ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(1), MUMBAI vs. FREE INDIA ASSURANCE SERVICES LTD., MUMBAI

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ITA 5268/MUM/2019Status: DisposedITAT Mumbai11 March 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 upheld the CIT(A)'s order, finding it to be in line with jurisdictional High Court decisions. The assessee had accepted the restricted addition.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted an addition on account of bogus purchases to 12.5%. The Assessing Officer had disallowed the entire purchases of Rs. 4,83,525/- for failing to prove their genuineness.

What were the issues?

Whether the entire amount of alleged bogus purchases should be disallowed or if a partial disallowance is permissible when the assessee has accepted the sales.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

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

For Appellant: Shri Subobdh Ratnaparkhi
Hearing: 08/03/2021Pronounced: 11/03/2021

आयकर अपील�य अ�धकरण मुंबई पीठ “एस एम सी”, मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI �ी �वकास अव�थी, �या�यक सद�य एवं �ी नबीन कुमार �धान, लेखा सद�य के सम� BEFORE VIKAS AWASTHY, JUDICIAL MEMBER & SHRI N.K.PRADHAN, ACCOUNTANT MEMBER आअसं. 5268/मुं/2019 (�न.व. 2011-12) (A.Y.2011-12) Asstt. Commissioner of Income Tax-6(3)(1), Room NO.506, 5th Floor, Aaykar Bhavan, M.K.Road, Mumbai 400 020. ...... अपीलाथ� /Appellant बनाम Vs. Free India Assurance Services Ltd., 209, Prime Plaza, B.M.Road, Elphinstone (East), Mumbai – 400 013 PAN: AAACF3879K ..... ��तवाद�/Respondent Assessee by : Shri Subobdh Ratnaparkhi Revenue by : Shri Sanjay J. Sethi सुनवाई क� �त�थ/ Date of hearing : 08/03/2021 घोषणा क� �त�थ/ Date of pronouncement : 11/03/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M:

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-12, Mumbai ( in short ‘the CIT(A)’) dated 11/04/2019 for the assessment year 2011-12.

2.

Shri Sanjay J. Sethi, representing the Department submitted that the assessee has indulged in bogus purchases. Since, the assessee failed to discharge its onus in proving genuineness of the purchases and suppliers, the Assessing Officer made

2 आअसं. 5268/मुं/2019 (�न.व. 2011-12) (A.Y.2011-12) addition of the entire such purchases aggregating to Rs.4,83,525/-. In the first appeallate proceedings, the CIT(A) restricted the addition to 12.5% on bogus purchases. The ld.Departmental Representative submitted that the entire bogus purchases should be disallowed in line with the decision of Hon'ble Supreme Court of India in the case of N.K. Proteins Vs. DCIT, 250 taxaman 22.

3.

Per contra, Shri Subobdh Ratnaparkhi appearing on behalf of the assessee supported the findings of CIT(A). The ld.Authorized Representative of the assessee submitted that the assessee is engaged in multiple activities. The disallowance on account of bogus purchases has been made by the Assessing Officer in respect of trading of consumer product business carried out by the assessee. The ld.Authorized Representative of the assessee submitted that the assessee made purchases of water flasks aggregating to Rs.4,83,525/- from M/s. Rushabh Sales Corporation. The assessee furnished various documents viz. GRN, purchase invoices, bank statement, etc. to prove genuineness of purchases. The assessee further furnished reconciliation statement of purchases and sales. Thus, the assessee could show one to one correlations with the purchases and sales. Despite that the Assessing Officer made addition of the entire purchases from M/s. Rushabh Sales Corporation terming it to be bogus. The CIT(A) after appreciating the evidences furnished by the assessee restricted the addition to 12.5% of the total purchases. Since, the amount involved was miniscule the assessee accepted the addition and decided not to file further appeal. The ld.Authorized Representative of the assessee asserted that it is a case where no addition should have been made in the light of documents furnished by the assessee and the decision in the case of CIT vs. Century Plywood India Ltd., 262 Taxaman 13(SC).

4.

Both sides heard, orders of authorities below examined. The assessee had made purchases to the tune of Rs.4,83,525/- from M/s. Rushabh Sales Corporation. Since, assessee failed to prove genuineness of the said dealer and the transactions,

3 आअसं. 5268/मुं/2019 (�न.व. 2011-12) (A.Y.2011-12) the Assessing Officer held that the purchases are bogus and made addition of the entire such purchases under section 69C of the Act. In first appeal, the CIT(A) after recording the fact that the sales declared by the assessee has been accepted by Assessing Officer, the CIT(A) restricted the addition to Rs.60,441/- i.e. 12.5% of the alleged bogus purchases. We find that the order of CIT(A) is in line with the decision of Hon’ble Jurisdictional High Court in the case of PCIT vs. Paramsakhti Distributors Pvt. Ltd. in Income Tax Appeal No.413 of 2017 decided on 15/07/2019. The assessee has accepted the addition. We find no infirmity in the impugned order, the same is upheld and the appeal by Revenue is dismissed being devoid of merit.

5.

In the result, appeal by the Revenue is dismissed.

Order pronounced in the open court on Thursday, the 11th day of March, 2021.

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