ITO-29(2)(5), MUMBAI vs. SHRI. PRASHANT R SHAH, MUMBAI

The dispute in the present appeal is confined to partial relief granted by the learned Commissioner (Appeals) in the matter of 2 Shri Prashant R. Shah additions made by the Assessing Officer on account of alleged non– genuine purchases.

Brief facts, which are more or less common in both the assessment years are, the assessee is an individual and carries on business in supplying and trading of mechanical and electrical goods through his proprietary concern M/s. Shah Trading Co. For the assessment years under consideration, the assessee filed his return of income in terms of section 139(1) of the Income Tax Act, 1961 (for short “the Act”). Initially, the returns filed by the assessee were processed under section 143(1) of the Act. Subsequently, the Assessing Officer received information from DG (Inv.), that purchases worth ` 5,83,584, in assessment year 2010–11 and ` 23,66,504, in assessment year 2009–10 were non–genuine as the concerned selling dealers are providing accommodation bills. On the basis of such information, the Assessing Officer re–opened the assessments under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer called for certain information from the assessee to prove the purchases. As observed by the Assessing Officer, the assessee did not submit VAT payment receipt and Sales Tax payment receipt, consumption details of goods purchased, toll receipts, insurance or goods in transit, dispatch vouchers, etc. Therefore, he treated the entire purchase as non–genuine and added them under 3 Shri Prashant R. Shah section 69C of the Act as unexplained expenditure. Of–course, the Assessing Officer had also disallowed certain expenditure claimed by the assessee on ad–hoc basis. However, in the present appeals, I am not concerned with that issue as it is not the subject matter of appeals. Be that as it may, contesting the additions made on account of non–genuine purchases, the assessee preferred appeals before learned Commissioner (Appeals).

After considering the submissions of the assessee in the context of facts and material on record and evidences produced, learned CIT(A) deleted the additions made by the Assessing Officer.

The learned Departmental Representative relying upon the observations of the Assessing Officer submitted that since the assessee failed to prove the genuineness of purchases, the Assessing Officer was justified in disallowing the purchases.

Raising a preliminary objection, the learned Counsel for the assessee submitted that the appeals filed by the Department are not maintainable due to low tax effect. He submitted, in the facts of the present appeals, the re–opening of assessment was not on the basis of any information received from external agencies. Therefore, the appeals are not covered under any of the exceptions provided in CBDT

Without prejudice, the learned Counsel for the assessee submitted, before the first appellate authority the assessee had submitted all supporting evidences such as party wise ledger account of suppliers, purchase invoices, corresponding sale invoices, statement showing co–relation of purchases with corresponding sales, bank statement showing payment made through cheque, certificate issued by the bank showing payment made to seller/supplier, etc. He submitted, the evidences produced by the assessee were forwarded to the Assessing Officer for enquiry and examination. Drawing our attention to the remand report furnished by the Assessing Officer he submitted, the Assessing Officer has found nothing wrong with the evidences filed by the assessee, hence, has not made any adverse comment. Thus, he submitted, once the assessee had proved the genuineness of purchases, learned Commissioner (Appeals) has rightly deleted the additions.

I have carefully considered the rival submissions and perused the material on record. As regards the preliminary objection regarding the maintainability of the appeals, on a perusal of the assessment orders and other materials on record, I do not find any observation by the Assessing Officer to demonstrate that the re–opening of assessment is on the basis of any information received from external agencies. Rather, the assessment orders clearly reveal that relying upon the information received from the DG (Inv.), Mumbai, the Assessing Officer has re–opened the assessment. That being the case, these appeals are not protected under the exceptions provided as per CBDT Circular no.17/2019, dated 8th August 2019. Therefore, the tax effect on the amount disputed in these appeals being below the monetary limit of ` 50 lakh, they are not maintainable and have to be dismissed as withdrawn.

Even, otherwise also, the assessee has a strong case on merits. Though, the Assessing Officer has treated certain purchases as non– genuine, before the first appellate authority the assessee furnished various supporting evidences to prove the genuineness of such purchases. It is a fact that the evidences furnished by the assessee were forwarded to the Assessing Officer for enquiry and verification. On a perusal of remand report dated 3rd May 2016, sent by the Assessing Officer to learned Commissioner (Appeals), it is very much

In the result, appeals are dismissed. Order pronounced in the open court on 17.12.2020