BABAN PIRAJI GHADGE,MUMBAI vs. DCIT CIRCLE-2, KALYAN

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ITA 4550/MUM/2018Status: DisposedITAT Mumbai29 July 2019AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the concession for disallowance of cash expenses was based on a mixed question of law and fact, and remitted the issue to the Assessing Officer for fresh examination. Similarly, the disallowance for bogus purchases was also remitted for fresh examination.

What were the facts?

The assessee, engaged in construction, was subjected to disallowance for bogus purchases and cash expenses exceeding Rs. 20,000. The Assessing Officer and CIT-A confirmed these disallowances.

What were the issues?

Whether the disallowance of cash expenses exceeding Rs. 20,000 was justified, and whether the disallowance for bogus purchases was correctly confirmed without proper examination.

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Shamim Yahya (AM)

For Appellant: Ms. Riya Mohini
For Respondent: Shri Chaitanya Anjaria
Hearing: 4.7.2019Pronounced: 29.7.2019

This appeal by the assessee is directed against orders of learned CIT-A dated 2.4.2018 and pertains to assessment year 2011-12.

2.

The first issue raised pertains to confirmation of disallowance of bogus purchase at Rs. 4,70,329/-.

3.

The second issue raised is to confirmation of disallowance on account of cas expenses application of the provision of section 40A(3) at Rs 1,00,765/-

4.

Brief facts of the case are that assessee is engaged in the business of construction. Pursuant to receipt of information that assessee has indulged in bogus purchases amounting to Rs. 4,70,329/-. The addition was made to the extent of hundred percent of the bogus purchase. The learned CIT-A also confirmed the same on a finding that assessee did not produce even the vouchers. Learned CIT-A noted that assessee has only produced the ledger account of purchases. As regards the disallowance of expenditure in cash

2 Baban Piraji Ghadge exceeding Rs. 20,000/-, the assessing officer noted that assessee's counsel had agreed for the same. Learned CIT-A also confirmed the same.

5.

This order has been challenged before the ITAT. I have heard both the counsel and perused the records. As regards the disallowance under section 40A(3). I note that it is the contention of the assessee that all the cash payments exceeding Rs. 20,000 in cash were falling under the exception provided under the act. Hence it is pleaded that no disallowance in this regard should be done. I note that authorities below have noted that assessee's representative has agreed for the disallowance. However I find that this issue is a mixed question of law and fact. Honourable Supreme Court had held that concession on mixed question of law and fact doesn't preclude the aggrieved party in challenging the same. Accordingly in the interest of justice I remit this issue the file of assessing officer. The assessing officer is directed to consider the issue afresh after giving the assessee proper7 opportunity of being heard.

6.

As regards the disallowance on account of bogus purchase, I note that the same has been done @ 100% of the bogus purchase on the plea that assessee has not been able to substantiate the purchases. I also note that there is no other finding that there is any shortcoming in the other results of the assessee. Hence in the interest of justice I remit this issue also for the assessing officer to examine afresh after giving the assessee proper opportunity of being heard.

7.

In the result appeal by the assessee stands allowed for statistical purposes. Order has been pronounced in the Court on 29.7.2019.

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