SHRI NAJMUL HASAN CHOUDHARI,MUMBAI vs. ITO, 26 (2)(3), MUMBAI

These two appeals by the assessee are directed against the orders of Commissioner of Income Tax (Appeals)-38, Mumbai (in short ‘the CIT(A)’) for the assessment years 2010-11 and 2011-12, respectively. Both the impugned orders are of even date i.e. 28/11/2018. Since the issue involved in both these appeals is identical, these appeals are taken up together for adjudication and are disposed off by this common order.

The brief facts of the case as emanating from records are: The assessee had filed his return of income for the impugned assessment year declaring total income of Rs.4,78,360/-. The return of the assessee was processed under section 143(1) of the Income Tax Act, 1961 ( in short ‘the Act’). On the basis of information received from Sales Tax Department, Government of Maharashtra by DGIT(Investigation), Mumbai the assessment for assessment year 2010-11 in the case of assessee was reopened. As per information received assessee had obtained bogus purchase bills from various declared hawala dealers aggregating to Rs.1,64,17,512/-. Notice under section 148 of the Act dated 03/03/2015 was served on the assessee. The assessee failed to respond to the notice. No return in response to the notice under section 148 of the Act was filed by the assessee. Hence, Assessing Officer completed the assessment under section 144 of the Act. The Assessing Officer in order to verify genuineness of the purchases issued notices under section 133(6) to the alleged suppliers of the goods to the assessee. The said notices were received back unserved with remarks “Left” or “unknown”. The Assessing Officer made addition of Rs.20,52,189/- i.e. 12.5% of non-genuine purchases. Aggrieved by the assessment order dated 12/02/2016 the assessee filed appeal before CIT(A). Before the CIT(A) again the assessee or the Authorized Representative for the assessee failed to appear. The CIT(A) upheld the assessment order and dismissed the appeal of the assessee in ex-parte proceedings. Hence, present appeal has been initiated by the assessee.

Shri Ajay Pratap Singh, representing the Revenue vehemently defended the impugned order. The ld. Departmental Representative submitted that the assessee has failed to prove genuineness of the purchases and the suppliers of the goods. The notices sent to the suppliers were received back unserved. The ld. Departmental Representative further contended that the Assessing Officer / CIT(A) in a fair manner has restricted the disallowance on bogus purchases to 12.5% of such purchases. The ld. Departmental Representative prayed for dismissing the appeal of the assessee .

Submissions made by ld. Departmental Representative heard and orders of authorities below examined. A perusal of the assessment order and the order of the CIT(A) reveal that the assessee has not co-operated with the authorities below. Despite service of notice under section 148 of the Act and subsequent notices under section 143(2) and 142(1) of the Act, the assessee has failed to appear before the Assessing Officer. Thereafter, the Assessing Officer issued show cause notice for levy of penalty under section 271(1)(b) of the Act. The assessee even failed to respond to penalty notice. Consequently, penalty under section 271(1)(b) of the Act was levied vide order dated 15/01/2016. Since the assessee failed to respond to the statutory notices issued by Assessing Officer from time to time, the Assessing Officer was constrained to invoke the provisions of section 144 of the Act and complete assessment in an ex-parte proceedings. Thereafter, in first appellate proceedings the assessee again failed to appear before the CIT(A) despite service of notices. A perusal of para-3 of the impugned order would show that four notices were issued to the assessee on different dates i.e. 10/07/2018, 15/10/2018, 29/10/2018 and 15/11/2018. The assessee did not respond to any of the notices and failed to attend the proceedings before CIT(A). The conduct of the assessee shows that the assessee is recalcitrant and has no respect for the Statutory Authorities.

The assessee is a trader. Information was received from Sales Tax Department, Government of Maharashtra that assessee has obtained bogus purchase bills from the following parties:

Taking into consideration the nature of assessee’s business, I am of considered view that estimation of GP at 12.5% is on higher side. The ends of justice would meet if the GP on bogus purchases is restricted to 8%. The impugned order is modified in the terms aforesaid and appeal of the assessee is partly allowed.

The facts in both the appeals are pari-materia. Therefore, the findings given by us while adjudicating appeal for assessment year 2010-11 would mutatis mutandis apply to assessment year 2011-12 as well. Consequently, the appeal by the assessee is partly allowed.

In the result, both appeals by the assessee are partly allowed.