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Income Tax Appellate Tribunal, B Bench, Mumbai
Before: Shri G.S. Pannu & Shri Pawan Singh
This appeal by the assessee under Section 253 of the Income Tax Act is directed against the order of the CIT(A)-2, Thane dated 06.09.2016 for A.Y. 2008-09.
The assessee has raised the following grounds of appeal: -
1. Ground No. 1: Reassessment proceeding is bad in law and hence should be quashed 1.1 On the facts and circumstances of its case and the law prevailing on the subject the learned Commissioner of Income- tax (Appeals)-2 ['CIT(A)'] has erred in not quashing the reopening of the assessment by treating same as bad in law. 1.2 The Appellant submits that the Order passed under Section 143(3) r.w.s. 147 of the Income-tax Act, 1961 ('the Act') is erroneous, in excess of jurisdiction and bad in law.
M/s. Evonik Catalysts India Pvt. Ltd.
2. Ground No. 2: Disallowance of purchases of Rs. 97,66,198 by treating the same as unsubstantiated purchases 2.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding the disallowance of the purchases of Rs. 97,66,198 by considering the same as unsubstantiated purchases as per the provisions of Section 37 of the Act. 2.2 The Appellant submits that the AO should be directed to delete the disallowance so made and recompute the total income accordingly.
3. Ground No. 3: Levy of interest under Section 234D of the Act 3.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have directed the AO to delete the interest levied under Section 234D of the Act and re-compute the tax liability of the Appellant accordingly.”
At the outset the learned A.R. of the assessee argued that the grounds of appeal raised by the assessee is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for A.Y. 2007-08.
The learned D.R., after going through the decision of the Tribunal in fairly conceded that the grounds of appeal are covered in favour of the assessee.
We have considered the submission of both parties and gone through the orders of the Authorities below. A perusal of the order of the Tribunal for A.Y. 2007-08 reveals that similar grounds of appeal were raised by the assessee as raised in the present appeal and the Coordinate Bench of the Tribunal passed the following order: -
“6. We have heard rival contentions and perused the material available on record. As far as the issue of re-opening of assessment under section 147 of the Act is concerned, after perusing the material on record, we are of the view that action initiated under section 147 of the Act is appropriate, since, the Assessing Officer had tangible material in his possession revealing the fact of bogus purchase made
M/s. Evonik Catalysts India Pvt. Ltd. by the assessee from two parties. Therefore, we dismiss the ground raised by the assessee on re-opening. However, as far as merits of the issue is concerned, it is seen that while the Assessing Officer has added the entire purchases made from the parties, the learned Commissioner (Appeals) has restricted the addition to 25%. Perusal of the assessment order reveals, though, the assessee was unable to prove the actual delivery of goods at its premises, thereby, failing to conclusively prove the fact that goods were purchased from the concerned parties, however, it is also a fact that the Assessing Officer has not conducted any independent enquiry on his own, but has relied upon the information obtained from Sales Tax Department. Moreover, the Assessing Officer has not disputed the sales / consumption of the assessee. In these circumstances, though, the assessee's claim that purchases were made from the concerned parties is not acceptable, at the same time, the entire purchases cannot be added to the income of the assessee. As far as the disallowance made at 25% of the bogus purchase by the learned Commissioner (Appeals), we are of the view that the same is on the higher side considering the consistent view adopted by the Tribunal in cases of similar nature. In tune with the consistent view of the Tribunal as stated above, we restrict the addition to 12.5% of the alleged bogus purchase. Suffice to say, the learned Authorised Representative had no objection if the addition is restricted to 12.5% of the alleged bogus purchase. Thus, the order of the learned Commissioner (Appeals) is modified to this extent. Grounds raised by the assessee are partly allowed and grounds raised by the Revenue are dismissed.”
We have considering the decision of the Tribunal wherein the assessee has raised identical grounds of appeal as raised in the present appeal. The Coordinate Bench of the Tribunal restricted the addition on alleged bogus purchase to 12.5%. Following the decision of the Coordinate
M/s. Evonik Catalysts India Pvt. Ltd. Bench in assessee’s own case for A.Y. 2007-08 the ground No.1 is dismissed and the ground No.2 is partly allowed with similar direction.
Ground No.3 relates to levy of interest under section 234D of the Act. The levy of interest is consequential, hence, needs no specific adjudication.
In the result, the appeal filed by the assessee is partly allowed.