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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
Aayakr ApIla saM./ (inaQa-arNa baYa- / Assessment Year 2010-11) Aayakr ApIla saM./ (inaQa-arNa baYa- / Assessment Year 2011-12) R.K. Color Diamonds Pvt. Ltd. Income Tax Officer, ward- 1303 Panchratna Opera 5(3)91), House, Mama Parmanand Vs. Room No. 526, Aayakar Marg, Mumbai-400 004 Bhavan, M.K.Road, Mumbai-400 020 (ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent) स्थायी लेखा िं./PAN No. AAACL8489K अपीलाथी की ओर े / Appellant by : S/shri Anuj Kisnadwala, Sunil Hirawat, ARs प्रत्यथी की ओर े / Respondent by : Shri S.K. Bepari, DR ुनवाई की तारीख / Date of hearing: 24.10.2018 घोषणा की तारीख / Date of pronouncement : 24.10.2018 AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
These appeals by the assessee are arising out of the order of Commissioner of Income Tax (Appeals)-10, Mumbai [in short CIT(A)], in appeal Nos. CIT(A)-10/IT-5(3)(1)/4/16-17 & CIT(A)-10/IT-5(3)(1)/3/16-17 vide dated 30.11.2017. The Assessment was framed by the Income Tax Officer, ward 5(3)(1), Mumbai (in short ‘ITO/ AO’) for the A.Y. 2010-11 vide dated 26.02.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO applying the profit rate at 8% of the bogus purchase. For this assessee has raised identically worded grounds in both the years except the quantum. The facts and circumstances are exactly identical in both the years and hence, we will take the facts from AY 2011-12 and will decide the issue. The grounds raised in AY 2011-12 reads as under:
“1. On the facts and in law, the learned commissioner of Income-tax (Appeals) (hereinafter referred to as the “Ld. CIT(A)) had erred in confirming the addition of Rs. 6,02,362/- against the principles of natural justice.
2. On facts and in law, the Ld. CIT(A) had erred in confirming the addition of ₹ 6,02,362/- being the additional income calculated at 8% being possible profit out of purchase made of ₹ 75,29,531/- from M/s Millenium Stars and M/s Mohit Enterprises. Under the facts and circumstances of the matter, he ought to have deleted the said addition of ₹ 6,02,362/-
3. The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon’ble ITAT to decide this appeal according to law.”
Briefly stated facts are that the assessee is engaged in the business of diamond Trading. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to Rs. 4,31,650/- for AY 2010-11 & ₹75,29,531/- for AY 2011-12 as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: - 2010-11
Name of party Amount Mohit Enterprises 4,31,650/- 2011-12
Name of party Amount Millennium Star 5,53,254 Mohit Enterprises 69,76,277/- Total 75,29,531/- 4. During the course of assessment proceedings and during appellate proceedings, the assessee submitted documentary evidences such as payment received against such sales, receipt of material purchases, account payee cheque, statement of bank account. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of unproved purchase at 8% of ₹ 34,532/- for AY 2010-11 and ₹ 6,02,632/- for AY 2011-12 to the returned income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who confirmed the addition made by the AO by observing in para 7.3.32 by following the decision of Tribunal, Mumbai Bench in M/s Dhadda Gems Ltd. vs. ITO in to 7314/ Mum/2016 vide order dated 19.05.2017 by observing as under: -
“7.3.32 However, in the aforesaid instruction it has been stated that the above instruction would be applicable for assessments made during Financial Year 2008-09 and that the acceptance of profit at 6% or above as for a particular assessment year will not be a precedent for that assessee or for any other assessee. Further, it would not be applicable where there is information regarding escapement of income However, the persuasive value of the aforesaid instruction cannot be ignored. It is also observed that the Hon'ble ITAT, Mumbai in a recent decision dated 19 05 2017 in the case of MIs Dhadda Gems Ltd vs ITO 5(1)(3), Mumbai in to 7314 has sustained an addition @ 8% of the purchases shown from the impugned bogus parties, hence the profit embedded in accommodation entries of purchase can be taken as equivalent @ 8% of the purchase amount, which results from the saving on account of sales tax and other taxes and duties which may be leviable in respect of manufacture of sale of goods in question, which is transferred to the purchaser, when purchases are made without genuine bills. As it is an estimate of the profit embedded in purchase, it cannot be allowed to additions made on account of profit embedded in the accommodation entries of bogus purchases estimated @8% on such purchases are upheld.”
The learned Counsel for the assessee before me, only requested that he is ready to prove the purchases as genuine and for this the matter can be referred back to the file of the AO for fresh investigation. On this the learned Sr. DR fairly agreed.
After hearing both the sides and going through the facts of the case, I am of the view that the facts at this stage cannot be examined by making investigation. Hence, in the interest of justice and coordinated investigation, I remand this matter back to the file of the AO. AO is directed to provide reasonable opportunity of being heard to the assessee and also provide the evidences collected by the Revenue. The assessee will also file all documentary evidences to prove its case. The orders of the lower authorities are set aside and matter in both the years is remanded back to the file of the AO.
In the result, both, the appeals of assessee are allowed for statistical purposes.
Order pronounced in the open court on 24-10-2018. AadoSa kI GaaoYaNaa Kulao mao idnaMk 24-10-2018kao kI ga[- .