Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-29, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 16.07.2019 for the Assessment Year (AY) 2009-10. 2. The brief facts of the case as emanating from records are: The assessee is a trader in Gold & Diamond Jewellery. The assessment for AY 2009-10 in the case of assessee was re-opened on the ground that the assessee has obtained आअसं. 6167/मुं/2019 (िन.व.2009-10) (A.Y. 2009-10) bogus purchase bills amounting to Rs. 2,76,187/- from various (four) hawala dealers during the period relevant to the AY under appeal. Since, the assessee failed to discharge its onus in proving genuineness of the dealers and the purchases made from them, the AO disallowed entire alleged bogus purchases. Against the assessment order dated 10.03.2014 passed under section 143(3) read with section 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], the assessee filed appeal before the CIT(A). The CIT(A) after examining the facts and documents on record restricted the disallowance to 12.5% of unproved purchases. Now, the Revenue is in appeal against the relief granted by the CIT(A).
Sh. Devang Divecha appearing on behalf of the assessee submitted at the outset that this appeal by the Revenue is liable to be dismissed on account of low Tax effect in the light of CBDT Circular No. 17/2019 dated 08.08.2019.
Sh. Sanjay J. Sethi representing the Department vehemently defended the assessment order and prayed for reversing the findings of CIT(A). The ld. DR submitted that the assessment was re-opened on the basis of information received from DGIT (Investigation), Mumbai, therefore, case of the assessee falls under exceptions provided in para-10(e) of CBDT Circular No. 3/2018 dated 11.07.2018 and subsequently amended by Circular dated 20.08.2018.
Both sides heard, orders of the authorities below examined. A perusal of reasons for re-opening reveals that the assessment in the case of assessee was re-opened on the basis of information received from Investigation Wing of Income Tax Department. The Tribunal in the case of ITO vs. Amarchand P. Shah आअसं. 6167/मुं/2019 (िन.व.2009-10) (A.Y. 2009-10) reported as 73 ITR(T) 588, Mumbai has held that information from DDIT(Inv.) of the Income Tax Department is not an ‘external source’ as envisaged in CBDT Circular (supra). It is an internal wing of the Income Tax Department, therefore, any addition on the basis of information received from the Investigation Wing of the Department would not be covered by exception provided in para-10(e) of the CBDT Circular (supra). Since, the appeal by Revenue is not protected by exception as pleaded by ld. DR and the tax effect involved in the present appeal is less than the monetary limit specified by the CBDT Circular No. 17/2019 dated 08.08.2019, this appeal by the Revenue is liable to be dismissed on account of low tax effect. I hold and direct accordingly.
Even otherwise on merits, I find no substance in appeal filed by the Revenue. Once the AO has accepted sales turnover declared by the assessee, entire alleged bogus purchases cannot be disallowed. It is only the profit margin embedded in such transactions that can be brought to tax (Re: PCIT vs. Paramshakti Distributors Pvt. Ltd. in Income Tax Appeal No. 413 of 2017 decided on 15.07.2019).