BUGGET IMPEX,MUMBAI vs. INCOME TAX OFFICER WARD 19(1) (2) , MUMBAI

The appellant, M/s. Bugget Impex (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 10.12.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2014-15 on the grounds inter alia that:-

Briefly stated facts necessary for adjudication of the controversy at hand are: on the basis of search and seizure operation carried out on Bhanwarlal Jain and his group concern on 03.10.2013 by DGIT(Inv.), Mumbai whereby information has taken on record that Bhanwarlal Jain and his group company are providing accommodation entries in the forms of unsecured loans to interested parties, issuing bogus sale/purchase bills to various

On the basis of findings given by the investigation wing, Assessing Officer(AO) show caused assessee who has furnished requisite details along with explanation. Declining the contentions raised by the assessee, the AO proceeded to hold that there is circumstantial evidences of obtaining bills from Bhanwarlal Jain concern, the benefit of which would not be more than 5% of the purchase cost and as such made addition of Rs.13,11,095/- to the business income equivalent to 5% of Rs.2,62,21,909/- qua the purchases made from M/s. Kangan, M/s. Dharam and M/s. Maniprabha and thereby made additions under section 143(3) read with section 147 of the Act.

Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has restricted the addition to 3% of the purchases made by the assessee by partly allowing the appeal. Feeling

I have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

Undisputedly, out of the entries pertaining to the bogus purchases contained in the table extracted in the preceding para No.2, purchases of Rs.49,52,848/- from Dharam Impex pertains to the year under consideration i.e. A.Y. 2014-15 and rest of the entries are qua earlier years. It is also not in dispute that both AO as well as Ld. CIT(A) have decided the issue on the basis of estimation and guess work without going into the argument addressed by the assessee that he has not made bogus purchases rather brought on record all the documents to prove the identity, genuineness and creditworthiness of the supplier from whom the alleged purchases were made.

In the backdrop of the aforesaid facts and circumstances of the case the Ld A.R. for the assessee contended that during the appellate proceedings the assessee has discharged the onus on it by proving the identity, genuineness and creditworthiness of the purchases made by submitting Ledger account, Bills/Vouchers, Bank statement to show that the payment was made by account payee cheques, Confirmation from M/s. Dharam Impex, Stock Register, Affidavit from M/s. Dharam Impex, ITR Ack. of ITA No.1775/M/2022 6 M/s. Bugget Impex M/s. Dharam Impex for AY 2014-15, Sale Register (showing goods purchased from M/s. Dharam Impex is sold to M/s. Super Gems Pvt, Ltd., Mahendra Brothers, etc., Copies of the bank statement, of Parties to whom the goods were sold and copies of the bank statement of the appellant where such payments are received along with audit report.

This contention is supported with the aforesaid documents available in the paper book from page 1 to page 37 of the paper book. When I examine the aforesaid contentions raised by the assessee in the light of the submissions made by the assessee extracted in para 4 of the Ld. CIT(A) the assessee has submitted before the Ld. CIT(A) all the aforesaid documents mentioned in the preceding paras to prove the identity, genuineness and creditworthiness of purchases made by the assessee. But CIT has not preferred to discuss the same on merits rather jumped to the decision by reducing the addition from 5% of non genuine purchases to 3%.

I am of the considered view that when assessee has come up with specific pleas that none of his alleged purchases are bogus and brought on record the entire details the Ld. Lower Revenue Authorities were required to examine the same on merits. To decide the issue once for all, I am of the considered view that AO is required to examine the issue threadbare by providing the opportunity of being heard to the assessee.

Resultantly, present appeal is remitted back to the AO to decide afresh after providing opportunity of being heard to the ITA No.1775/M/2022 7 M/s. Bugget Impex assessee by examining the evidence brought on record by the assessee, hence appeal filed by the assessee is allowed for statistical purposes.