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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY, JM & SHRI S. RIFAUR RAHMAN, AM
M/s Ganesh Engineering ITO-28(1)(5), R. No. 325, 3rd floor, Workshop, Plot No. 77, Sector-23, बिधम/ Tower No. 6, Vashi Turbhe, Navi Mumbai Railway Station Complex, Vs. Pin-400 703 Vashi, Navi Mumbai-400 703 स्थायीलेखासं./जीआइआरसं./ PAN No. AAAFG1982H (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant Shri Sanjay J. Sethi, DR : by प्रत्यथीकीओरसे/Respondentby : None सुनवाईकीतारीख/ : 11.01.2021 Date of Hearing घोषणाकीतारीख / : 25.01.2021 Date of Pronouncement आदेश / O R D E R
Per S. Rifaur Rahman, Accountant Member:
The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) - 26 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 11.04.19 for Assessment Year (in short AY) 2010-11.
M/s Ganesh Engineering Workshop 2. At the outset, it is noticed that none appeared on behalf of assessee in spite of calls and even no application for adjournment was moved. On the other hand, Ld. DR is present in the court and is ready with arguments. Therefore, we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.
The brief facts of the case are, based on the information received from the DGIT(Inv) and Maharashtra Sales Tax Department about the accommodation entries obtained by the assessee. Accordingly, assessment was reopened u/s 147 of the Act and subsequently assessment was completed u/s 143(3) r.w.s 147 of the Act by the AO thereby making 100% addition on account of bogus purchases.
Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee, Ld. CIT(A) agreed with the AO that this purchases were not genuine and does not mean that purchases made from these parties are genuine. The courts have held that payment made by cheque itself is not sacrosanct so as to prove M/s Ganesh Engineering Workshop the genuineness of the purchases when the surrounding circumstances are suspect. However, the assessee has shown onwards sales which has not been doubted by the AO. By relying on various case law, he reduced the disallowance @ 12.5% of bogus purchases and partly allowed the appeal of the assessee.
Now before us, the revenue has preferred appeal by raising the grounds of appeal as under:-
(1) "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O. to restrict the disallowance of bogus purchases to 12.5% as against 100% addition made by the Assessing Officer on account of bogus purchases without appreciating the fact that parties from whom these purchases were made to proven accommodation entry providers, as concluded by Sales Tax Authorities pursuant to the investigation carried out by them?"
(2) "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the latest Apex Court decision in the case of N.K. Proteins Ltd vs DCIT (769 of 2017), wherein the Hon'ble Supreme Court has conformed 100% addition made on account of bogus purchases?"
M/s Ganesh Engineering Workshop (3) "The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored".