No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC” BENCH,
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals) -54, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys. 2010-11 & 2011-12.
The assessee has filed the present appeal against the order dated 05.04.2018 passed by the Commissioner of Income Tax (Appeals) -54, ITA No. 4717 & 4718/M/2018 A.Y. 2009-10 & 2010-11 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2010- 11.
The assessee has raised the following grounds: - “
1. That on the facts of the case and in law the ld. CIT(A) has erred in upholding the validity of the reassessment proceeding initiated u/s 147 by issue of notice u/s 148 on wrong facts and in unlawful manner.
2. That the Ld. CIT(A) has erred in retaining the part adhoc disallowance at Rs.8,84,851/- out of disallowance made by the Ld. AO at Rs.16,31,091/- out of the alleged hawala purchases of Rs.1,30,48,733/-. In view of the same the appellant prays that the part disallowance retained by Ld. CIT(A) may be deleted. That both the appeal grounds are independent grounds & without prejudice to each other.
3. Your appellant keeps the right to add, amend or alter any of the above grounds on or before hearing.”
4. The brief facts of the case are that the assessee filed his return of income on 10.09.2010 declaring total income to the tune of Rs.9,21,772/- for the A.Y.2010-11. The case of the assessee was reopened u/s 148 of the Act by issuance of notice dated 23.03.2016. Thereafter, notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The reasons for reopening are that the assessee has taken the accommodation entries of bogus purchase in sum of Rs.1,30,48,733/- from the following parties.
Name of the Party Amount Anand Deep Metal 1,30,48,733 Total 1,30,48,733/- 5. After the reply of the notice, the AO restricted the addition to the extent of 12.5% of the bogus purchase in sum of Rs.1,30,48,733/- which comes to the tune of Rs.16,31,091/- The total income of the assessee was A.Y. 2009-10 & 2010-11 assessed to the tune of Rs.25,52,860/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who partly allowed the claim of the assessee but the assessee was not satisfied, therefore, the assessee has filed the present appeal before us.
We have heard the argument advanced by the Ld. Representative of the Department and perused the record. The assessee failed to produce the party to substantiate his claim. In the instant case, the sale is not doubted. It is settled law that when the sales are not doubted then the100% disallowance for bogus purchase cannot be done. No sale could be done without actual purchases. The proposition is supported by decision of the Jurisdictional High Court in case of Nikunj Eximp Enterprises (in writ petition no 2860 order dated 18.06.2014). The facts and circumstances of the present case indicate that the assessee purchased the material from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expenses of the exchequer. As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee is concerned, we find that the Hon’ble High Court of Bombay has recently decided the matter of controversy in case of PCIT Vs. M. Haji Adam & Co. (ITA. No. 1004 of 2016 dated 11.02.2019). The relevant para no. 8 is hereby reproduced as under: -