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Facts
The assessee, engaged in trading and exporting edible items, had an assessment order passed under Section 147/143(3). A survey led to information about a purchase from M/s Himadri Food Ltd being allegedly non-genuine. The Assessing Officer (AO) added the entire sum to the income, and the CIT(A) upheld this addition.
Held
The Tribunal held that the CIT(A) failed to adjudicate the issue judiciously and did not properly examine the evidences filed. The matter was remanded back to the CIT(A) for a fresh adjudication, with directions to provide the assessee with a proper opportunity of being heard.
Key Issues
Whether the CIT(A) properly adjudicated the issue of non-genuine purchases without proper inquiry and examination of evidence. Whether the matter should be remanded for fresh adjudication.
Sections Cited
147, 143(3), 133A, 148, 250
AI-generated summary — verify with the full judgment below
Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 19.11.2024 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals), CIT(A)-51, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 147/143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 24.03.2022 for the Assessment Year [A.Y.] 2018-19.
A.Y. 2018-19 Idris Mikdad Attarwala, Mumbai 2. In various grounds of appeal, the assessee has contested the appeal order by submitting that the ld.CIT(A) is wrong in concluding that the assessee did not file necessary evidence before him and upholding the addition made by the ld.AO, though the assessee had duly filed necessary documents vide acknowledgement no.226932981040923 dated 04/09/2023.
The facts in brief are that the assessee an individual, engaged in trading and exporting of several edible items as proprietor of M/s Everest Global filed ROI on declaring total income of Rs. 91,16,940/-. Survey action u/s 133A of the Act was conducted at the his office premises. Pursuant to the information received from the DDIT(Inv),5(2), Mumbai and CGST & Central Excise, Mumbai, the assessment was reopened by issuing notice u/s. 148 of the Act as the AO had information that the assessee made purchase of Rs 20.06 lakh from M/s Himadri Food Ltd which was stated to be non-genuine as the alleged seller was found to be engaged in bogus billing and the assessee was one of recipients of such bills. Although during the assessment proceedings, the assessee submitted various details including copies of bills and bank statement in support of the contention that the transactions were genuine, the AO rejected the contention on the ground that the assessee failed to discharge onus on him by proving the purchase as genuine and A.Y. 2018-19 Idris Mikdad Attarwala, Mumbai proceeded to add the entire sum to the income. In the subsequent appeal, the ld.CIT(A) upheld the addition holding that the investigation revealed that impugned purchase was merely an accommodation entry and supporting evidences filed were irrelevant. Moreover, the assessee failed to furnish any evidence before him in support of the said transaction.
Before us, while the ld.DR relied on the orders of lower authorities, it was pleaded by the ld. Authorised Representative that the AO made the addition without conducting any independent enquiry and without providing him with the enquiry report. He also ignored all the evidences submitted. Assessee’s exports sales are of Rs. 38,79,00,685/- and the opening stock was 7,79,553/- and total purchase Rs. 36,74,49, 130/- closing stock of Rs. 6,52,550/-.During the assessment proceedings, Ld. AO. has asked assessee to justify the genuineness of transaction with Himadri Foods Limited vide SCN dated 09/03/2022. In response to notice assessee filed his reply vide letter dated 19/03/2022 before AO alongwith following documents.
A. Chart of purchase Himadri Foods Limited for the Period of 01/04/2017- 31/03/2018. B. Bank Statement of State Bank of India reflecting amount paid to M/s. Himadri Foods Limited. C. Bills, Invoice alongwith Delivery challan and Packing List for export.
A.Y. 2018-19 Idris Mikdad Attarwala, Mumbai 4.1 Further, the assessee explained the transaction entered into with Himadri Foods Limited were arising out of purchases of goods from them for his export orders. The said purchases are reflected in the purchase accounts in the P&L account and the taxes on purchases i.e. VAT &GST are booked under duties & taxes in the Balance sheet in the books of accounts.GP ratio declared by assessee is 4.36%.Without prejudice, it is also submitted that the gross profit rate disclosed for the year was 4.36% and in the alternative, the addition could have been made to the extent of such rate only as held by the jurisdictional High court in several decisions and also by the coordinate bench of ITAT, Mumbai.
The assessee in the course of hearing before us, also filed additional evidence in terms of Rule 29 of ITAT Rules consisting of National Company Law Tribunal order dated 9th December, 2020, GST Portal status of Himadri Food Ltd, Export House Certificate for Assessee, Letter of Factory Stuffing permission and GSTR-2A of the assessee for F.Y. 2017-18 stating that these evidences are crucial and germane to substantiate the case of the assessee. It is stated that all these evidences show that party is existing and transactions are genuine. Without any enquiry or verification the AO wrongly treated the transaction as non-genuine. Sales of the assessee is fully accepted by A.Y. 2018-19 Idris Mikdad Attarwala, Mumbai A.O. Part of purchase is accepted by the department is disputed. The assessee relied on certain decisions of hon’ble Bombay High court where it has been held that the purchases cannot be rejected without disturbing the sales in case of a trader and restricted addition to G.P ratio.
We have gone through the additional evidences filed before us and we accept the same as they have bearing on the issue involved. However, it is noticed from the contents of the appellate order passed by the ld.CIT(A) para 5.3.1. that the assessee did not submit any details during appeal proceedings other than statement of facts filed along with the appeal memo. On the other hand, the ld.AR has refuted the observing by submitting that the ld.CIT(A) has completely ignored necessary evidences filed before him. It appears to us that the issue in hand has not been adjudicated properly by the ld.CIT(A) in the absence of appropriate representation by the assessee before him. There appears a case of miscommunication leading to the above conclusion by the appellate authority.
We further notice that the ld.CIT(A) has not adjudicated on the issue in a judicious manner and has brushed aside the grounds specifically raised before him. It is a settled law that the CIT(A) has co- terminus powers of an Assessing officer and it is duty cast upon him to A.Y. 2018-19 Idris Mikdad Attarwala, Mumbai consider all points of issue and give a finding. Further, section 250 clearly provides that the Commissioner (Appeals) may make further inquiry or direct the Assessing officer to undertake further inquiry before disposing of the appeal and reports the results of the inquiry to the commissioner (Appeals) and also, the order of the Commissioner (Appeals) shall state the point of determination, decision and the reasons for such decision while disposing of the appeal in writing. From the plain reading of the section, it emerges that the CIT (A) shall, by himself or through an assessing officer, make necessary inquiry before adjudicating any appeal. However, in the case under consideration, the ld.CIT(A) has grossly failed to adhere to these provisions of the Act. In such a situation, the above matter needs to be remanded back to the ld.CIT(A) to arrive at a conclusion by examining all the relevant facts of the case including the submissions made by the assessee and also the additional evidences filed and accepted by us, so as to arrive at a judicious conclusion in accordance with the provisions of the Act.
Thus, in the interest of justice, we deem it appropriate to allow the appeal for statistical purposes, emphasizing the need for a thorough and compliant adjudication process. The ld. CIT(A) shall give proper and adequate opportunity of being heard to the assessee in accordance A.Y. 2018-19 Idris Mikdad Attarwala, Mumbai with principles of natural justice in the set aside remand proceedings for due adjudication of the appeal of the Revenue filed before him.
In the result, the appeal is allowed for statistical purposes.
Order pronounced in the open court on 11/03/2025.