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Income Tax Appellate Tribunal, “SMC”, BENCH
Before: SHRI R.C.SHARMA, AM & SHRI VIKAS AWASTHY, JM
Revenue by Shri Kumar Padmapani Bora (Sr.DR) Assessee by None Date of Hearing 10/12/2019 Date of Pronouncement 10/12/2019 आदेश / O R D E R PER: R.C. SHARMA, A.M. This is the appeal filed by the revenue against the order of the ld. CIT(A)-37, Mumbai dated 28/09/2018 for the A.Y. 2011-12 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).
Non body appeared on behalf of the assessee in spite of giving opportunities on 02/12/2019 and 10/12/2019, accordingly, the Bench decided to dispose off the appeal after hearing the ld. Sr.DR and considering the material placed on record.
In this case, the A.O. reopened the assessment on the basis of information received from Sales Tax Department that the assessee was ITO Vs Tushar S. Kamdar engaged in taking accommodation entries of purchases. After making detailed enquiry, the A.O. estimated the profit @ 12.5% of alleged bogus purchases. By the impugned order, the ld. CIT(A) deleted the entire addition by relying on the order of the ITAT in assessee’s own case in after having the observation at para 6.7 of the appellate order, against which the revenue is in further appeal before the ITAT.
It was argued by the ld. Sr.DR Shri Kumar Padampani Bora that the ld. CIT(A) has wrongly relied on the order of the earlier of the assessee in so far as the supplier of goods in the appeal decided by the Tribunal was different from the suppliers who was found to be bogus during the year under consideration. As per the ld DR during this year, the purchases were found to be made from the following parties:
Samarth Enterprises Rs. 19,29,375/- 2. Aryan Enterprises Rs. 22,75,481/- Total Rs. 42,04,856/-
The ld. Sr.DR has drawn our attention to the order of the Tribunal wherein suppliers were different i.e. from Shrinath Trading Co. amounting to Rs. 35,75,520/- and Saileela trading amounting to Rs. 18,32,220/-. As per the ld DR, since the supplies were different during the year under consideration and who was found to be bogus by the A.O. after making detailed enquiry, therefore, the ld. CIT(A) was not justified in deleting the entire addition just by relying on the order of the ITO Vs Tushar S. Kamdar earlier year wherein facts were entirely different in so far as suppliers in the earlier year was different from the supplies of the current year under consideration. He contended that the order of the A.O. may be upheld.
We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that after making detailed enquiry, the A.O. found the purchases to be bogus. However, since the sales were accepted, the A.O. only has added only 12.5% in the income of the assessee. The ld. CIT(A) has deleted the same by following the order of the Tribunal wherein suppliers were entirely different. Since the facts of the current year under consideration are different from the facts of the earlier year, we do not find any justification in the order of the ld. CIT(A) for following the order of the earlier year without discussing the genuineness of the suppliers, who were different from the suppliers dealt with by the Tribunal. Accordingly, we set aside the order of the ld. CIT(A) deleting entire disallowance.
The Hon’ble Jurisdictional High Court in the case of Pr.CIT Vs M/s Mohommad Haji Adam & Co. in of 2016 vide its order dated 11/02/2019 have held as under:
“8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether
ITO Vs Tushar S. Kamdar the Revenue is correct in contending that the entire purchase amount should be added by way of assesses additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd.. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under-
So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6% gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66%. Therefore, considering 5.66% of Rs.3,70,78,125/which comes to Rs.20,98,621.88 we think it fit to direct the revenue to add Rs.20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue."
Since the facts of the current year under consideration are different from the facts of the earlier year, we do not find any justification in the order of the ld. CIT(A) for following the order of the ITO Vs Tushar S. Kamdar earlier year without discussing the genuineness of the suppliers, who were different from the suppliers dealt with by the Tribunal. Therefore, considering the totality of the facts and circumstances of the case, we restore the matter back to the file of the A.O. for deciding the matter afresh after giving due and reasonable opportunity of hearing to the assessee in terms of decision of the Hon’ble Bombay High Court as discussed above.
In the result, appeal of the revenue is allowed for statistical purposes only.
Order pronounced in the open court on 10th December, 2019.