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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI N.K.PRADHANShri Naresh C. Mistry,
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against order of Commissioner of Income Tax (Appeals)-2, Pune (in short ‘the CIT(A)’) for the assessment years 2009-10.
The appeal by the assessee is time barred by 260 days. The assessee has filed an application seeking condonation of delay, supported by an affidavit. The AR submitted that the delay occurred in filing of the appeal on
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account of ill health of the assessee and for the reason that the assessee was not aware of the order passed by CIT(A). The order from CIT(A) was received by one of the employees of the assessee, who had later left the service of the assessee. The ld. Authorized Representative for the assessee contended that the assessee came to know about the impugned order when he visited the Assessing Officer on 21/12/2018. The assessee was served with demand notice and the order giving effect. The assessee immediately thereafter, searched for the order of CIT(A) at his premises. After locating the impugned order, the assessee filed appeal before the Tribunal on 07/11/2019 with a delay of 260 days. The ld. Authorized Representative for the assessee submitted that the delay in filing of the appeal was not deliberate. The assessee was under bonafide impression that the demand in the case of assessee was dropped consequent to the appeal before the CIT(A). The ld. Authorized Representative for the assessee further prayed that the delay of 260 days in filing of the appeal may be condoned in the light of judicial pronouncements of the Hon’ble Jurisdictional High Court and the Hon’ble Supreme Court of India. To support his contentions the ld. Authorized Representative for the assessee placed reliance on the following decisions:
(1) Taj Sats Air Catering vs. CIT, Income Tax Appeal NO.1096 of 2012
decided on 13/08/2012.
(2) Prima Paper and Handling Pvt. Ltd. vs. CIT, 141 taxamann.com 240(Bom)
(3) Ram Nath Sao Alias Ram Nath Sahu & Ors. Vs. Gobardhan Sao & Ors. 2002(3) SCC 195.
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Shri R. Bhoopathi, representing the Department, vehemently opposed the application of assessee seeking condonation of delay in filing of the appeal. The ld. Departmental Representative submitted that the assessee has not been able to show sufficient reasons causing delay in filing of the appeal. The explanation furnished by the assessee is generic and not specific.
We have heard the submissions made by rival sides on condonation of delay in filing of the appeal The appeal has been filed by the assessee beyond period of limitation. The delay is attributed to the ill health of the assessee. The assessee has filed medical records along with affidavits to support his contentions. Further, the assessee has pleaded that the delay is on account of negligence on the part of his employee, who after receiving the order from CIT(A) has not informed the assessee and later left the job. After examining the contents of the affidavit we are satisfied that the delay in filing of the appeal is not deliberate or intentional. The assessee/appellant has been able to show sufficient reason causing delay in filing of appeal. The Hon’ble Apex Court has consistently held that the explanation furnished by the assessee in explaining the delay should be accepted by taking a liberal view. Thus, in the light of reasons explained by the assessee and the law laid down by the Hon’ble Apex Court, we are inclined to condone delay of 260 days in filing of the appeal. The delay is condoned and the appeal is admitted to be heard and disposed on merits.
Shri Nishit Gandhi, ld.Authorized Representative of the assessee explaining the facts of the case submitted that the assessee is engaged in manufacturing of engineering goods. The Assessing Officer reopened the assessment on the basis of information received from Sales Tax Department, Government of Maharashtra that the assessee has obtained bogus purchase
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bills amounting to Rs.2,36,914/- from three hawala dealers, i.e. Laxmi Trading Co. – Rs.52,728/-, Bhoomi Enterprises – Rs.1,04,020 and Impex Traders – Rs.80,156/-. The Assessing Officer further observed that there are discrepancies in the remaining purchases amounting to Rs.56,29,367/-, as well. The AO made adhoc disallowance @ 20% of such remaining purchases and made addition of Rs.11,25,873/-. Further, Assessing Officer made adhoc disallowance @20% on the total expenditure claimed and thus, made addition of Rs.2,51,631/-. Aggrieved against assessment order dated 20/03/2016 passed under section 144 r.w.s. 147 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) granted part relief to the assessee by restricting disallowance to 10% on regular purchases and expenditure claimed and confirmed the entire amount of bogus purchases.
The ld. Authorized Representative for the assessee submitted that the assessee in appeal has raised seven grounds of appeal including the sub- grounds. The assessee is not pressing ground No.1 to 4 of the appeal. Thus, the effective grounds are ground Nos. 5 & 6 relating to the addition made in respect of bogus purchases and confirming of adhoc disallowances of Rs.6,88,752/- in respect of expenditure respectively.
On the other hand, ld. Departmental Representative vehemently defended the impugned order. The ld. Departmental Representative submitted that the assessee did not appear before the Assessing Officer during assessment proceedings and thus, the Assessing Officer was constrained to pass assessment order under section 144 of the Act. The assessee appeared before the CIT(A) for the first time. Even before CIT(A) the assessee failed to produce vouchers/books of account, etc. to prove genuineness of expenditure. Still, the CIT(A) granted part relief by restricting disallowance to 10%. The
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ld.Departmental Representative prayed for dismissing the appeal of assessee and confirming the finding of CIT(A).
We have heard the submissions made by rival sides and have perused the orders of authorities below. Admittedly, the assessee did not participate in assessment proceedings before the Assessing Officer. The Assessing Officer made addition of Rs.2,36,914/- in respect of hawala transactions. After perusal of the assessment order we find that the Assessing Officer has not doubted sales made by assessee. Thus, entire purchases cannot be treated as bogus. It is only profit element in the bogus purchases that is to be brought to tax. After taking into consideration entirety of facts, we estimate GP @12.5% on the alleged bogus purchases. The ground No.5 of appeal is partly allowed, accordingly.
9 In ground No.6, the assessee has assailed adhoc disallowance of Rs.6,88,752/- in respect of expenditure claimed. The Assessing Officer during assessment proceedings in order to verify genuineness of the expenses claimed in the P&L Account called for the vouchers and books. The assessee failed to appear before the Assessing Officer. The Assessing Officer made adhoc disallowance @ 20% of total expenditure claimed. In the proceedings before the CIT(A) the assessee again failed to substantiate the expenditure. Rater, the assessee admitted the fact before the CIT(A) that there can be some element of personal expenditure in the expenses claimed. Thus, taking into consideration entirety of facts, we are of considered view that the ends of justice would meet if, expenditure to the extent of 5% is disallowed. We hold and direct accordingly. Thus, ground No.6 of the appeal is partly allowed.
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In respect of ground No.1 to 4 of the appeal, the ld.Authorized Representative of the assessee has stated at bar that he is not pressing these grounds. Thus ground No. 1 to 4 of the appeal are dismissed as not pressed.
The ground No.7 of the appeal is general in nature and hence, require no adjudication.
In the result, appeal of assessee is partly allowed in the manner aforesaid.
Order pronounced in the open court on Thursday, the 20th day of February, 2020.
Sd/- Sd/- (N.K.PRADHAN) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 20/02/2020 Vm, Sr. PS(O/S) Copy of the Order forwarded to : 1. The Appellant , 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file.
BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai