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Income Tax Appellate Tribunal, “F”
Before: SHRI PAWAN SINGH, JM & SHRI S. RIFAUR RAHMAN, AM
M/s J J Timber Industries, ITO – 32(2)(1), D-9m 3rd floor, Saibaba C-11, 3rd floor, Dham, Saibaba Nagar, Nr. बिधम/ Pratyakshkar Bhavan, Saibaba Temple, Borivali Bandra Kurla Complex, Vs. West, Mumbai-400 092 Bandra East, Mumbai-400 051. स्थायीलेखासं./जीआइआरसं./PAN No. AADFJ5482E (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant Shri Mohd. Rizwan, DR : by प्रत्यथीकीओरसे/Respondentby : None सुनवाईकीतारीख/ : 12.12.2019 Date of Hearing घोषणाकीतारीख / : 31.01.2020 Date of Pronouncement आदेश / O R D E R
Per S. Rifaur Rahman, Accountant Member:
The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) – 44 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 18.07.18 for Assessment Year (in short AY) 2011-12. M/s J J Timber Industries 2. At the outset, it is noticed that none has 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.
The brief facts of the case are that assessee is engaged in the business of making of wooden boxes for packaging from jungle wood and filed its return of income for A.Y. 2011-12 on 30.09.2011 declaring total income at Rs. NIL. The return was processed u/s 143(1) of the Act. Thereafter, information was received from DGIT(Inv.), Mumbai and Sales Tax Department, Mumbai that the assessee has obtained accommodation entries in the form of purchases from the bogus concerns. Subsequently, the case was re-opened by issuing notice u/s 148 of the Act dated 12.03.2015 after recording reasons. Thereafter, assessment u/s 143(3) r.w.s 147 of the Act was completed on 29.02.2016 determining the total income at Rs. 16,50,070/- by disallowing bogus purchases to the extent of Rs. 9,15,724 (i.e. 100%) and estimated the income @ 8% of the turnover.
M/s J J Timber Industries 4. Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A), after considering the submission of the assessee, had reduced the disallowance @ 12.5% of purchases and deleted the estimation of income. Accordingly, Ld. CIT(A) partly allowed the appeal of the assessee.
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 the Ld. CIT(A) erred in restricting the addition to Rs.1,14,466/- (@ 12.5% of Rs.9,15,724/-) on account of bogus purchases, without appreciating that the fact that the assessee has not produced any cogent evidence to substantiate that he had taken actual delivery of goods purchased from the parties and the notices u/s 133(6) issued to the parties, from whom alleged bills were received, were returned undelivered by the postal authorities with the remark 'Not known" and the assessee has also failed to produce the purchase parties before the AO."
"On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in relying upon M/s J J Timber Industries judgement in the case of CIT Vs Nikunj Eximp, of 2010 (Bombay High Court) and the decision of Gujarat High Court in the case of CIT Vs Simit Sheth (2013) 38 Taxmann.com 385 (Guj), without appreciating that the facts involved in the appellant's case are different from the facts of the above case laws."
3. "The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the AO be restored."
"The appellant craves leave to amend or alter any grounds or add a new ground, which may be necessary."
Considering the submissions and material placed on record, we notice that the decision of the Coordinate Bench of this Tribunal in the case of Sunil B. Vorani (HUF) vrs ITO (ITA No. 1337/Mum/2017), wherein it was held as under:- Be that as it may, after evaluating the entire facts, grounds raised
by the assessee, perusal of the records and judgments relied by the parties, we find that Ld. CIT(A) has upheld the findings of AO in estimating the profit @ 25% of the total sales. In our considered view, considering the facts of the present case and while relying upon the following judgments:- 1) ClT vs M/s J J Timber Industries Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj). (HC),
2. CIT v Simit D, Sheth (2013) 356 ITR 451 (Guj)-(HC) and 3. CIT vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (1C) and taking into consideration the facts of the present case, and also considering the order passed by the Coordinate Bench of SMC in assessee’s own case and to account for the profit element embedded in these purchase transactions to factorize profit earned by assessee against purchase of material in the grey market and undue benefit of VAT against bogus purchases, we are of the considered view that upholding the additions @ 25% of the sales by Ld. CIT(A) is unreasonable. The ends of justice would be met in case the additions are restricted @ 12.5 % of purchase amount of Rs. 2,26,39,391/-. Consequently orders passed by Ld. CIT(A) are set aside and hence we direct the AO to restrict the additions to the extent of 12.5% of the bogus purchases of Rs. 2,26,39,391/-. made from the parties. Accordingly these grounds raised by the assessee are partly allowed.
Therefore, respectfully following the aforesaid decision, we are inclined to accept the findings of Ld. CIT(A). Accordingly, grounds raised by the revenue are dismissed.