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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI RAJESH KUMAR & SHRI PAVAN KUMAR GADALE
आदेश / O R D E R PER PAVAN KUMAR GADALE - JM:
The Assessee has filed the appeal against the order of the CIT(A)-25,Navi Mumbai passed u/s 143(3) r.w.s 147 and 250 of the Act. The assessee has raised the following the grounds of appeal:
Vrajlal Manilal Shah, Mumbai - 2 - “1. The Ld. CIT(A) erred in not granting proper, sufficient and adequate opportunity of being heard to the appellant while framing the appellate order.
2. It is submitted that in the facts and the circumstances of the case and in law, the appellate order so framed be held as bad and illegal, as the same is framed in breach of the principles of natural justice and is passed without application of mind to the facts and the submissions brought on record by the appellant..
3. The Ld. CIT(A) erred in confirming the action of the AO in initiating reassessment proceedings and framing the assessment of the appellant by invoking the provisions of Sec. 147 r.w.s 148.
4. While doing so, the Ld. CIT(A) failed to appreciate that the case of appellant did not fall within the parameters laid down by Sec. 147 r.w.s 148 and the necessary preconditions for initiating and completion thereof were not satisfied.
It is submitted that in the facts and the circumstances of the case and in law the reassessment framed is bad illegal and void.
The CIT(A) erred in confirming the action of the A.O in making addition of Rs. 12,90,170/- u/s 69C of the Act to the income of the appellant on account of alleged unapproved bogus purchases.
The appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.
The Brief facts of the case are that the assessee is engaged in the business of manufacturing of vacuum forming/thermo Forming of plastic items. The assessee has filed the return of income for the A.Y 2010-11 on 30.09.2010 with a total income of Rs.
Vrajlal Manilal Shah, Mumbai - 3 - 6,49,150/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the A.O has received information from DGIT, Mumbai and the Sales Tax Department, Maharashtra that the assessee has received accommodation of bogus purchases bills from the certain entities and dealers. Therefore A.O. issued notice u/s 148 of the Act, in response to the notice the assessee submitted that the return of income filed on 30.09.2010 is treated as compliance to the notice. Further, the notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued. In compliance, the Ld. AR of the assessee appeared from time to time and furnished the details. The assessee called upon to file the details of purchases made from the parties. The A.O found that the assessee has obtained purchase bills of Rs. 12,90,170/- from two dealers and issued notice u/s 133(6) of the Act to the parties to prove the genuineness of the purchases but the notices were returned unserved by the postal authorities as unclaimed. Therefore, the A.O considering the information filed on record and the facts that the assessee could not prove the genuineness of the Vrajlal Manilal Shah, Mumbai - 4 - purchases has made an addition of bogus purchases and assessed the total income of Rs. 19,39,320/- and passed the order u/sec143(3) r.w.s.147 of the Act. Aggrieved by the order of the A.O, the assessee has filed an appeal with the CIT(A). Whereas, the CIT(A) has confirmed the action of the A.O. and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee filed an appeal with the Tribunal.
At the time of hearing, the Ld.AR of the assessee submitted that the Ld.CIT(A) has erred in confirming the addition made by the A.O, though the assessee has submitted bills and other details in the assessment proceedings .
Contra, Ld.DR emphasized that the assessee has not proved the genuineness of the purchases therefore the CIT(A) has rightly confirmed the addition and supported the orders of the lower authorities.
5. We heard the rival submissions and perused the material on record. The sole disputed issue as envisaged by the Ld. AR is in respect of addition of Vrajlal Manilal Shah, Mumbai - 5 - bogus purchases made by the A.O and confirmed by the CIT(A). We find on the perusal of the assessment order, the A.O has not doubted the sales. Whereas, the assessee has made bogus purchases from the dealers, in turn provides savings to the assessee for nonpayment of taxes. We considering the facts, circumstances and series of decisions of the Hon’ble Tribunal in the similar cases and precedents, where the income is estimated @12.50% of value of bogus transactions was accepted. Accordingly, we restrict the addition to the extent of 12.50% of bogus purchases and modify the Ld.CIT(A) order sustaining the addition to the extent of 12.50% and partly allow the grounds of appeal
of the assessee.
6. In the result the appeal filed by the assessee is partly allowed.