ITO 24 (2)(5), MUMBAI vs. M/S META PLAST INDUSTRIES, MUMBAI

O R D E R Per Shri Shamim Yahya (AM) :-

This appeal by the revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-36 dated 30.08.2019 and pertains to assessment year 2010-11.

1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition at Rs.7,95,568/- made by the AO, pertaining to Hawala Purchases, notwithstanding that the assessee name was listed by the Sales Tax Department as a beneficiary of accommodation entries provided by bogus dealers/sellers and that, during the course of assessment proceedings, the assessee was unable to produce the impugned parties or to furnish the substantiating evidence to prove the genuineness of the purchase.

2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.3,28,330/- made by the AO, on account of unverified sundry creditors without considering the decision of the Hon'ble Apex Court on the issue of bogus purchases dated 16.01,2017 in the case of N K Proteins vs. DCIT (2017) (84 Taxmann.com 195)(SC).

3. On the facts and circumstance of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 11,23,900/- made by the AO, on account of hawala purchase and unverified sundry creditors.

4. On the facts and circumstance of the case and in law, the Ld.CIT(A) erred in deleting the addition made by AO, the Ld.CIT(A) had violated the rule of 46A of the Income Tax Act by accepting the new evidences from the appellant without calling for any remand report from the Assessing Officer.

5. The appellant prays that the order of the CIT(Appeal) on the above grounds be set aside and that of the AO be restored.

6. The appellant craves leave to amend or alter any ground or to submit additional new ground which may be necessary.

S.No Name of the Creditor TIN No. Amount 1 Rajasthan Metal Ind.Ltd. 27930733678v 7,23,506/- 2 Rajasthan Metal Ind.Ltd. 27630609586v 72,062/-

“After considering the observations above, it is apparent that the grounds of reopening mentioned facts and figures which were not related to the appellant. The parties along with the TIN numbers as mentioned by the AO in his order were never dealt with by the appellant during the year under consideration nor in the past. The appellant produced documentary evidences of Purchase bill. Bank statements reflecting payments for purchases made as well as the J 2 Form of the VAT Audit Report - 704 which clearly indicated that the actual parties dealt with by the appellant were as under: Raj Sagar 27090720560V 6,95,680/- 7,23,506/- Metal Indus.

Raj Ratan Metals 27820376439V 69,290 72,062/-

Hence, in view of the above, the grounds of reopening recorded by the AO were not related to the appellant and to such extent was bad in law and the reopening was liable to be quashed, The additions made by the AO on this issue is therefore Deleted. The Ground of appeal is Allowed. The other issue relating to addition oflRs,3,28,3307- in the case of M/s. Dimple Metal /Industries was not justifiable during the FY 2008-09 as there were no purchases made from the said party during the year. The above figure pertains to FY 2008-09 on which the assessee had already paid the tax vide order No. OE-II- 54/25/14-15 dtd. 13.02.2015. Hence, after verification of the details the addition made on this ground of Rs,3,28,330/- is also deleted. In the result, the appeal for the AY 2010-11 is allowed.”

7. Against the above order, revenue is in appeal before the ITAT 8. I have heard both the parties and perused the records. I note that ld.CIT(A) has given a finding that assessee has made no purchase from the parties from whom AO has alleged that assessee has made bogus purchases. Hence, deletion of this disallowances by ld.CIT(A) is upheld. On the issue of deletion of Rs. 3,28,330/- added by the AO u/s. 41(1) of the Act, assessee has not disputed that the liability is non-existent. The assessees plea is that while making the purchase in 2008-09 assessee has already paid tax. This bizarre explanation has been accepted by ld.CIT(A). Addition u/s. 41(1), which is for remission of liability has nothing to do with such type of explanation. The section postulates addition for remission of liability on account of trading goods and expenditures, debits in connection of which has earlier been made to profit and loss account. The ld.CIT(A) has not properly applied mind on this issue. Hence, this issue is remitted to ld.CIT(A).