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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & SHRI AMARJIT SINGH
O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-5 passed u/s 143(3) r.w.s 147 and 250. The revenue has raised the following revised grounds of appeal:
1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming proceeding us 148 of income tax act, 1961.
2. On the facts and circumstances of the case and law, the 1d. CIT(A) erred in confirming disallowance of Mital Vardhibhai Doshi, Mumbai. - 2 -
Rs.7,41,956/- being 5% of suspicious purchases of Rs.1,48,39,110 /- assumed by the Ld. AO.
3.Assessee craves leave to reserve right to add to, alter or amend any of the aforesaid grounds of appeal at or before the time of hearing and to produce such further evidence, documents and papers in support of claim.
The Ld.AR submitted that there is a delay in filling the appeal before the Honble Tribunal and filed an affidavit for condonation of delay and the Ld.DR has no serious objections. Hence the delay is condoned and the appeal is admitted.
The brief facts of the case that the assessee is engaged in the business as a diamond merchant and filed the return of income for the A.Y 2008-09 on 16.08.2008 declaring a total income of Rs. 93,500/- and the return of income was processed u/s 143(1) of the Act. The Assessing Officer(A.O) received the information from DGIT (Inv) that, the assessee has obtained bogus purchase bills from the parties, where the search has been taken place in the Rajendra Jain Group. The A.O. has considered the facts and find that the assessee was beneficiary and has a reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. Incompliance to the Mital Vardhibhai Doshi, Mumbai. - 3 - notice, the Ld. AR of the assessee filed a letter dated 13.04.2015 and requested to consider the return of income filed originally as due compliance to notice u/s 148 of the Act. Subsequently the A.O issued notice u/s 143(2) and 142(1) of the Act. In compliance to the notice, the Ld. AR of the of the assessee appeared and filed the details. The reasons recorded for reopening of assessment were also provided to the assessee and the assessee filed objections for reopening of assessment and the A.O. has disposed off the objections referred at Para 6 of the AO order.
The AO has called for various details in respect of purchases to test check the genuineness of transctions and relied on various statements and material details and was not satisfied with the submissions and clarifications, further the A.O. has dealt elaborately on the transactions and disallowed the claim of purchases of Rs.1,48,39,110/- and assessed the total income of Rs.1,49,32,620/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 28.03.2016.
Mital Vardhibhai Doshi, Mumbai. - 4 -
Aggrieved by the A.O.order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal
, submissions of the assessee and finding of the AO and the facts with respect to the transactions and relied on the judicial decisions and the decisions of Coordinate Bench of Tribunal on the profit element has restricted the addition @ 5% of total purchases which worked out to Rs. 7,41,956/- and has confirmed the validity of reassesseement proceedings and partly allowed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal.
6. At the time of hearing, the Ld. AR submitted that the reassessment proceedings are void and the addition was made without making investigation/enquiry. Further, the Ld.AR submitted that the transactions are genuine and duly supported with the documents and addition sustained by the CIT(A) is an higher side. The Ld.AR substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the appeal. Contra, the Ld. DR supported the order of the CIT(A).
Mital Vardhibhai Doshi, Mumbai. - 5 -
We heard the rival submissions and perused the material on record. On the first disputed issue with respect to the validity of reassessment proceedings, we find that the submissions of the Ld. AR are not realistic and case laws relied are distinguishable on facts and this ground of appeal is dismissed. On the merits of the case, we find the CIT(A) has restricted the addition to the extent @5% of purchases. The Ld.AR has emphatically submitted that the profit element estimated by the CIT(A) is on the very high compared to similar business operations. The Ld.AR demonstrated the GP Percentage for the past and current year and prayed to lower percentage addition. We considered the material information filed and the Ld.AR relied on the decisions of the Hon’ble Tribunal in the similar cases where the addition has been sustained in the range of 2% to 3% and in some cases based on facts, the matter was restored to the file of the A.O. Therefore, to meet the ends of justice we restrict the addition to the extent of @3% (as against @5%) and modify the order of the CIT(A) and we make it clear this decision is applicable to this asseesseement year only
Mital Vardhibhai Doshi, Mumbai. - 6 - and partly allow the ground of appeal in favour of the assessee. 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 08.08.2022.