ITO 21(1)(2), MUMBAI vs. BANWARILAL LALLAN VISHWKARMA, MUMBAI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-33, Mumbai ( in short ‘the CIT(A)’) dated 26/03/2019 for the assessment year 2010-11.

The brief facts of the case as emanating from records are : The assessee is engaged in the business of interior works contracts. On the basis of information received from Sales Tax Department, Government of Maharashtra by the Director General of Income Tax (Investigation) that the assessee has indulged in obtaining bogus purchase bills amounting to Rs.68,458/- from declared hawala dealers, the assessment in the case of assessee for assessment year 2010-11 was reopened. In reassessment proceedings, the Assessing Officer made addition of the entire alleged bogus purchases. Aggrieved by the assessment order dated 27/03/2015 passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A). The first appellate authority after considering the submissions of the assessee restricted the addition to Rs.20,537/- i.e. 30% of the bogus purchases. Against the findings of CIT(A), the present appeal has been filed by the Revenue.

Shri Sanjay J. Sethi, representing the Department submitted that though the tax effect involved in the appeal is less than the monetary limit specified vide CBDT Circular No. 17/2019, dated 08-08-2019 but the case of assessee falls under exception specified in para 10(e) of Circular No. 03 of 2018 dated 11/07/2018 and amended on 20/08/2018 . The ld. Departmental Representative submitted that the CIT(A) has erred in not considering the fact that the assessee could not prove genuineness of the purchases. The assessee could neither produce the parties from whom goods were allegedly procured nor the notices issued to the said parties under section 133(6) could be served on the address furnished by assessee. The assessee failed to discharge his onus in proving the genuineness of purchases and the suppliers of goods.

Submissions made by ld.Departmental Representative heard and orders of authorities below examined. A perusal of assessment order shows that the assessee had failed to prove the genuineness of the purchases in question. However, the sales declared by the assessee were not disputed by the Assessing Officer. Without purchase, there cannot be sales. The CIT(A) in first appellate proceedings has observed that the assessee might have procured goods from grey market and had obtained bills from hawala operators. In such like transactions it is only the profit element embedded in the transactions that has to be brought to tax.

No appeal/cross objections filed by the assessee against the order of CIT(A) has been brought to the notice of Bench. In case any appeal/cross objections by the assessee against impugned order of CIT(A) is noticed,, then this order may be recalled and the cross appeals may be listed together for disposal by a common order.

In the result, appeal by the Revenue is dismissed.