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Income Tax Appellate Tribunal, “SMC” BENCH,
Before: SHRI B. R. BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Neelkanth Khandelwal Department by: Shri N. Hemalatha (Sr. AR) Date of Hearing: 28.06.2018 Date of Pronouncement: 26.09.2018 O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed present appeal against the order dated 22.01.2018 passed by the Commissioner of Income Tax (Appeals)-54, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2011-12.
The assessee has raised the following grounds: - “ The ground or grounds of appeal are without prejudice to one another. On the facts and in the circumstances of the case and in law, the Id. CIT erred in confirming the action of the AO A.Y. 2011-12 in re-opening the assessment u/s.147 of the Income Tax Act, 1961 as the prescribed conditions there are not satisfied. a) On the facts and in the circumstances of the case and in law, the Id. CITerred in confirming the addition to the extent of Rs. 6,90,525/-, after set off incremental gross profit @ 5.16% already shown by the Appellant, made by the AO to the income of the Appellant on account of possible profit element @ 12.5% embedded in purchases made through alleged non-genuine parties on the basis of information of the Sales Tax Department about suspicious dealers having rejected the accounts u/s.l45(3). b) The Id. CIT(A) failed to appreciate that:- i} all the purchases are genuine beyond doubt and supported by sufficient materials; ii} all the goods purchased from these parties have been backed by corresponding sates which arc accepted to be genuine; iii) the gross profit ratio shown by the Appellant is quite reasonable; iv) nothing has been brought on record by the AO that money has exchanged the hands in lieu of payment made for these purchases by account payee cheque; and v) the AO had neither provided copy of materials and statements relaying upon by him nor allowed any opportunity to the Appellant to cross examine those parties who have been alleged to have provided the accommodation entries of such purchases, c| In reaching to the conclusion and confirming such addition (subject certain relief) made by the AO, the Id. C1T(A} omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations a factors. d) Without prejudice, the rate or percentage of profit element embedded in such purchases as fixed by the AO and confirmed by the CIT(A) is excessive and unreasonable on the facts of the case.
2 A.Y. 2011-12
The Ld. CIT(A) erred in holding that levy of interest u/s 234B and 234C of the I.T. Act, 1961 is mandatory. The appellant denies his liability for such interest.
The Ld. CIT(a) erred in holding that the ground raised
disputing initiation of penalty proceedings us/ 271(1)(c) is premature. The appellant denies his liability for such penalty.”
4. The brief facts of the case are that the assessee filed his return of income on 30.09.2011 declaring total income to the tune of Rs.2,82,170/-.The return was processed u/s 143(1) of the Act. The case was reopened u/s 147 of the Act and notice u/s 148 of the Act was issued and served upon the assessee. Thereafter, notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee was in the business of Reseller of Non-Ferrous Metals. The case of the assessee was reopened upon the information DGIT (Inv.) Wing, Mumbai in which it was conveyed that the assessee had taken the accommodation entries from 8 parties whose name are being mentioned below.: - TIN Hawala Party/arties PAN F.Y. Amount in Rs. 27400628967V Global Trade Impex AMRPB2286L 2010-11 1,018,091 27750709236V Atlas International (I) ATHPB9489L 2010-11 770,117 27290804161V Unicon Enterprise AWNPB0239M 2010-11 143,670 27540672055V Premier Enterprise APWPB1348D 2010-11 683,774 27420676874V Seemant Trading Co. AQRPB8469K 2010-11 1,064,054 27720355445V Nirma Metal Industries AHWPB5557E 2010-11 782,887 27650686108V Aarco Enterpries AQRPB8274G 2010-11 990,148 27250773725V Pravin Impex ANSPB6684L 2010-11 71,461 55,24,202/- 3 A.Y. 2011-12 The total purchase was to the tune of Rs.55,24,202/-. After considering the reply of the assessee, the purchase to the tune of Rs.55,24,202/- was restricted to the extent of 12.5% i.e.6,90,525/-. The income of the assessee was assessed to the tune of Rs.9,72,700/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the addition, therefore, the assessee has filed the present appeal before us. ISSUE No. 1:-
5. At the time of argument, the Ld. Representative of the assessee did not press the issue, therefore, the issue no. 1 is being decided in favour of the revenue against the assessee being not pressed. ISSUE No. 2:-
6. Under this issue the assessee has challenged the addition @ 12.5% of the bogus purchase to the tune of Rs. 55,24,202/- i.e. to the tune of Rs.6,90,525/-. The Ld. Representative of the assessee has argued that the assessee has furnished the ledger account, stock summary, item wise purchased, copies of bank-statement and showed the corresponding sale etc. to the authorities but the AO did not consider the same, therefore, assessing the profit @ 12.5% of the bogus purchase is wrong against the law and facts and is liable to be set aside. It is also argued that the CIT(A) has decided the matter of controversy on the basis of the decision of the Gujarat High Court in 4 A.Y. 2011-12