ACIT 27(2), MUMBAI vs. KALPESH P. PUJARA, MUMBAI

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ITA 7111/MUM/2018Status: DisposedITAT Mumbai19 February 2020AY 2009-105 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 agreed with the CIT(A) that while the purchases from suspect parties were not genuine, the purchases themselves could not be doubted as the AO had not doubted the sales declared by the assessee. The Tribunal followed the decision of the Hon'ble Gujarat High Court in CIT vs. Smith P. Sheth.

What were the facts?

The Assessing Officer (AO) made a 100% addition of bogus purchases based on information about accommodation entries. The CIT(A) agreed that the purchases were not genuine but reduced the disallowance to 12.5% based on the assessee's subsequent sales and a High Court decision.

What were the issues?

Whether the entire bogus purchases should be added or only the profit element, when the assessee has shown subsequent sales which were not doubted.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 69C

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI VIKAS AWASTHY, JM & SHRI S. RIFAUR RAHMAN, AM

ACIT 27(2) Kalpesh P. Pujara, Room No. 420, 4th floor, 3/4/61, Kalptru Aura बिधम/ Tower No. 6, Vashi Phase-II, Peal Building, Opp- R. City Mall, LBS Railway Station Complex, Vs. Navi Mumbai-400 703 Marg, Ghatkopar(w), Mumbai 400 086 स्थायीलेखासं./जीआइआरसं./PAN No. ACWPP8054D (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant : Shri Drop Singh Meena, DR by प्रत्यथीकीओरसे/Respondentby : None सुनवाईकीतारीख/ : 04.02.2020 Date of Hearing घोषणाकीतारीख / : 19.02.2020 Date of Pronouncement आदेश / O R D E R

Per S. Rifaur Rahman, Accountant Member:

1.

The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) – 26 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 27.09.18 for Assessment Year (in short AY) 2009-10. Kalpesh P. Pujara

2.

At the outset, it is noticed that none appeared on behalf of assessee in spite of calls and even no application for adjournment was moved. On the other hand, Ld. DR is present in the court and is ready with arguments. Therefore, we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.

3.

The brief facts of the case are, based on the information received from the DGIT(Inv) and Maharashtra Sales Tax Department about the accommodation entries obtained by the assessee. Accordingly, assessment was reopened u/s 147 of the Act and subsequently assessment was completed u/s 143(3) r.w.s 147 of the Act by the AO. AO made 100% addition of the bogus purchases u/s 69C of the Act.

4. Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and based on the submission of assessee, Ld. CIT(A) agreed with the AO that this purchases were not genuine and does not mean that purchases made from these parties are genuine. The courts have held that payment made by cheque itself is not sacrosanct so as to prove the genuineness of the Kalpesh P. Pujara purchases when the surrounding circumstances are suspect. However, the assessee has shown onwards sales which has not been doubted by the AO. By relying on the decision of Hon’ble Gujrat High Court in the case of CIT vrs. Smith P. Sheth 356 ITR 451 (Guj), he reduced the disallowance @ 12.5%. Accordingly, Ld. CIT(A) partly allowed the appeal of the assessee.

5.

Aggrieved with the above order, revenue has preferred the appeal before us on the ground mentioned herein below:-

1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs 6,60,569/- made by the Assessing Officer on account of bogus purchases, without appreciating the fact that the assessee has failed to produce bills, vouchers and other documentary evidences in support of its claim and without considering the latest Apex Court decision in the case of N.K. Protein Ltd. wherein it is held that once it is proved that the purchases are bogus then addition should be made on entire purchases and not on profit element embedded in such purchases."

2. "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in estimating the profit from Hawala purchases by disallowing only Rs. 94,367/-, being 12.5% of the bogus purchases as even the basic onus of producing transport details, delivery challans etc. were not fulfilled by the assessee."

3. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored.

4.

The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.

6.

Considered the submission of Ld. DR and material placed on record. We are of the considered view that no doubt the purchases made from the suspected parties are not genuine. However, the purchases itself cannot be doubted as rightly adjudicated by Ld. CIT(A) that AO has not doubted sales declared by the assessee, only he suspects the purchases. By respectfully following the decision of Hon’ble Gujrat High Court in the case of CIT vrs. Smith P. Sheth (supra), we are inclined to agree with the findings of Ld. CIT(A). Therefore, grounds raised by the revenue are dismissed.

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