ACIT -19(2), MUMBAI, MUMBAI vs. MAYURENDRA GORAKSHNATH BHIWANDKAR, MUMBAI, MUMBAI

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ITA 6173/MUM/2019Status: DisposedITAT Mumbai08 July 2021AY 2011-124 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, noting that the AO did not conduct further inquiries and relied solely on information from the sales tax department. The CIT(A) had considered a bank certificate confirming financing and inspection of the plant and machinery.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting an addition of Rs. 1,22,500/- made by the AO on account of depreciation on fictitious plant and machinery purchases. The AO had treated purchases as bogus based on information from DGIT (Inv.) and sales tax department.

What were the issues?

Whether the AO was justified in disallowing depreciation on plant and machinery purchases without conducting independent inquiries, solely relying on third-party information. The validity of the AO's addition based on alleged bogus purchases.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 148,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR

For Respondent: Ms. Smita Verma, D.R
Hearing: 30.06.2021Pronounced: 08.07.2021

Per Rajesh Kumar, Accountant Member:

1.

The present appeal has been preferred by the Revenue against the order dated 10.07.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.

2.

At the time of hearing when the case was called for hearing, neither assessee nor his authorised representative was present to attend the hearing nor any application for adjournment was filed. Therefore, we are deciding the appeal of the Revenue after hearing the Ld. D.R. and after considering the merits of the case.

2 Shri Mayurendra Gorakshnath Bhiwandkar 3. The only issue raised by the Revenue is against the order of Ld. CIT(A) deleting the addition to Rs.1,22,500/- as made by the AO on account of depreciation on the fictitious purchase of plant & machinery.

4.

The facts in brief are that the assessee filed the return of income on 28.08.2011 declaring total income of Rs.28,02,800/- which was processed under section 143(1) of the Act. The case of the assessee was thereafter reopened by the AO after receipt of information from DGIT (Inv.), Mumbai that assessee is beneficiary of hawala purchase entries to the extent of Rs.7,97,484/- from two parties namely; Sejal Enterprises Rs.9,984/- and Galaxy Corporation Rs.7,97,484/- and accordingly the notice under section 148 of the Act was issued on 08.03.2016. The AO called for various details and information from the assessee from time to time during the course of assessment proceedings which were duly filed before the AO. The AO observed after considering the submission of the assessee that assessee has made bogus purchases of Rs.9,984/- which were debited in the profit & loss account whereas Rs.7,00,000/- of bogus purchases were capitalized under plant & machinery and claimed depreciation of Rs.1,22,500/-. The AO finally rejected the contentions of the assessee and treated the purchases as non genuine thereby making an addition of being 25% of the bogus purchases of Rs.9,984/- which comes to Rs.2496/- and also disallowing the depreciation claimed by the assessee of Rs.1,22,500/- to the income of the assessee by framing assessment under section 143(3) read with section 147 of the Act dated 31.01.2014.

3 Shri Mayurendra Gorakshnath Bhiwandkar 5. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by directing the AO to delete the addition. While allowing the appeal of the assessee, the ld CIT(A) recorded a finding that assessee has produced a certificate from the bank before the AO and also before the ld CIT(A) as the plant and machinery was financed by the bank and also inspected. The ld CIT(A) has noted that AO has not made further enquiries and merely relied upon the information received from sales tax department.

6.

After hearing the Ld. D.R. and perusing the material on record, we observe that Ld. CIT(A) has passed the appellate order after recording that AO has not carried out any further enquires and relied on the information received from Sales Tax Deptt. The ld CIT(A) even referred to the bank certificate testifying the fact that the plant was financed by the bank and the machinery was also inspected. Thus there is no infirmity in the order of ld CIT(A) and we are inclined to uphold the same by dismissing the appeal of the Revenue.

7.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 08.07.2021.

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