ITO 20 (2)(4), MUMBAI vs. NAVIN RAMNIKLAL GALA, MUMBAI

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ITA 6594/MUM/2019Status: DisposedITAT Mumbai24 May 2021AY 2011-123 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 found no reason to deviate from the co-ordinate bench's consistent stand and approved the CIT(A)'s conclusions. Therefore, the Tribunal declined to interfere with the order.

What were the facts?

The Assessing Officer appealed the CIT(A)'s order which restricted an addition for alleged bogus purchases to 8.26% of the purchase amount. The CIT(A) had relied on a co-ordinate bench decision for a previous assessment year.

What were the issues?

Whether the CIT(A) erred in restricting the addition for bogus purchases based on a previous ITAT decision and the assessee's declared GP rate. The onus on the assessee to prove genuineness of transactions was also a point of contention.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI ‘B’ BENCH, MUMBAI

O R D E R Per Pramod Kumar, VP:

1.

By way of this appeal, the appellant Assessing Officer has challenged correctness of the order dated 1st July 2019, in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 for the assessment year 2011-12.

2.

Grievances raised by the appellant are as follows:- 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in granting relief of Rs. 1,85,444/- by restricting the addition to 8.26% of the alleged bogus purchase from Hawala Parties." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the onus is on the assessee to explain and substantiate the genuiness and true nature of the purchase transaction." 3. " On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that fact that the hawala dealers admitted on oath before sales tax authorities that they have not sold any material to anybody assessee Assessment Year: 2011-12 Page 2 of 3 failed to produce such parties at the assessment stage through specifically asked by the A.O.

4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred is not appreciating the fact that purchase were made from some other parties which were not recorded in the books of accounts and only accommodation bills were obtained from hawala parties and there by attracting provisions of section 40A(3)." 5. "Though the tax effect is below the monetary limit prescribed in the CBDT instruction no.17/2019 dated 08.08.2019 as amended on 20.08.2018 as the case falls in the exception provided in para 10(e) of the said instruction in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities."

3.

When this appeal was taken up for the hearing, it was noticed, that the issue in appeal is covered in favour of the assessee, by co-ordinate bench decisions. It is so evident from the following observations of learned CIT(A): 4.3 Decision:- I have considered the assessment order, the submissions and detailed filed by the appellant. The appellant has contested the rate of profit element on the bogus purchases estimated by the A.O at 12.5%. It has been submitted that its own case for A.Y 2009-10 in the ITAT Mumbai vide their order dated 23.04.2019 have directed the disallowance to be restricted to 12.5% of bogus purchase as reduced by the GP rate already declared by the assessee on these transactions. The appellant has submitted that the gross profit ratio is 8.26% for A.Y 2011-12. The A.O. is directed to verify the same and recompute the disallowance after reducing the rate of 12.5% by the OF rate of the appellant during A.Y. 2011-12 on such transactions, as held by the Hon'ble ITAT for A.Y 2009-10 and allow appropriate relief. Ground no. 1 is partly allowed.

4.

Having perused the impugned order, and having rival submissions on the same, we see no reasons to deviate from the consistent stand taken by the co-ordinate bench. The same, we approve conclusions arrived at by the CIT(A) and decline to interfere in the matter.

In the result, the appeal is dismissed. Pronounced in the open court today on the 24th 5. day of May 2021.

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