DCIT 15(2)(2), MUMBAI vs. INDOCEN ELECTRONIC SYSTEM P.LTD, NAVI MUMBAI

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ITA 6134/MUM/2018Status: DisposedITAT Mumbai13 October 2020AY 2010-114 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 upheld the CIT(A)'s order, finding no distinction in facts from a previous assessment year where a similar restriction was applied. The Revenue's appeal was dismissed as lacking merit.

What were the facts?

The assessee, engaged in repair of electronic equipment, was subject to reassessment based on information about bogus purchase bills totaling Rs. 37,99,718/- from hawala dealers. The Assessing Officer made a full addition, but the CIT(A) restricted the disallowance to 12.5%.

What were the issues?

Whether the CIT(A) erred in restricting the disallowance on bogus purchases to 12.5% instead of 100%, and if the facts of the current assessment year are distinguishable from a prior year.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY & SHRI RAJESH KUMAR

For Appellant: Shri Uodal Raj Singh
For Respondent: Shri Ashok Puri
Hearing: 13/10/2020Pronounced: 13/10/2020

This appeal by the Revenue is directed against the order of Commissioner of Income Tax - 24, Mumbai (in short ‘the CIT(A)’) dated 19.07.2018.

2.

The brief facts of the case as emanating from the records are : The assessee is engaged in the business of repair of PCB and high-tech electronic and communication equipments. Reassessment proceedings were initiated against the assessee under Section 147 r.w.s. 148 of the Income Tax Act, 1961

M/s. Indocen Electronic System Pvt. Ltd. (hereinafter referred to as ‘the Act’) on the basis of information received from Maharashtra Sales Tax Department. As per the information received, the assessee had obtained bogus purchase bills to the tune of Rs.37,99,718/- from the following hawala dealers :- i) R.K. Enterprise - Rs.18,53,696 ii) Rumggt Enterprises - Rs. 6,50,104 iii) Grifton India Riddhi Enterprises - Rs.12,95,918 Total Rs.37,99,718 The Assessing Officer made addition of the entire alleged bogus purchase. Aggrieved against the assessment order dated 20.12.2017 passed under Section 143(3) r.w.s. 147 of the Act, the assessee filed appeal before the CIT(A).

The CIT(A), following its own order in Assessment Year 2009-10, restricted the disallowance on account of bogus purchase to 12.5%. Against the findings of CIT(A), the Revenue is in appeal before the Tribunal.

3.

Shri Uodal Raj Singh representing the Department vehemently defended the assessment order and prayed for modifying the findings of CIT(A) to make 100% disallowance in respect of bogus purchase. The ld. DR submitted that the CIT(A) merely followed its own order of Assessment Year 2009-10 without examining the facts in the impugned assessment year.

4.

On the other hand, Shri Ashok Puri appearing on behalf of the assessee vehemently supported the order of CIT(A). The ld. AR submitted that the facts in impugned assessment year are similar to Assessment Year 2009-10. The ld. AR prayed for dismissing the appeal of Revenue.

M/s. Indocen Electronic System Pvt. Ltd.

5.

We have heard the submissions made by rival sides and have examined the orders of the authorities below. The case of Revenue is that assessee has indulged in obtaining accommodation entries from hawala dealers without actual purchase of goods. We observe that the CIT(A) in the impugned order has specifically mentioned that the issue raised in the present appeal is similar to the one decided in Assessment Year 2009-10. In the immediately preceding assessment year, CIT(A) had restricted the disallowance in respect of bogus purchases to 12.5%. Following the same criteria, CIT(A) restricted the disallowance on account of bogus purchase in the impugned assessment year to 12.5%. The ld. DR has not been able to distinguish the facts in two assessment years. We find no infirmity in the impugned order. Accordingly, the same is upheld and the appeal of Revenue is dismissed sans merit.

6.

No cross appeal by the assessee against the impugned order of CIT(A) has been brought to our notice. In case, there is any cross appeal by the assessee, then, the present order may be recalled and both the appeals, i.e. appeal by the assessee and appeal of the Revenue have to be decided together.

7.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on Tuesday, the 13th October, 2020.

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