ITO 17(2)(4), MUMBAI vs. SHRI. NARENDRA, MUMBAI

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ITA 571/MUM/2019Status: DisposedITAT Mumbai04 March 2020AY 2009-104 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 Commissioner (Appeals)'s decision to restrict the disallowance on non-genuine purchases to 12.5%. This was because the Assessing Officer had not doubted the assessee's sales, implying only the profit element in the purchases should be considered.

What were the facts?

The Assessing Officer reopened the assessment based on information that purchases from a specific vendor were non-genuine. The assessee failed to provide any evidence to substantiate these purchases during assessment proceedings.

What were the issues?

Whether the entire non-genuine purchases should be disallowed or only the profit element embedded therein, especially when sales are not doubted.

Which sections of the Income-tax Act were involved?

Section 147,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”BENCH, MUMBAI

Before: SHRI SAKTIJIT DEYAND SHRI G. MANJUNATHA

For Respondent: Shri Saurabh Deshpande

The captioned appeal has been filed by the Revenue challenging the order dated 12th November 2018, passed by the learned Commissioner of Income Tax (Appeals)–58, Mumbai, pertaining to the assessment year 2009–10.

2.

The dispute in the present appeal is confined to the decision of learned Commissioner (Appeals) in restricting the disallowance on 2 Shri Narendra account of non–genuine purchases to 12.5% as against the full addition made by the Assessing Officer.

3.

When the appeal was called for hearing, no one was present on behalf of the assessee to represent the case. There is no application seeking adjournment either. Accordingly, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record.

4.

Brief facts are, the assessee is an individual. For the assessment year under dispute, the assessee filed his return of income on 28th September 2009, declaring income of ` 9,88,430.The return of income filed by the assessee was initially processed under section 143(1) of the Act. Subsequently, on the basis of information received from Sales Tax Department through the office of the DGIT (Inv.), Mumbai, that purchases worth ` 2,33,714, claimed to have been made during the year from Shri Sai Trading Co. is non genuine, as, the concerned party has been identified as a hawala operator providing accommodation bills, the Assessing Officer re–opened the assessment under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer issued statutory notices along with questionnaire requiring the assessee to furnish necessary details to prove the purchases. However, as alleged by the Assessing Officer, the assessee

3 Shri Narendra did neither complied even to a single notice issued by the Assessing Officer nor he appeared in the assessment proceedings,. Thus, the Assessing Officer proceeded to complete the assessment under section 144 of the Act to the best of his judgment. On the basis of material available on record, the Assessing Officer ultimately concluded that the purchases worth ` 2,33,714 are non–genuine and accordingly added back to the income of the assessee. The assessee contested the aforesaid addition before the first appellate authority. However, before learned Commissioner (Appeals) also, the assessee did not appear in person, but made his submissions through e–mail. After considering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals) restricted the addition to 12.5% of the non–genuine purchases.

5.

We have considered the submissions of learned Departmental Representative and perused the material on record. No doubt, in the course of assessment proceedings the assessee has neither appeared nor furnished any evidence to prove the genuineness of purchases made from the declared source. However, the Assessing Officer has not doubted the sales effected by the assessee. That being the case, the entire purchases cannot be disallowed and added back to the income of the assessee, but only the profit element embedded in such purchases can be considered for addition. In the aforesaid view of the 4 Shri Narendra matter, we are in agreement with the learned Commissioner (Appeals) in restricting the addition to 12.5% of the non–genuine purchases. Accordingly, we uphold the order of learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.

6.

In the result, appeal stands dismissed. Order pronounced in the open Court on 04.03.2020

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