M/S SHRI MANGALAM TRADERS, MAHASAMUND,MAHASAMUD vs. INCOME TAX OFFICER, MAHASAMUND, MAHASAMUD

आदेश / ORDER

PER RAVISH SOOD, JM:

“1. That the order of Ld. CIT(A) is bad in law as well as on facts and the entire additions of Rs.19,91,000/- sustained by the Ld. CIT(A) are bad in law and accordingly liable to be deleted.

2. In the facts and circumstances of the case, the Ld. CIT(A) has grossly erred in confirming the action of Ld. AO in making addition of Rs.19,91,000/- without mentioning the section under which disallowance has been made under the of income tax act, 1961.

3. The learned CIT(A) erred in sustaining the disallowance of Rs.19,91,000/- made on account of bogus purchases without appreciating the fact that the disallowance was made mechanically without appreciating the evidences furnished by the assessee and also without rejecting the books of account.

4. Without prejudice to Ground No.1, 2 & 3 above and in the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that based on the judicial dictum at best only a percentage (gross profit rate) of the alleged bogus purchases could have been disallowed and not 25% of alleged bogus purchases of Rs.79,64,000/-.

6. The appellant craves leave to urge, add, amend, alter, enlarge, modify, substitute, delete or withdraw any of the ground or ground and to adduce fresh evidence at the time of hearing of the appeal.”

S. No. Name of the party Total purchase 1. M/s. Agrawal Agro 24,00,000/- 2. M/s. Balaji Food Rice Tech 21,14,000/- 3. M/s. Shri Hanuman Food Product 13,00,000/- 4. M/s. Bhagwati Paddy 21,50,000/- Total 79,64,000/- As the assessee firm had failed to substantiate the authenticity of the aforesaid purchase transactions, therefore, the A.O after rejecting its books of account u/s.145(3) of the Act disallowed 25% of the subject bogus purchases and worked out a disallowance of Rs.19,91,000/-. Accordingly, the A.O vide his order passed u/s.143(3) of the Act, dated 26.12.2018, after making the aforesaid addition determined the income of the assessee firm at Rs.20,98,730/-.

“8. Decision 8.1 I have carefully considered the facts of the case and the assessment order u/s.143(3) of the Act, 1961. The issue involved in this appeal is addition of Rs.19,91,000/- on account of bogus purchases. Despite being given many opportunities, the appellant did not respond during appellate proceedings nor furnished any written submission or any evidence in support of the grounds of appeal raised. The assessment order of the A.O has been carefully perused and I find that during the assessment proceedings no evidence was produced and the appellant failed to substantiate the genuineness of purchases made and the AO has passed a detailed and speaking order discussing the said issue in detail. 8.2. In the appellate proceedings, burden of proof lies on the appellant to prove that the facts and the findings of the Assessing Officer are incorrect. However, in the instant case, appellant has not furnished any evidence/written submission in support of grounds of appeal raised by the appellant. 8.3 As mentioned in Para 6.1 of this appeal order, this office has issued several letters / notices to appellant to file written submission. However, the appellant did not file written submissions. The notices were issued on email available in the ITBA Module of the Income Tax Department. 8.4. From the above conduct of the appellant, it is evident that the appellant is not interested in pursuing its appeal. The Hon'ble Supreme Court in the case of CIT Vs B. N. Bhattacharjee & Others [1979]

10. CTR 354 (SC) observed that preferring an appeal, means effectively pursuing it. The Hon'ble M.P. High Court in the case of Estate of Late TukojiraoHolkar Vs CWT [1979] 223 ITR 480 (MP) dismissed the reference filed at the instance of the assessee for default and for not taking necessary steps. Considering the conduct of the appellant in the present proceeding, I am of the view that the appellant is not interested in pursuing the appeal. 8.5 The Hon'ble Supreme Court in the decision pronounced on October 25, 2019 in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd in Civil Appeal No. of 2019 (Arising out of SLP (Civil) No. 29855 of 2018) has held that if a notice is duly served upon the litigant through its authorized representative, and it was provided sufficient opportunity to appear before the Court and contest the matter but the litigant chooses to let the matter proceed ex-parte, the order cannot be recalled. In the case of the present appellant, the notices to the appellant u/s 250 of the I.T. Act, 1961, have been issued online-through the ITBA software, as is required under the Faceless Assessment & Appeals now in practice. 8.6 The decision of the Hon'ble High Court of Mumbai in the case of M/s. Chemipol v/s. Union of India [Central Excise Appeal No.62 of 2009] clearly states, that every court judicial body or authority, which has a duty to decide a matter between two parties, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in case of Nandramdas Dwarkadas, AIR 1958 MP 260, is reproduced below: Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses." 8.7 The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. NallaThampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000)

3. SCC 242. In the latter case, the Apex Court has held as under:- "That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi- judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi-judicial body. In the absence of the complainant, therefore, the court will be without its jurisdiction to dismiss the complaint for non- prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the non-appearance of the complainant." 8.8 In its decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. On 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. Necessary course of action is to draw adverse inference; otherwise it would amount to give premium to the assessee for his negligence. When the assessee is non- cooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and non-genuineness. 8.9 During the appellate proceedings, the appellant has been provided more than sufficient opportunities but appellant failed to submit any submission or evidence during appeal proceedings in support of grounds of appeal as well as statement of facts, and remained non-compliant. The law assists those that are vigilant with their rights and not those that sleep there upon. Following this principle as embodied in the well-known dictum "vigilant bus non dormentibus, jura subveniunt", the grounds raised in this appeal as reproduced in para Nu. 3 supra are dismissed.

9. In the result, the appeal is dismissed.”

5. The assessee firm being aggrieved with the order of the ADDL/JCIT(A), Udaipur has carried the matter in appeal before the Tribunal.

Carrying his contention further, the Ld. AR submitted that as the assessee firm had remained divested of an opportunity to put forth its case assailing the impugned addition made by the A.O before the CIT(Appeals), therefore, the latter’s order is liable to be set-aside with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee firm.