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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI. SHAMIM YAHYA & SHRI VIKAS AWASTHY
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Mumbai ( in short ‘the CIT(A)’) dated 31/07/2018 for the assessment year 2011-12.
The brief facts of the case as emanating from records are: The assessee is engaged in retail trading of kids wear and accessories. On the basis of information received by the DGIT(Invn) from the Sales Tax Department, Government of 2 आअसं. 7091/मुं/2018 (�न.व. 2010-11) ITA NO.7091/MUM/2019(A.Y.2010-11)
Maharashtra, the assessment in the case of assessee was reopened. As per the information received, the assessee has obtained bogus purchase bills aggregating to Rs.2,11,58,438/- from following hawala operators:
S.No. Name of Party Amount.(Rs.) 1. Sakhti Trading Co. 1,86,49,463/- 2. M/s.Maruti Impex 25,08,975/- Total 2,11,58,438/- During the course of assessment proceedings, the assessee failed to substantiate trail of goods and the genuineness of suppliers. Since, the sales declared by the assessee were accepted by the Assessing Officer, the Assessing Officer concluded that the assessee might have made purchases from grey market and has obtained matching bogus bills from the bogus entry providers. The Assessing Officer further observed that in assessment year 2008-09 the additions were made in assessee’s case on account of transactions with hawala operators. The addition of 25% was accepted by the assessee. The Assessing Officer following the same criteria made addition by estimating profit @ 25% on bogus purchases. Aggrieved by the assessment order dated 29/03/2016 passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A), inter-alia assailing the addition on account of bogus purchases and in not allowing deduction of brought forward business losses of Rs.48,91,792/. The First Appellate Authority after examining the facts of case and considering the submissions of the assessee granted part relief to the assessee by restricted the G.P on bogus purchases to 12.5%. Now the assessee is in second appeal before the Tribunal, impugning the additions confirmed by the CIT(A).
Shri Gurbinder Singh representing the Department vehemently supported the impugned order and prayed for dismissing the appeal by assessee. The 3 आअसं. 7091/मुं/2018 (�न.व. 2010-11) ITA NO.7091/MUM/2019(A.Y.2010-11)
ld.Departmental Representative submitted that the assessee has failed to discharge his onus in proving the genuineness of purchases and the dealers.
We have heard the submissions made by ld.Departmental Representative and have examined the orders of authorities below. The assessee in appeal has raised seven grounds. The grounds No.1 to 4 of the appeal are in respect of bogus purchases. The contention of the assessee before the first appellate authority is that the assessee has been able to prove genuineness of purchases by furnishing various documents. The assessee has further contended that while determining the purchases the authorities below has failed to consider purchase returns and the stock in hand available at the year end. The availability of stock in hand would nullify the impact of purchases on profit. The assessee has further contended that in the P&L Account only net purchases are reflected. Taking in to consideration entirety of facts we deem it appropriate to restore grounds No.1 to 4 of the appeal to the file of Assessing Officer for fresh consideration after affording reasonable opportunity of hearing to the assessee, in accordance with law. Consequently, grounds No. 1to 4 of the appeal are allowed for statistical purpose.
In ground No.5 of the appeal the assessee has contested that the Assessing Officer has erred in not allowing deduction against brought forward business losses and unabsorbed depreciation. We find that the assessee in grounds of appeal before the First Appellate Authority has raised specific issues as ground No.5, However, the same has not been adjudicated by the CIT(A). We further observe that in grounds of appeal before the CIT(A), the assessee has mentioned that rectification application has been filed before the Assessing Officer to allow deduction of brought forward business loss. The fate of said application is not known. We direct the Assessing Officer to dispose of the said rectification application filed by the assessee within a period of six months from the date of receipt of this order, if the same is still
4 आअसं. 7091/मुं/2018 (�न.व. 2010-11) ITA NO.7091/MUM/2019(A.Y.2010-11) pending for disposal. Consequently, ground No.5 of the appeal is allowed for statistical purpose.
The ground No.6 and 7 of the appeal are general in nature, hence, require no adjudication.
In the result, appeal by the assessee is allowed for statistical purpose in the terms aforesaid.
Order pronounced in the open court on Friday, the 12th day of March, 2021.