ITO 20(1)(2), MUMBAI vs. SHRI. ASHOK B BAGWE, MUMBAI

These two appeals by the Revenue are directed against the orders of Commissioner of Income Tax (Appeals)-32, Mumbai [ in short the ‘CIT(A)’] for assessment years 2009-2010 and 2010-11, respectively. Both the impugned orders are of even date i.e. 23/10/2019. Since, facts germane to the issue raised in these appeals are similar, these appeals are taken up together for adjudication and are decided by this common order.

For the sake of convenience facts are narrated from the appeal in 2009-10.

The brief facts of the case as emanating from records are: The assessment for assessment year 2009-10 in the case of assessee was reopened on the basis of information received Director General of Income Tax(Investigation). As per the information received, the assessee had obtained bogus purchase bills aggregating to Rs.8,48,803/- in F.Y. 2008-09 from the following operators declared as hawala dealers by the Sales Tax Department, Government of Maharashtra.

The Shri Sanjay J. Sethi representing the Department vehemently defended the assessment order. The ld.Departmental Representative submitted that the assessee has failed to discharge his onus in proving genuineness of dealers and purchases made from them. No documentary evidence was furnished by the assessee to prove transportation of goods. The assessee neither produced the dealers nor any confirmations from the said dealers were furnished by the assessee. The ld.Departmental Representative prayed for reversing the finding of CIT(A) and upholding the assessment order. To further buttress his submissions, the ld.Departmental Representative placed reliance on the case of N.K. Proteins vs. DCIT, 84 taxmann.com195(SC).

On the other hand, Shri Sunil Rohra appearing on behalf of the assessee vehemently defended the impugned order and prayed for dismissing the appeal filed by the Revenue. The ld.Authorized Representative of the assessee submitted that assessee has declared G.P of 28.49% during the relevant assessment year on regular transactions.

Both sides heard, orders of authorities below examined. Undisputedly, the assessee has failed to discharge his onus in proving authenticity of the dealers and genuineness of purchases made from them. At the same time it is observed that the Assessing Officer has accepted sales turnover declared by the assessee. Without purchases there cannot be sales. Therefore, entire alleged bogus purchases cannot be added. It is only the profit element embedded in such like transactions that can be brought to tax [ Re: PCIT vs. Paramshakhti Distributors Pvt. Ltd. in Income Tax Appeal No.413 of 2017 decided on 15/07/2019 by the Hon'ble Bombay High Court.] Taking into consideration entirety of facts, I find that the Assessing Officer has erred in (A.Y 2009-10) ITA NO.7764/MUM/2019(A.Y 2010-11)

Both sides are unanimous in stating that the facts in appeal for assessment year 2010-11 are similar to the facts in assessment year 2009-10. Nature of transactions and the manner of addition is identical except for the quantum of bogus purchases and the dealers. In assessment year 2010-11 the assessee has allegedly obtained bogus purchase bills amounting to Rs.10,03,551/- from four dealers stated to be accommodation entry providers. The respective sides agreed that the submissions made for assessment year 2009-10 would apply to assessment year 2010-11. Since, the facts are similar to the facts in assessment year 2009-10, the detailed findings given while adjudicating appeal of the Revenue for assessment year 2009-10 would mutatis mutandis apply to the present appeal also. For parity of reasons the appeal by the Revenue is dismissed.

To sum up, both appeals by the Revenue are dismissed.