ITO 22(3)(1)- ERSTWHILE, NAVI MUMBAI vs. AMIT S. AGARWAL, NAVI MUMBAI

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ITA 5732/MUM/2015Status: DisposedITAT Mumbai12 July 2018AY 2009-104 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that a similar issue in the assessee's own appeal for the same assessment year was remitted back to the Assessing Officer. The Tribunal concurred with this approach and dismissed the Revenue's appeal.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted an addition for bogus purchases from Rs. 77,58,233 to Rs. 4,58,120 (5.65% gross profit). The Assessing Officer had made the addition based on information about suspicious dealers and unserved notices.

What were the issues?

Whether the CIT(A) erred in restricting the addition for bogus purchases, and whether the matter should be remitted back to the AO for further verification as done in the assessee's own appeal.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(3),Section 147,Section 148,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI C.N. PRASAD, JM & SHRI MANOJ KUMAR AGGARWAL, AM

आदेश / O R D E R

Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year [AY] 2009-10 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-26 [CIT(A)], Mumbai, Appeal No.CIT(A)-26/IT/21/14-15 dated 07/10/2015 by raising following grounds of appeal: - Amit S. Agarwal Assessment Year-2009-10 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition of Rs.77,58,233/- u/s.69C of the Act to Rs.4,58,120/- @5.65% gross profit declared by the assessee on the total bogus hawala purchases of Rs.81,08,233/-, thereby allowing relief of Rs.73,00,113/- to the assessee.

1.

2. The appellant prays that the order of the CIT(A) on the above ground be reversed and that of the Assessing Officer be restored. The assessment for impugned AY was framed by Ld. Income Tax Officer- 22(3)(1), Mumbai [AO] u/s 143(3) read with section 147 of the Income Tax Act,1961 on 30/09/2014 wherein the assessee has been saddled with certain addition of Rs.77.58 Lacs on account of alleged bogus purchases, which is the sole subject matter of this appeal. The original return of income filed by the assessee at Rs.6.18 Lacs was processed u/s 143(1).

2. Briefly stated the assessee being resident individual engaged in trading of iron & steel under proprietorship concern namely Arpit Enterprises was subjected to reassessment proceedings for impugned AY pursuant to receipt of certain information from Sales Tax Department, Maharashtra regarding dealers being indulging in bogus purchase bills without carrying out any actual business. Pursuant to the said information, it was found that the assessee made certain purchases aggregating to Rs.81,08,233/- from six such suspicious dealers, the details of which have been extracted at para-3 of the quantum assessment order. Consequently notice u/s 148 dated 25/03/2014 was issued to the assessee wherein the assessee was required to substantiate the purchases made by him. The assessee defended the purchases made by him. However, notices u/s 133(6) issued by Ld. AO to confirm the transactions remained un-served.

Amit S. Agarwal Assessment Year-2009-10 Finally, not convinced, Ld. AO made the addition of Rs.77.58 Lacs in the hands of the assessee, being peak credit of alleged bogus purchases.

3.

Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 07/10/2015 wherein the Ld. CIT(A), after considering the factual matrix and placing reliance on certain judicial pronouncements, estimated the impugned additions to 5.65% of aggregate alleged bogus purchases. Aggrieved, the revenue is in further appeal before us.

4.

It has been brought to our notice that the assessee, similarly aggrieved by the addition of 5.65% as sustained by Ld. CIT(A) contested the same with partial success before this Tribunal vide dated 03/11/2017 wherein the matter has been concluded as follows:- 3. We have heard the parties and perused the materials on record. Though, in the memorandum of appeal the assessee has raised multiple grounds including the validity of reopening of assessment under section 147 of the Act, however, at the time of hearing the only submission made by the learned A.R. is to the effect that out of the amount added towards bogus purchases, there are purchases returned back by the assessee. Therefore, the G.P. rate adopted by the Commissioner (Appeals) should be applied to net purchases. After hearing the submissions of the parties we are of the view that the issue relating to the addition made on account of bogus purchases requires to be remitted back to the file of the Assessing Officer for verifying the aforesaid claim of the assessee. Let the Assessing Officer verify assessee’s claim of purchase returns and in case he is satisfied with assessee’s claim, let him apply the G.P. rate of 5.6% to net purchases, alleged to be bogus. Ground no. 4 is partly allowed.

5.

We have carefully perused the submissions and the cited order of the Tribunal. We find that a view has already been taken by the Tribunal in assessee’s appeal and the matter has already been remitted back to Ld.

Amit S. Agarwal Assessment Year-2009-10 AO with certain directions. Concurring with the same, we dismiss the revenue’s appeal. 6. Resultantly, the revenue’s appeal stand dismissed. Order pronounced in the open court on 12th July, 2018

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