ACIT CIRCLE-22(1), MUMBAI vs. CHANDRAPRAKASH SHARMA HUF, MUMBAI

PDF · subscribers
ITA 4966/MUM/2019Status: DisposedITAT Mumbai24 February 2021AY 2010-115 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 the Commissioner (Appeals)'s decision to restrict the disallowance to ₹4,00,000, considering the VAT rates and potential VAT savings, to be fair and reasonable. The Tribunal upheld this decision.

What were the facts?

The Assessing Officer reopened the assessment based on information that the assessee, a HUF engaged in civil contracting, had benefited from accommodation bills for purchases worth ₹84,46,199. Notices to the selling dealers returned unserved, leading the AO to disallow 20% of the purchases.

What were the issues?

Whether the disallowance of non-genuine purchases was justified, and if so, to what extent, considering the evidence and the Commissioner (Appeals)'s findings.

Which sections of the Income-tax Act were involved?

Section 147,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY

For Respondent: Ms. Smita Verma

Asstt. Commissioner of Income Tax ……………. Appellant Circle–22(1), Mumbai v/s Chandra Prakash Sharma (HUF) 21, 2nd Floor, Asiya Manzil K.K. Road, Opp. Royal Hotel ……………. Respondent Santacruz (W), Mumbai 400 054 PAN – AAAHS6863B Revenue by : Ms. Smita Verma Assessee by : None Date of Hearing – 03.02.2021 Date of Order – 24.02.2021

O R D E R PER SAKTIJIT DEY. J.M.

The captioned appeal filed by the Revenue arises out of order dated 2nd May 2019, passed by the learned Commissioner of Income Tax (Appeals)–32, Mumbai, for the assessment year 2010–11.

2.

When the appeal was called for hearing, no one was present on behalf of the assessee. Considering the nature of dispute, I proceed to dispose of the appeal ex–parte qua the assessee after hearing the 2 Chandraprakash Sharma (HUF)

learned Departmental Representative and on the basis of materials available on record.

3.

The only dispute is confined to partial relief granted by the learned Commissioner (Appeals) in the matter of addition made on account of non–genuine purchases.

4.

Brief facts are, the assessee a Hindu Undivided Family (HUF) is engaged in the business of civil and labour contractor. For the assessment year under dispute, the assessee filed its return of income on 25th September 2010 declaring income of ` 20,15,087. Assessment in case of the assessee was originally completed under section 143(3) of the Act. Subsequently, the Assessing Officer received information from the Sales Tax Department through the Investigation Wing indicating that the assessee is a beneficiary of accommodation bills provided by certain parties towards purchases worth ` 84,46,199. On the basis of such information the Assessing Officer re–opened the assessment under section 147 of the Act. In course of assessment proceedings, the Assessing Officer called upon the assessee to furnish evidence to prove the purchases. In response, the assessee furnished certain documentary evidences to support its claim that purchases are genuine. However, the Assessing Officer was not convinced with the assessee’s claim. Further, as observed by the Assessing Officer,

3 Chandraprakash Sharma (HUF) notices issued under section 133(6) of the Act to the selling dealers returned back un–served. Therefore, he concluded that the purchases are non–genuine. After rejecting the books of account the Assessing Officer disallowed 20% of the alleged non–genuine purchases, thereby, making an addition of ` 16,89,240. The assessee challenged the aforesaid disallowance before the first appellate authority.

5.

After considering the submissions of the assessee in the context of the facts and material on record, learned Commissioner (Appeals) restricted the disallowance to ` 4,00,000.

6.

I have considered the submissions of the learned Departmental Representative and perused the material on record. It is evident from the assessment order, in the course of assessment proceedings the assessee had furnished the month wise quantitative details of sales and purchases, invoices and delivery challans, ledger account, etc. It further appears that the primary reasons for which the Assessing Officer did not accept the purchases as genuine is, the notices issued under section 133(6) of the Act returned back un–served and further, the assessee failed to produce the concerned parties. However, it is a fact on record that the Assessing Officer was convinced that the goods representing the disputed purchases have entered the stock of the assessee and the assessee has made the corresponding

4 Chandraprakash Sharma (HUF) sales/utilization. Therefore, instead of disallowance the entire purchases, the Assessing Officer has disallowed 20% out of it. As could be seen, learned Commissioner (Appeals) taking note of the fact that the major VAT rate on the goods purchased are 4% and 12.5% and the total amount of VAT which the assessee might have saved by purchasing the goods from unverified sources would amount to ` 3,76,042, has restricted the disallowance to ` 4,00,000. I find the aforesaid decision of learned Commissioner (Appeals) fair and reasonable. Therefore, there is no need to interfere with his order. Accordingly, grounds are dismissed.

7.

In the result, appeal is dismissed. Order pronounced in the open court on 24.02.2021

More judgments on Section 147

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

Recent GST High Court judgments

Search GST case law →