ASSISTANT COMMISSIONER OF INCOME TAX-10(1)(1), MUMBAI vs. H.K.JEWELS PVT LTD., MUMBAI

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ITA 5659/MUM/2019Status: DisposedITAT Mumbai11 June 2021AY 2010-113 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 held that while the assessee failed to prove the genuineness of the dealer, the sales turnover was accepted by the AO and there was no disparity in closing stock. Therefore, only the profit element embedded in the bogus transactions, not the entire purchases, could be brought to tax.

What were the facts?

The assessee, a jewellery manufacturer and trader, was found to have obtained accommodation entries totaling Rs. 4,95,084/- from a declared hawala operator. The Assessing Officer (AO) added the entire amount as bogus purchases as the assessee failed to substantiate the genuineness of the purchases and the dealer.

What were the issues?

Whether the entire amount of alleged bogus purchases can be added to the income when sales are accepted and there is no stock disparity, or only the profit element embedded in such transactions.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

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

Hearing: 30/03/2021Pronounced: 11/06/2021

ACIT -10(1)(1), 2nd Floor, Room No. 209, Aayakar Bhavan, M.K. Road, ...... अपीलाथ) /Appellant Mumbai-400020 बनाम Vs. H.K. Jewels Pvt. Ltd. 3rd Floor, Wicel Administration Building, Central Road, Opp. Seepz, MIDC, Andheri (E), Mumbai-400093. PAN: AACCH2454E ..... *ितवाद,/Respondent अपीलाथ) -ारा/ Appellant by : Sh. Sushil Kumar Mishra *ितवाद, -ारा/Respondent by : None सुनवाई क. ितिथ/ Date of hearing : 30/03/2021 घोषणा क. ितिथ/ Date of pronouncement : 11/06/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-17, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 20.06.2019 for the Assessment Year (AY) 2010-11.

आअसं. 5659/मुं/2019 (िन.व.2010-11) (A.Y.2010-11)

2.

The brief facts as emanating from records are: The assessee is a manufacturer and trader of Gold & Diamond jewellery. During the course of assessment proceedings, the AO found that the assessee is involved in obtaining accommodation entries aggregating to Rs. 4,95,084/- from M/s Amit Trading Co., a declared hawala operator. During assessment proceedings, the assessee failed to substantiate genuineness of purchases and the aforesaid dealer. The AO made addition of entire alleged bogus purchases. The assessee carry the issue in appeal before the CIT(A). The CIT(A) after examining the facts and various decisions rendered by Hon’ble High Court and the Tribunal restricted the addition to 15% of alleged bogus purchases. Hence, the present appeal by the Revenue.

3.

Shri Sushil Kumar Mishra representing the Department submitted that the assessee has failed to prove genuineness of suspicious purchases and the dealer from whom such purchases were made. The notice under section 133(6) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] was sent to the dealer from whom the assessee had made alleged purchases, the same was received back unserved. The assessee has not filed any confirmation from the said dealer to prove genuineness of the transactions. The ld. DR prayed for restoring the findings of AO and setting-aside the impugned order of CIT(A).

4.

Submissions made by ld. DR heard, orders of authorities below examined. Undisputedly, the assessee failed to discharge its onus in proving genuineness of the dealer from whom alleged bogus purchases were made. At the same time, it is observed that the sales turnover declared by the assessee have been accepted by the AO. It is not the case of Revenue that there is आअसं. 5659/मुं/2019 (िन.व.2010-11) (A.Y.2010-11)

disparity in the closing stock either. Therefore, without purchases there cannot be sales. Under such like circumstances, it is only the profit element embedded in bogus transactions that can be brought to tax. Entire bogus purchases cannot be added. I concur with the findings of CIT(A), hence, the same are upheld and appeal of the Revenue is dismissed, sans merit.

Order pronounced in the open court on Friday, the 11th day of June, 2021. Sd/- (VIKAS AWASTHY) �याियक सद�य / JUDICIAL MEMBER मुंबई/Mumbai, 3दनांक/Dated: 11/06/2021 SK, PS *ितिल�प अ4े�षत *ितिल�प अ4े�षतCopy of the Order forwarded to : *ितिल�प अ4े�षत *ितिल�प अ4े�षत 1. अपीलाथ)/The Appellant , 2. *ितवाद,/ The Respondent. 3. आयकर आयु5(अ)/ The CIT(A)- 4. आयकर आयु5 CIT 5. �वभागीय *ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड9 फाइल/Guard file. BY ORDER, //True Copy//

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