GANPAT GHEVARCHAND MUTHA,MUMBAI vs. INCOME TAX OFFICER 19(1)(3), MUMBAI

The present Appealfiled by the assesseeis against the order of Commissioner of Income Tax (Appeals)-29, Mumbai, dated 12.06.17 for AY 2011-12.

We noticed that the assessee in the present appeal has challenged the order of Ld. CIT(A) regarding upholding the assessing officer's action of reopening of the completed assessment under section 147 of the income tax act as well as sustaining GP additions@ 12.5% of the alleged bogus purchases as unexplained income.

We have heard Ld. DR and we have also gone through the orders passed by the revenue authorities as well as documents placed on record. First of all, we have decided to deal with ground No-1 of appeal, wherein the assessee has challenged the order of Ld. CIT(A) regarding sustaining the order of assessing GanpatGhevarchandMutha officer in respect of reopening of completed assessment under section147 of the Income Tax Act. 5. As per the facts of the present case, the AO received information from the DDIT (investigation) Mumbai, who in turn received information from the sales tax Department about some parties who were providing hawala entry of the accommodation entries for the purchases. The information in possession of the AO was that the assessee had availed of accommodation entries for purchases from 11 parties totally to Rs. 2,03,10,567/-. On the basis of this information, AO initiated the reopening proceedings and invoked the provisions of section147 of I.T. Act. This section merely says that the AO has to ‘have reason to believe’ that any income chargeable to tax has escaped assessment. Reason to believe can be on the basis of any information which comes to his possession or knowledge. In the present case, this information was more than enough for any reasonable person to form a reason to believe that income has escaped assessment. 6. The Ld. CIT(A) has categorically discussed the facts of the case as well as the judicial pronouncements which are contained in para number 3.3.13.3.2 of its order and after appreciating the GanpatGhevarchandMutha facts and while relying upon the judgment of Hon’ble Supreme Court in the case of ACIT Vrs. Rajesh Jhaveri(supra), Ld. CIT(A) had rightly concluded that if the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to ‘have reason to believe’ that the income had escaped assessment. The said expression cannot be read to mean that the AO should finally ascertained the fact with legal evidence or conclusion. 7. Considering the orders passed by Ld. CIT(A) we find no justification in interference of the said orders as the Ld. CIT(A) has passed well reasoned and judicious order therefore in these circumstances, we dismiss this ground raised by the assessee

Now coming on the second groundof appeal,wherein the Ld. AR. has challenged the additions being 12.5% in respect of total non-genuine purchases.

We have gone through the detailed order passed by Ld. CIT(A) which is contained in para no. (5.1 to 5.3.2) of its order after having gone through the orders of Ld. CIT(A) as well as hearing Ld. DR at length, we find that Ld. CIT(A) while deciding GanpatGhevarchandMutha this ground has taken into consideration the facts of the present case, wherein the AO tried to verify the genuineness of purchases by issuing notice u/s 133(6) which was returned unserved. Ld. CIT(A) appreciated that when efforts of AO to verify had failed, he made the parties from whom the assessee was supposed to have made the purchases as witnesses and asked the assessee to produce the parties for verification when the assessee has miserably failed to call the parties, therefore the genuineness of the purchases from these parties could not be established beyond reasonable doubt. 10. We have further noticed that the onus was upon the assessee to produce the parties from whom the assessee had made purchases, but assessee has failed to discharge its onus therefore the revenue while relying upon the judgements of Hon’ble High Court had rightly come to the conclusion by estimating the gross profit of the alleged bogus purchases @ 12.5%. We further noticed that this ground raised by the assessee was partly allowed by the Ld. CIT(A), wherein directions were given to reduce the GP already shown by the assessee on such purchases.

In the net result, the appeal filed by the assessee stands dismissed. Order pronounced in the open court on 20th April, 2018. Sd/- Sd/- (R.C. Sharma) (Sandeep Gosain) लेखासदस्य / Accountant Memberन्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 20.04.2018 Sr.PS. Dhananjay GanpatGhevarchandMutha आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : अपीलाथी/ The Appellant 1. 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned यवभागीयप्रयतयनयध, आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, 5. Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER,