I.T.O. - 31(2)(1), MUMBAI vs. SHRI JITENDRA S. MAMANIA, MUMBAI

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ITA 6009/MUM/2018Status: DisposedITAT Mumbai19 December 2019AY 2010-115 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while the assessee couldn't fully prove the genuineness of purchases, the sales were not doubted. Following a coordinate bench's decision in a similar case, the Tribunal restricted the addition to 12.5% of the non-genuine purchases.

What were the facts?

The assessee claimed purchases worth ₹11,01,170 from parties listed as suspicious by the Sales Tax Department. The Assessing Officer added this entire amount to the assessee's income as non-genuine purchases. The CIT(A) restricted the addition to 25% of the non-genuine purchases.

What were the issues?

Whether the entire amount of purchases from suspicious dealers should be added back to the income, or if a partial disallowance is justified. The quantum of disallowance for non-genuine purchases.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN

For Appellant: Ms. Lajari K. Oswal
For Respondent: Smt. Jyothi Lakshmi Nayak

Date of Hearing – 26.11.2019 Date of Order – 19.12.2019 2 Shri Jitendra S. Mamania O R D E R PER SAKTIJIT DEY, J.M.

The aforesaid appeal by the Revenue and cross objection by the assessee are against the order dated 12th July 2018, passed by learned Commissioner of Income Tax (Appeals)–42, Mumbai, pertaining to the assessment year 2010–11.

2.

The only common dispute in the appeal and the cross objection is with regard to the part disallowance sustained by learned Commissioner (Appeals).

3.

Brief facts are, the assessee, an individual, is engaged in the business of manufacturing and trading of gift articles through his proprietorship concern Roundline Industries. For the assessment year under consideration, the assessee filed his return of income on 22nd September 2010 declaring total income of ` 10,76,820. During the assessment proceedings, the Assessing Officer, to verify the genuineness of purchases shown by the assessee, issued notices under section 133(6) of the Act to selected parties from whom the assessee claimed to have made purchases. On the basis of such enquiry, he found that purchases worth ` 11,01,170, claimed to have been made from three parties are doubtful as the concerned selling dealers appeared in the list of suspicious dealers issued by the Sales Tax

3 Shri Jitendra S. Mamania Department. According to the information received, these entities were only providing false bills without actual sale transaction. Thus, he called upon the assessee to prove the genuineness of purchases. As observed by the Assessing Officer, the assessee was unable to furnish any clinching evidence to fully prove the genuineness of purchases made from these parties. Accordingly, he treated the purchases worth ` 11,01,170, as non–genuine and added back to the income of the assessee. While deciding assessee’s appeal disputing such addition, learned Commissioner (Appeals) restricted the addition to 25% of the non–genuine purchases.

4.

The learned Departmental Representative submitted, since the assessee has failed to prove the purchases through proper supporting evidences, 100% addition made by the Assessing Officer was justified.

5.

On the other hand, learned Authorised Representative submitted, while deciding identical issue in assessee’s own case for the assessment year 2009–10, the Tribunal has restricted the addition to 12.5% of the non–genuine purchases. Thus, she submitted, the disallowance should be restricted to 12.5%.

6.

We have considered rival submissions and perused the material on record. No doubt, the assessee was unable to prove the source of purchases made through proper documentary evidences. However, the 4 Shri Jitendra S. Mamania sales effected by the assessee have not been doubted. Therefore, learned Commissioner (Appeals) was justified in interfering with 100% addition made by the Assessing Officer. However, the disallowance on account of non–genuine purchases @ 25% by learned Commissioner (Appeals) is on a much higher side. Notably, while deciding identical nature of dispute in assessee’s own case for the assessment year 2009–10 in ITA no.1380/Mum./2018, dated 4th October 2019, the Tribunal has restricted the addition to 12.5% of the non–genuine purchases. Facts being similar, respectfully following the aforesaid decision of the Co–ordinate Bench, we restrict the addition to 12.5% of the non–genuine purchases.

7.

In the result, Revenue’s appeal is dismissed and assessee’s cross objection is partly allowed. Order pronounced in the open Court on 19.12.2019

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