SHRI LAXMIKANT ASUBHAI GALA,MUMBAI vs. ITO, WARD-3(5), MUMBAI

PDF · subscribers
ITA 5203/MUM/2019Status: DisposedITAT Mumbai08 March 2021AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the entire alleged bogus purchases could not be added when sales were accepted, and only the profit element should be taxed. The addition was restricted to 12.5% of the alleged bogus purchases, to which the assessee's representative agreed.

What were the facts?

The assessee's business of manufacturing labels and stickers was subject to reassessment based on information regarding bogus purchase bills from suspicious dealers. The Assessing Officer made an addition for the entire alleged bogus purchases as the assessee did not appear during assessment proceedings.

What were the issues?

Whether the entire amount of alleged bogus purchases can be added to income when sales are accepted, and the issue of non-cooperation during assessment proceedings.

Which sections of the Income-tax Act were involved?

Section 144,Section 147

AI-generated summary — verify with the full judgment below

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

Before: VIKAS AWASTHY & SHRI N.K.PRADHANShri Laxmikant Asubhai Gala,

Hearing: 04/03/2021Pronounced: 08/03/2021

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Thane ( in short ‘the CIT(A)’) dated 06/06/2019 for the assessment year 2009-10.

2.

Ms.Ruchi Rathod appearing on behalf of the assessee submitted that the assessee is engaged in manufacturing of labels and stickers. The assessment year 2009-10 was reopened on the basis of information received by the DGIT (Inv),

2 आअसं. 5203/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)

Mumbai from the Sale Tax Department, Government of Maharashtra. In the reopened proceedings, the Assessing Officer held that the assessee has obtained bogus purchase bills aggregating to Rs.2,75,713/- from suspicious dealers. The assessee was never served with notice during the assessment proceedings.. The Assessing Officer in ex-part proceedings made addition of the entire alleged bogus purchases. Aggrieved by the assessment order dated 06/02/2015 passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A). The assessee filed evidences in the form of ledger accounts of the suppliers before the CIT(A) to prove genuineness of the purchases. However, the same was rejected by the CIT(A). Hence, the present appeal by the assessee. The ld.Authorized Representative of the assessee submitted that the sales declared by the assessee has been accepted, therefore, the entire alleged bogus purchases cannot be added. Although the purchases made by assessee are genuine and addition should be deleted in entirety, however, without prejudice to the primary contention, the addition may be restricted to the G.P declared by the assessee or any reasonable rate.

3.

Per contra, Shri Sanjay J. Sethi, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. The ld.Departmental Representative submitted that the assessee did not co-operate in assessment proceedings. Despite repeated notices the assessee failed to appear before the Assessing Officer, hence, the Assessing Officer was constrained to pass assessment order under section 144 of the Act. No documentary evidence was produced by the assessee either before the Assessing Officer or before the CIT(A) to substantiate genuineness of the purchases/suppliers. Since, the assessee failed to discharge his onus, the authorities below have rightly made addition of the entire bogus purchases.

3 आअसं. 5203/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)

4.

We have heard the submissions made by rival sides and have examined the orders of authorities below. A perusal of the assessment order shows that the assessee has failed to appear before the Assessing Officer despite several notices. Since, no evidence was filed by the assessee before the Assessing Officer to prove genuineness of the purchases and the suppliers, the Assessing Officer made addition of the entire alleged bogus purchases. It is relevant to mention here that the Assessing Officer accepted the sales turnover declared by the assessee. Thus, in such circumstances the entire alleged bogus purchases cannot be added. Without purchases there cannot be sales. The assessee might have procured goods from grey market and thereafter, obtained matching bogus purchase bills from hawala operators. It is only the profit element embedded in such bogus purchases that has to be brought to tax. Taking into consideration entirety of facts, we propose to restrict the addition at 12.5% of the alleged bogus purchases. The ld.Authorized Representative of the assessee has agreed for the addition @12.5% on the alleged bogus purchases. The addition is restricted to Rs.34,465/- i.e. 12.5% of the total bogus purchases. The impugned order is modified, accordingly and the appeal by the assessee is partly allowed, in the terms aforesaid.

5.

In the result, appeal by assessee is partly allowed.

Order pronounced in the open court on Monday the 08th day of March, 2021.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →