ITO 20(2)(2), MUMBAI vs. MOHAMEDI KANCHWALA, MUMBAI

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ITA 1249/MUM/2016Status: DisposedITAT Mumbai09 June 2021AY 2010-113 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, stating that the issue was covered by a decision in the assessee's own case for an earlier assessment year. The revenue's appeal was dismissed.

What were the facts?

The Assessing Officer (AO) disallowed purchases of Rs. 55,44,539/- due to non-receipt of replies from parties and information from the Sales Tax department about bogus purchases. The CIT(A) restricted the disallowance to 5% of the alleged bogus purchases, following a previous year's order.

What were the issues?

Whether the disallowance for bogus purchases should be restricted to 5% as per the CIT(A)'s order, following precedent in the assessee's own case.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA, AM & VIKAS AWASTHY, JM

For Appellant: Ms. Amrita Singh
For Respondent: Shri Rajesh Gupta
Hearing: 12.04.2021Pronounced: 09.06.2021

O R D E R Per Shamim Yahya, A. M.:

This appeal by the revenue is directed against the order of the learned Commissioner of Income Tax (Appeals)-32, Mumbai (‘ld.CIT(A) for short) dated 16.12.2015 and pertains to the assessment year (A.Y.) 2010-11.

2.

The grounds of appeal read as under:

1. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in granting relief of Rs.52,67,312/- by restricting the addition @5% (GP declared by the assessee) of total purchases from hawala parties without any actual purchase." 2. " On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in ignoring the fact that the assessee failed to discharge its burden that alleged bogus parties involved were existent and genuine. 3. " On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in finding that corresponding sales shown out of material involved in bogus purchase without mentioning how this and with what evidence before him such finding was arrived at. If such evidence was given (as corresponding sales) the same should have been remanded to the A.O. for his examination and comments." 4. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored.

3.

The brief facts of the case are that the assessee is engaged in the business of trading and labour job in fittings, Aluminium Sheets, etc. During the course of assessment proceedings, the AO noted that assessee has claimed purchases at Rs.

2 1249/Mum/2016 1,78,65,386/-. In order to verify the genuineness of the purchases, AO issued notices u/s 133(6) to several parties. Reply from four parties were not received as the envelopes were returned back as ‘not known’. In this regard, AO also noted that Sales tax department has also made enquiries and found that assessee is engaged in bogus purchases, The AO proceeded to make the disallowances of Rs.55,44,539/-.

4.

Upon assessee appeal Ld.CIT(A) referred to order of the earlier assessment year, he held that disallowances is to be restricted to 5%. He held as under:- This is directed against the AO disallowing the entire of the bogus purchases as discussed (supra). The AR submitted that on this issue my predecessor in office, in the appellant’s own case for AY 2011-12 has restricted the disallowance to 5% of the alleged bogus purchase. I have perused the order of my predecessor the appellant’s own case for AY 2011-12 and I find that the addition on account of bogus purchases has been restricted to 5%. I also note that the total purchases debited by the appellant for the full year is Rs.17865386/- out of which the AO has disallowed Rs.5544539/- which works out to 31%. In other words 31% of the total purchases have been added back. This would give an absurd result as far as the G.P. is concerned. In the circumstances, respectively following the decision of my predecessor the disallowance on account of bogus purchases is restricted to Rs.277227/- which is 5% of the alleged bogus purchase of Rs.5544539/-. The appellant gets a relief of Rs.52,67,312/-.

5.

Against this order revenue is in appeal before the ITAT. ITAT vide its ex-parte order, decided the matter vide order dated 28/11/2019.

6.

Subsequently, the Tribunal recalled the order vide order dated 03/02/2021 pursuant to the recall, now this appeal is before us.

7.

We have heard both the parties and perused the records. The Ld. Counsel of the assessee submitted that the issue is covered in favour of the assesee by the decision of ITAT in assessee’s own case for earlier year in for AY 2011-12 vide order dated 21/04/2017. In this order, ITAT has confirmed the order of Ld.CIT(A) and 5% of disallowances confirmed by the Ld.CIT(A) was upheld.

8.

The Ld. DR could not dispute the proposition that the ITAT in assessee’s own case has decided the issue by upholding the order of Ld.CIT(A) on similar facts. Hence, respectfully following the co-ordinate bench order in assessee’s own case, we

3 1249/Mum/2016 do not find any infirmity in the order of the Ld.CIT(A). Accordingly, we uphold the order. This appeal stands dismissed.

9.

In the result, this appeal by the revenue stands dismissed.

Order pronounced in the open court on 09 .06.2021

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