ASST. CIT 6(2)(1), MUMBAI vs. M/S CHINTAMANI JEWELLERY ARCADE PVT LTD., MUMBAI

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ITA 5694/MUM/2019Status: DisposedITAT Mumbai18 March 2021AY 2008-093 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 decision to restrict the disallowance to 12.5% of the bogus purchases. It noted that the assessee had provided supporting documentation and that the mere absence of transportation bills did not render the purchases bogus.

What were the facts?

The Assessing Officer added the entire amount of alleged bogus purchases of Rs. 2,54,737/- made from a hawala party. The assessee claimed to have purchase invoices, sales invoices, ledger accounts, and payments made by account payee cheques.

What were the issues?

Whether purchases from a party, supported by invoices and payments, can be treated as bogus solely due to the absence of transportation bills. The extent to which disallowance should be made for alleged bogus purchases.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

For Appellant: Ms. Shreelata Pardeshi
Hearing: 18.03.2021

O R D E R Per Mahavir Singh, VP: This appeal by the Revenue is arising out of the order of the Commissioner of Income Tax (Appeals)-12, Mumbai (‘CIT(A)’ for short) in appeal no. CIT(A)-12/DCIT- 6(2)(1)/B2-259/2016-17 vide order dated 27.05.2019. The assessment was framed by the DCIT, Circle-6(2)(1), Mumbai u/s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2010-11 vide his order dated 18.03.2016.

2.

The only issue in this appeal is against the order of the ld. CIT(A) in restricting the disallowance of bogus purchase @ 12.5% being bogus purchases of Rs.2,54,737/- which comes to Rs.31,842/-. For this, the Revenue has raised the various grounds, which we need not to reproduce for the sake of brevity.

(A.Y.2008-09) Asst. CIT vs. M/s. Chintamani Jewellery Arcade Pvt. Ltd.

3.

We have heard the rival contentions and gone through the facts and circumstances of the case. Brief facts are that the assessee is in the business of jewellery and dealing in gold ornaments, diamond jewellery and silver articles. During the course of assessment proceedings, the Assessing Officer (A.O. for short) noted that the assessee has debited bogus purchases of Rs.2,54,737/- from one hawala parties, M/s. Krishna Diam as per the information received from the DGIT (Investigation), Mumbai. The A.O. added the entire bogus purchases of Rs.2,54,737/-.

4.

In first appeal, the ld. CIT(A) restricted the disallowance at 12.5% of the bogus purchases and thereby restricted the addition at Rs.31,842/- being 12.5% of Rs.2,54,737/- We note that the assessee before the A.O. as well as before ld. CIT(A) and even now before us stated that the assessee has complete copies of purchase invoice, corresponding sales invoice, ledger account of parties, payment made by account payee cheque, which can be verified from the bank statement and even stock registers. We note that the simple non production of transportation bill, cannot treat the purchases as ingenuine or bogus purchases. We note that the ld. CIT(A) has restricted the disallowance of bogus purchases at 12.5%. We see no infirmity in the order of the ld. CIT(A) and the appeal of the Revenue is dismissed.

5.

In the result, this appeal by the Revenue is dismissed. Order pronounced in the open court on 18.03.2021.

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