ITO 25(1)(2), MUMBAI vs. SOHANLAL PUNARAMJI SANGAR, MUMBAI

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ITA 4510/MUM/2019Status: DisposedITAT Mumbai18 January 2021AY 2009-105 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 no infirmity in the order of the CIT(A) in deleting the disallowance of purchases. The CIT(A) had elaborately considered the submissions and evidence, noting the lack of specific details from the AO regarding the parties and verification for the purchases.

What were the facts?

The Assessing Officer made an addition of Rs. 14,327/- for bogus purchases and an ad-hoc disallowance of Rs. 5,00,000/- from other expenses. The CIT(A) deleted these additions, finding no specific evidence to sustain them. The revenue appealed against the deletion of the bogus purchase disallowance.

What were the issues?

Whether the CIT(A) erred in deleting the disallowance of bogus purchases and ad-hoc disallowance of expenses without sufficient evidence. Whether the assessee discharged the onus to prove the genuineness of purchase transactions.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VIRTUAL COURT

Before: SHRI C.N. PRASAD, HONBLEShri Paras Jain

For Appellant: Shri Paras Jain
For Respondent: Shri Sanjay J. Sethi
Hearing: 18.01.2021Pronounced: 18.01.2021

O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the revenue against order of the Learned Commissioner of Income Tax (Appeals) – 26, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 30.04.2019 for the A.Y. 2011-12.

2. Revenue has raised following grounds in its appeal: - (A.Y: 2009-10) Sohanlal Punaramji Sangar “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of the total amount of bogus purchase transaction to the tune of Rs. 14,327/-.

2.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to consider the fact that the Hawala Dealers had confirmed on oath before the Sales Tax Department that purchases made by the assessee were without supplying the goods.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to consider that the assessee has not discharged the onus upon him to prove the genuineness of the purchase transaction claimed by it.

4.

On the facts and in circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that provision of section 40A(3) are attracted in the case of assessee and 100% bogus purchase amount is to be disallowed.

5.

On the facts and in circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that the decision of Honble Apex Court in the case of N K Proteins Ltd. Vs DCIT in SLP (Civil) No.769/2017 dated 16/01/2017 has confirmed the 100% addition on this issue.

6. The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored.

7.

The appellant craves leave to amend or to alter any ground or add a new ground, which may be necessary.”

3.

Briefly stated the facts are that, the assessee engaged in the business of manufacturing of readymade shirts and selling it to the retails shops filed return of income on declaring income of ₹.4,42,190/- for the A.Y.2009-10 and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the DGIT (Inv.,), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers.

(A.Y: 2009-10) Sohanlal Punaramji Sangar The assessment was reopened U/s. 147 of the Act based on the information received from DGIT(Inv.) Mumbai, that the assessee has availed accommodation entries from various dealers who are said to be providing accommodation entries without there being transportation of any goods. In the reassessment proceedings, the assessee was required to prove the genuineness of the purchases made from various parties referred in Assessment Order.

4. Inspite of issue of numerous notices none appeared before the appellate proceedings. Therefore, Assessing Officer proceeded to complete the assessment u/s. 144 of the Act in order to avoid time bar for completion of assessment. In the re-assessment proceedings, Assessing Officer made an addition in respect of disallowance of purchases of ₹.14,327/- as bogus purchases and adhoc disallowance of ₹.5,00,000/- from other expenses in the Assessment Order. On appeal the Ld.CIT(A) considering the evidences and various submissions of the assessee deleted the addition made by the Assessing Officer. Against this order revenue is in appeal before us challenging the order of the Ld.CIT(A) in deleting the disallowance of purchases.

(A.Y: 2009-10) Sohanlal Punaramji Sangar 5. Ld. Counsel for the assessee reiterated the submissions made before the Ld.CIT(A).

6.

Ld. DR vehemently supported the orders of the Assessing Officer.

7. Heard both sides, perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), I find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and deleted the addition made by the Assessing Officer observing as under: - “5.7. I have considered the submissions carefully. I have also examined the remand report submitted. The AO has not specified the party from whom purchases of Rs. 14,327/- was made and the verification carried out in this regard in the remand proceedings. Further, there is no evidence brought on record in the assessment order or even in remand proceedings to sustain the adhoc disallowance of Rs. 5,00,000/-. No such expenses have been shown to be false or bogus. The copy of the ITR filed is perused and the columns are duly filled in and it is not blank. Copy of audit report has been filed, in the appellate proceedings, though it is not clear whether audit report also part of the online return filed along with the ITR. Now given the fact that in the remand report no specific evidence has been brought on record to sustain the adhoc disallowance and, therefore, the additions made should be deleted and the contentions of the assessee must succeed. In these facts, the Ground of Appeal No. 3 & 4 are allowed and the addition made of Rs 14,327/- and Rs. 5,00,000/- is deleted.”

8. On a careful perusal of the order of the Ld.CIT(A) and the reasons given therein, I do not find any infirmity in the order passed by the (A.Y: 2009-10) Sohanlal Punaramji Sangar Ld.CIT(A) in deleting the disallowance of purchases of ₹.14,327/-. Grounds raised by the revenue are dismissed.

9.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the virtual court on 18.01.2021.

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