Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH
Per Amarjit Singh (AM): The present appeal filed by the assessee is directed against the order passed by the NFAC, Delhi dated 22.11.2021 for A.Y. 2009-10. The assessee has raised the following grounds before us:
“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred grossly erred in confirming the action of AO of reopening the case u's 148 r.w.s. 147 of the I.T. Act and therefore Assessment order passed u/s 143(3) r.w.s 147 of the act is bad in law
On the facts and circumstance of the case and in law the Ld. CIT(A) has erred grossly erred in confirming the action of AO the Assessment order passed u/s 143(3) rws 147 is in gross violation of the Juri iction exercised by the AO and is therefore bad in law.
On the facts and circumstance of the case and in law, the Ld. CIT(A) erred in confirming the disallowance made the AO of Rs. 5,58,52/- in respect of the purchases made by the Appellant alleging to be Bogus Purchase.
P a g e | 2 Xmex Clothing Pvt. Ltd. Vs ITO-11(3)(1)
The Appellant craves leave to add, alter, modify, amend or delete any of the above Grounds on or before or at the time of hearing.”
Fact in brief is that return of income declaring total income of Rs.88,748/- was filed on 30.10.2010. The case of the assessee was reopened u/s 147 of the Act by issuing of notice u/s 148 of the Act. Regarding reopening of the assessment the A.O stated that on the official website of the Sale Tax Department, there was information of hawala dealers who have issued only bills to the various parties without actual delivery of goods. The details of purchases made by the assessee from such parties are as under:
Sr. Name of the parties PAN TIN Amount No. (Rs.)
Raj Traders AIJPD9848G 27450262425V 86403
Right Choice AJKPC2016R 27380665838V 315025
Vinayak Trading Co. BNTPS7947D 27160650342V 308424
Marcon Enterprises ASPPS8792L 27390325605V 82035
Adarsha Trading Co.P. Ltd. AAGCA1090D 27980596735V 110041
Sunico Traders P. Ltd. AALCS2561E 27040636925V 240547
Rajeshwari Trading P. Ltd. AACCR7829M 27480388751V 71983
Takshil Trading P. Ltd. AABCT5406H 27020044072V 109325
Thar Traders P. Ltd. AABCT8974G 27260059654V 154762
Raj International AJTPM0916B 27550250924V 32760
Navoday Trade Impex P.Ltd. AACCN3641F 27470563502V 42024
Big Step International AKJPP9963A 27870165388V 99793
Taks Trade P Ltd. AABCT8973B 27140017428V 115908
Swastik Sales Agency P. Ltd. AAKCS1682F 27290563504V 118881
A-1 Sales Corporation ALAPD2195E 27190604978V 129246
Elecon Impex P. Ltd. AABCE6233B 27690557658V 131002
The assessing officer also stated that DGIT (Inv), Mumbai vide letter dated 29.01.2013 has also communicated that in their inquiries it was found that the aforesaid parties were involved in issuing of sale bills without supplying goods and that the assessee company was one of the beneficiaries of such hawala transactions. The A.O has stated that assesse has furnished copies of bills, ledger account and bank statement pertaining to the purchases made from such parties but not provided copies of transportation and delivery challan. The assessing officer also stated that assessee did purchase goods from other supplier
P a g e | 3 Xmex Clothing Pvt. Ltd. Vs ITO-11(3)(1) from the grey market and obtained the bills from the aforesaid parties and the assessee has been benefitted by extra margin of purchasing goods from the grey market. Therefore, the A.O has added 26% of the alleged purchases to the amount of Rs.5,58,521/- as non-genuine purchases u/s 69C to the total income of the assessee.
Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
Heard both the sides and perused the material on record. During the course of assessment on the basis of information from Sale Tax Department that the aforesaid parties were indulged in issuing bogus bills without supplying of any material, the assessing officer treated 26% of the purchases of Rs.21,48,159/- made by the assessee from such parties as bogus and added to the total income of the assessee. During the course of assessment assessee has furnished copies of purchase invoices and detail of payment made for such purchases through bank account. The A.O has mentioned in his finding at para 4 of the assessment order that assessee had purchased goods from other supplier without bills in the grey market and has been benefitted by the extra margin of purchasing goods from the grey market. We observe that assessing officer has not doubted the corresponding sales against the said purchases, therefore, only the profit margin embedded in such transaction could be taxed. We observe that in such type of transaction, the assessee purchases the goods from the grey market by making gross payment in cash without bills. The bills are obtained from the third parties and after receipt of cheques such parties adjust the same by providing cash after deducting their commission. Taking all these facts the material purchased in the grey market are always cheaper than the material sourced from the genuine dealer. After taking into consideration that assessee has brought the material from the grey
P a g e | 4 Xmex Clothing Pvt. Ltd. Vs ITO-11(3)(1) market at cheaper rate we consider that it is fair and reasonable to restrict the disallowance at 5% of the impugned purchases. Therefore, the A.O is directed to restrict the disallowance to the extent of 5% of the impugned purchases. Accordingly, the ground no. 3 of the assessee is partly allowed.
Ground no. 1 & 2 pertaining to reopening of the assessment were not discussed therefore the same stand dismissed.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 20.03.2023 (Vikas Awasthy) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 20.03.2023 Rohit: PS
आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant प्रत्यथी / The Respondent. 2. आयकर आयुक्त / CIT 3. 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.