BHARAV TUBE (INDIA),MUMBAI vs. INCOME TAX OFFICER 19(1)(2), MUMBAI

The issue in this case pertains to bogus purchases. The brief facts are that the assessee has filed its return of income for the assessment year 2010-11 on 24.09.2010 declaring total income of Rs.1,33,380/-. Subsequently, the Assessing Officer received information from the sales tax department through the DGIT(Inv.), Mumbai that the assessee had procured bogus purchase bills totaling to Rs.2,38,50,302/- from 31 parties. The Assessing Officer issued notice u/s.148 on 21.10.2014. Subsequently, notices u/s.143(2) and 142(1) were issued along with questionnaire. In response to the notices, details called for were submitted. The assessee is a firm engaged in the business of trading in ferrous and non-ferrous metal.

During the course of assessment proceedings, the Assessing Officer asked the assessee to produce the parties from whom the assessee had purchased the goods and prove the genuineness of the purchases. The Assessing Officer has stated in the assessment order that the assessee failed to produce the parties before him. Thus, the purchases and genuineness remained unexplained. The Assessing Officer has therefore disallowed Rs.29,81,288/- i.e. 12.5% of the bogus purchases of Rs.2,38,50,302/- and added the same to the total income of the assessee. The Assessing Officer has completed the assessment by determining the total income of the assessee at Rs.31,14,670/- and levied tax of Rs.15,64,480/- on the assessee.

Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) dismissed the appeal for non prosecution holding that assessee had taken a lackadaisical approach with regard to appellate proceedings.

I have heard the ld. Departmental Representative and perused the records. None appeared on behalf of the assessee despite notice.

Upon carefully consideration, I find that it is incumbent upon the ld. Commissioner of Income Tax (Appeals) to pass an order on the merits of the case and not dismiss the appeal for non prosecution. For this proposition, I place reliance upon following case laws: 1. CIT vs Premkumar Arjundas Luthra (HUF) (2017) 154 DTR (Bom) 302 2. CIT vs S Chenniappa Mudaliar (1969)74 ITR 1 (SC)

Accordingly in the interest of justice, I remit the issue raised in appeal to the file of the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) is directed to consider the issue afresh and pass an order on the merits of the case after giving the assessee proper opportunity of being heard.

In the result, this appeal by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 07.03.2018