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Income Tax Appellate Tribunal, “B” Bench, Mumbai
O R D E R Per Shamim Yahya (AM) :- This appeal by the assessee is directed against the order of learned CIT(A) dated 12.12.2019 and pertains to assessment year 2009-10.
Grounds of appeal read as under :
1. In the facts and circumstances of the case & law, the Learned CIT(A) and the Assessing Officer erred by making an addition & confirming addition (respectively) at 100% of value of alleged bogus purchases at 100% amounting to Rs. 1,42,03,397/-.
2. Addition on account of alleged bogus purchases are simply made on the basis of information received from DGIT (Inv) forwarded by Sales Tax Department and no independent efforts have been taken by the A.O. except for issuance of notice u/s.133(6). Material collected at the back of the assessee has been used against him without providing it with the same.
3. Addition has been confirmed by the CIT(A) by completely ignoring submissions like purchase invoices, statement of purchase and sale details, payment by account's payee cheques and ledger accounts. Also sales are not doubted and hence the addition be deleted.
4. Learned A.O has wrongly made addition at the rate of 100% of alleged bogus purchases without giving sufficient opportunities to present the matter. Also, the CIT(A) has passed an order by completely ignoring the adjournment request filed on 05-12-2019.
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Bombay HC in the case of PCIT Vs Rishabhdev Tachnocable Ltd. ITA 1330/2017 (February 2020) has held that in case of bogus purchases, only profit element can be added. Also as per several High Court and ITAT decisions it has been held that in case of bogus purchases, an addition can be made only to the extent of profit element embedded in such purchases. However, the CIT(A) and AO have passed judgment in complete isolation of such case laws.
Brief facts of the case are that the assessee is engaged in auto parts, auto accessories and automobile goods. Pursuant to information from Maharashtra Sales tax department that the assessee has allegedly made purchases of Rs. 1.42 crores from several parties who have issued false bills, the assessment was reopened. The Assessing Officer did not refer in the earlier part of his order that notices were issued to alleged bogus parties. However, in paragarph 9 while noting that from the above discussions following facts emerges “that the notice under section133(6) were issued to the sellers which were returned back as unserved”. The Assessing Officer proceeded to make 100% disallowance without doubting the sales.
We have heard learned Departmental Representative and perused the records. None appeared on behalf of the assessee.
5. We note that upon assessee’s appeal learned CIT(A) confirmed the Assessing Officer’s order. In the said order she did not give adequate opportunity to the assessee she proceeded to distinguish the Hon'ble Bombay High Court decision in the case of M/s. Mohommad Haji Adam & Co. dated 11.2.2019 by holding that ‘the said discussion was not based on this line of argument’, which in our considered opinion is an utter contempt of Hon'ble Jurisdictional High Court decision. By no stretch of imagination we can countenance the same. Moreover, the fact that learned CIT(A) has not given proper opportunity to the assessee is evident from the following paragraph noted by learned CIT(A) herself :-
“4.1 The appeal was filed on 30.04.2015 vide Form 35. The address mentioned therein is Shop No. SB, Tapia Mansion Block C, Jalbhai Street, Opp. Railway Bakery, Grant Road (East), Mumbai-400004. Notices dated
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23.09.2016 and 13.09.2019 were issued to the appellant through India Post and ITBA to provide an opportunity of being heard.
4.2 During the appellate proceeding, Shri Dinesh R. Shah C.A. appeared on 18.11.2016 and written submission was filed. The matter was adjourned to 06.12.2016. Again Shri Dinesh R. Shah C.A. appeared on 06.12.2016 and seeking time to furnish details. The case was adjourned to 03.01.2017. There was no compliance.”
From the above it is apparent that learned CIT(A) has misled herself erroneously distinguished Hon'ble Jurisdictional High Court decision and has not given proper opportunity of being heard to the assessee and has uphold 100% disallowance on bogus purchases without anything brought on record regarding doubtfulness of the sales. In this view of the matter in our considered opinion the issue needs to be remitted to the file of learned CIT(A). learned CIT(A) is directed to pass a fresh order denovo after giving the assessee proper opportunity of being heard.
In the result appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on 25.8.2021.