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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: SHRI G.S. PANNU (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the assessee against the order dated 15.09.2017 passed by the Commissioner of Income Tax (Appeals)-2, Pune, for the assessment year 2011-12, whereby the Ld. CIT (A) has dismissed the appeal filed by the assessee against assessment order passed u/s 143 (3) read with section 147 of the Income Tax Act, 1961 (for short ‘the Act’).
Brief facts of the case are that the assessee engaged in the business of manufacturing, selling repair, maintenance and letting out of transformers, filed its return of income for the assessment year under consideration declaring the total income of Rs. 36,26,830/-. Subsequently, information was received from Sales Tax Department, Maharashtra to the effect that the assessee had obtained accommodation bills from bogus parties which used to issue bogus bills without supplying any goods. Accordingly, the assessment was reopened after 2 Assessment Year: 2011-12 issuing notice u/s 148 of the Act. Since, no reply was received to the notice, u/s 148 of the Act, the AO treated the original return filed by the assessee as the return filed in response to the said notice. The AO also issued notice 143 (2) and 142 (1) of the Act and the assessee was asked to furnish details regarding the purchases shown from the bogus entities M/s Shiv Industries and M/s Dharm Traders Pvt. Ltd. amounting to Rs. 10,03,995/- during the previous year. However, no response was received by the AO. Accordingly, the AO issued show cause notice as to why the purchases shown from the bogus parties should not be added to the income of the assessee and the assessment should not be finalized u./s 144 of the Act on the basis of material available on record. In response thereof, the assessee submitted the written reply and contended that all the purchases in question are genuine. The assessee also submitted the copies of monthly purchase, sales and stock, chart showing monthly billing on account of job work done and sales effected, increase/decrease in stock at the end of the month. The assessee further contended that invoice/delivery challan and statement of bank account further establish the genuineness of purchase. However, the AO rejecting the claim of the assessee added the said amount to the income of the assessee.
3. In the first appeal, the Ld. CIT (A) after hearing the assessee confirmed the addition made by the assessee and dismissed the appeal filed by the assessee.
Aggrieved by the order of Ld. CIT (Appeals), the assessee has preferred this appeal before the Tribunal on the following effective grounds:-
1. “In the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in upholding the issue of notice u/s 143 (2) and completing the assessment u/s 143
(3) r.w.s. 147 without appreciating the fact that the assessee has not filed any return in response to notice u/s 148 served upon him by the Assessing Officer.
3 Assessment Year: 2011-12
2. “In the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in upholding the reassessment proceedings initiated u/s 147 by issue of notice u/s 148 dated 01.07.2013 without recording the reasons before issue of such notice.
In the facts and in the circumstances of the case and in law, the Learned CIT
(A) has erred in upholding the reassessment proceedings initiated u/s 147 by issue of notice u/s 148 dated 01.07.2013 by the learned Assessing Officer without independent application of mind on the information received from the Sales Tax Department. 4. “In the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in confirming the action of the Assessing Officer of completing the assessment u/s 143 (3) r.w.s. 147, on the basis of statement of third party without providing any opportunity of cross examination of the witnesses or providing the copy of documents relied upon by the Assessing Officer and thus violating the law laid down by Honorable Supreme Court in the case of Kishanchand Chellaram v. CIT (1980) 125 ITR 713 and Andaman Timber Industries v. Commissioner of Central Excise (Civil Appeal No. 4228 of 2006).
5. In the facts and in the circumstances of the case and in law, the Learned CIT (A) has erred in sustaining addition of Rs. 10,03,995/- being entire alleged bogus purchases, merely on surmises and conjectures relying upon non jurisdictional High Court decisions and disregarding the Honorable jurisdictional High Court decisions in the case of Babulal C. Borana v. Third ITO (2006) 282 ITR 251 (Bom) and CIT v. Nikunj Eximp Enterprises (P) Ltd. (2013) 216 Taxman 171 (Bom) and various other tribunal decisions.
All the above grounds are without prejudice to each other.”
4 Assessment Year: 2011-12
Before us, the Ld. counsel for the assessee submitted that the he does not press ground No 1 to 4 of the appeal vide which the assessee has challenged the jurisdiction of AO in reopening of assessment. Hence, we dismiss the said ground of appeal being not pressed. Vide ground No 4 the assessee has challenged the action of the Ld. CIT (A) in confirming the addition made by the AO on account of bogus purchases. The Ld. counsel submitted that the Ld. CIT(A) has wrongly confirmed the addition made by the AO. The Ld. counsel further submitted that the assessee is a bona fide buyer of material and entered into the transactions in ordinary course of business with the vendors. The assessee has submitted the invoice, delivery challan, stock register, which establish the genuineness of the purchases. The Ld. counsel further submitted that opportunity to cross examine the witnesses, who had deposed against the assessee was not given by the authorities below. The Ld. CIT (A) has ignored the chart submitted regarding consumption, gross profit trend etc. by the assessee. The Ld. counsel further contended that since VAT registration was given to the parties concerned after verification, no question of bogus sale by the said entities does arise. The Ld. counsel accordingly submitted that the impugned order is liable to be set aside.
6. On the other hand, the Ld. Departmental Representative (DR) relying on the concurrent findings of the authorities below, submitted that in this case the issue under consideration is based on facts. Since, the assessee has failed to discharge the onus of proving genuineness of the purchases, the Ld CIT(A) has rightly confirmed the addition made by the AO. Therefore, there is no infirmity in the impugned order to interfere with.