessment order. Finally, the AO was not satisfied with the explanations and information provided by the assessee and has estimated income @ 12.5% on alleged bogus purchases of Rs.22,89,295/- which worked out to Rs.2,86,037/- and similarly the A.O made addition of Rs.3,50,000/- as unexplained expenditure and assessed the total income of Rs.9,51,640/- and passed the order u/s 143(3)r.w.s147 of the Act dated 13.01.2016.
4. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas, the CIT(A) has considered the grounds of appeal, statement of facts and submissions and find that there is a delay of 1167 days in filing the appeal against the order U/sec143r.w.s147 of the Act dated 13.01.2016 and served on asseesse on 15.02.2016. Whereas the assessee has filed the Form-35 electronically on 28.05.2019. The CIT(A) without going into the merits of the appeal has observed that the assessee has not explained the delay and dismissed the assessee appeal in limine. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal.
5. At the time of hearing, the ld. AR of the assessee submitted that the CIT(A) has dismissed the assessee’s appeal, because the assessee has not filed appeal as per the 7 Arif Noor Mohammed Basathia procedure laid down under Rule 45 & 46 of Income Tax Rules, 1962. Whereas, the assessee has filed the appeal manually on 15.03.2016 and again during appellate proceedings the assessee has filed Form .no 35 electronically on 28-05-2019 as per CBDT circular no.20/2016.The amendment in filling the appeal is w.e.f 1-3-2016 and due to technical glitches and proceedings the appeal was filed electronically subsequently. The ld.AR prayed that the assessee be provided an opportunity to substantiate the delay and relied on the CBDT Circular and factual Paper Book and prayed for allowing the appeal. Contra, the Ld.DR supported the order of the CIT(A).
We have heard the rival submissions and perused the material available on record. The sole crux of the disputed issue that the assessee has filed the appeal in paper form on 15.03.2016. Further, we find that as per the amendment and procedure laid down under Rule 45 & 46 of the Income Tax Rules, 1962 w.e.f. 01.03.2016. The appeal in Form No. 35 has to be filed electronically, whereas the assessee has filed the appeal in electronic form on 28-05-2019 due to technical issues. We have considered the facts of technicalities in filing the appeal electronically and the amendment effective from 01.03.2016. We find the Honble Tribunal in the case of Ashraf Aziz Kasmani vs ITO [2018] 92 taxmann.com 293 (Mumbai-Trib.) on the identical issue has dealt on the facts and provisions of law and 8 Arif Noor Mohammed Basathia granted the relief and observed at Para 4 to 12 of the order read as under: 4. “Thereafter, the Id. Commissioner of Income Tax (Appeals) considered the admissibility of appeal filed in manual form on 30.6.2016. In this regard, he referred to be CBDT Notification No. SO 637(E) [No. 11/2016 dated 01.03.2016] and has referred as under: "In exercise of the powers conferred by sub-section (1) of section 249, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely 1. (1) These rules may be called the Income-tax (3rd Amendment) Rules, 2016. (2) They shall come into force on the date of their publication in the Official Gazette.
In the Income-tax Rules, 1962 (herein after referred to as the said rules), for rule 45, the following rule shall be substituted, namely:- 45. Form of appeal to Commissioner (Appeals).- (1) An appeal to the Commissioner (Appeals) shall be made in Form No. 35. (2) Form No. 35 shall be furnished in the following manner, namely:-
9 Arif Noor Mohammed Basathia
(a) in the case of a person who is required to furnish return of income electronically under sub-rule(3) of rule 12,-