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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
आदेश/ ORDER
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-10, Mumbai (in short ‘the CIT(A)’) dated 29/11/2019 for the assessment year 2007-08.
Shri Vimal Punmiya appearing on behalf of the assessee submitted that the assessee is a trader in diamonds. The assessment for assessment year 2007-08 in the case of assessee was reopened on the ground that the assessee has obtained bogus purchase bills from M/s. Moulimani Impex Pvt.Ltd., M/s. Sun Diam and M/s. Vitrag Jewels aggregating to Rs.1,24,16,485/- during the financial year 2006-07. The Assessing Officer made addition of Rs.15,52,061/- by estimating suppressed profit margin on alleged bogus purchases @ 12.5%. The assessee carried the issue in appeal before CIT(A), inter-alia, challenging reopening of assessment, as well as, addition on merits. The CIT(A) granted part relief to the assessee by restricting addition on account of alleged bogus purchases to 8%. The assessee has offered G.P of 4.15% during the period relevant to the assessment year under appeal. The ld. Authorized Representative for the assessee pointed that addition for similar reasons were made by the Assessing Officer in assessee’s own case in subsequent assessment years, the assessee carried the issue in appeal before the Tribunal for Assessment Years 2008-09,2010-11,2011-12, 2012-13 and 2013-14 in to 7314/Mum/2016 for the respective assessment years. The Tribunal vide order dated 19/05/2017 common for aforesaid assessment years had restored the issue back to the file of Assessing Officer with specific direction. The Assessing Officer has granted relief to the assessee while passing order giving effect to the Tribunal order. The ld. Authorized Representative for the assessee submitted that the present appeal may also be restored back to the file of Assessing Officer with similar directions.
Shri Sanjay J. Sethi representing the Department vehemently defended the impugned order and prayed for upholding the same. However, the ld. Departmental Representative fairly admitted that the Tribunal in assessee’s own case in subsequent assessment years, wherein additions were made on account of bogus purchases in somewhat similar manner has adjudicated appeals of the assessee. 4. Both sides heard, orders of authorities below examined. The addition has been made in the hands of assessee on account of assessee’s involvement in obtaining accommodation entries from concerns belonging to Rajendra Jain Group. The contention of assessee is that the assessee has submitted all the relevant documents before the Authorities Below to prove genuineness of purchases. However, the Authorities Below have failed to consider the documents furnished by the assessee. In written submissions the ld. Authorized Representative for the assessee has listed documents furnished by assessee to substantiate genuineness of purchases. The same is reproduced herein below:
1. 1. Assessee has all bills of purchases with delivery challans 2. All payment made thought account payee cheque.
3. Supplier provided all identity to bank following KYC Norms. 4. All sales of assessee were accepted. 5. Without Purchases sales cannot take place. 6. Assessee accounts duly Audited by Tax Auditor and VAT Auditor. 7. Delivery Challan of all purchases are duly maintained.
8. Assessee purchases are sold to customers and balance are lying as closing stock.
9. Assessee purchases are sold to customers and correlation given by assessee. 10- All purchases bills also had shown VAT amount which is duly paid by assessee to supplier.
11. Vat is paid by us to the Maharashtra Government.
12. There is no evidence than cash received back by assessee.
5. I find that similar contentions were raised by the assessee before the Tribunal in to 7314/Mum/2016 (supra). The Tribunal restored the issue back to the file of Assessing Officer by observing as under:- “8. We have gone through the facts and circumstances of the case and orders of the lower authorities and also submissions made by both the sides before us. It is noted that in this case, the assessee himself has offered the addition to be made keeping in view the peculiar facts and circumstances of the case. However, the alternative prayer before us is that the addition should be computed in fair and justified manner. Therefore, after taking into the totality of facts and circumstances of the case, we find that the first prayer of the assessee cannot be accepted and thus the addition made on account of bogus purchases cannot be deleted fully. Next question that arises before us is that how much addition should be made. Ld. CIT(A) has sustained the addition @ 8% The revenue is not in appeal before us. Therefore, the addition is sustained at 8% as has been done by Ld. CIT(A). However, the only grievance of the assessee which is now left is that the amount of profit which is already disclosed by the assessee should be deducted; otherwise it will lead to excessive addition. We have carefully considered in the facts of this case and find that the peculiar facts and circumstances of the case demand that proportionate amount of gross profit already disclosed by the assessee corresponding to the amount of bogus purchases should be deducted from the addition made. The assessee emphatically stated before us that if this issue is sent back to the file of the AO then, the assessee shall be able to match the amount of the sales with the corresponding amount of alleged bogus purchases and therefore the exact amount of profit disclosed on these purchases can be factually worked out. This issue is accordingly sent back to the file of the AO where the assessee shall submit requisite details and evidences to show the corresponding amounts of sales against the impugned bogus purchases and then the amount of addition sustained @ 8% by the Ld. CIT(A) shall be further reduced by the amount of gross profit actually shown on these purchases. The addition shall be sustained on the balance amount. The AO shall give adequate opportunity to the assessee before deciding this ground afresh. Thus, assessee would get part relief. This ground may be treated as allowed for statistical purposes.”
Since both sides are unanimous in stating that the facts in the impugned assessment year are identical to the facts in assessment year 2008-09, respectfully following the decision of Division Bench in assessee’s own case the issue in appeal is restored back to the file of Assessing Officer for deciding the same a fresh in line with the directions of the Tribunal for assessment year 2008-09(supra). The appeal of assessee is thus allowed for statistical purpose.
Order pronounced in the open Court on Friday the 24th day of September, 2021