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Facts
The assessee, engaged in manufacturing and supplying goods, filed its return and was subsequently issued a notice under Section 148 due to alleged purchases from accommodation parties. The Assessing Officer found purchases worth ₹18,67,913/- from bogus hawala dealers and made an addition of 100% to the total income.
Held
The Tribunal noted that in identical earlier years, addition to the extent of 12.5% was held to be chargeable. Following a coordinate bench decision confirmed by the High Court, the Tribunal directed the Assessing Officer to restrict the addition to 12.5% of the bogus purchases.
Key Issues
Whether the addition on account of non-genuine purchases should be restricted to 12.5%?
Sections Cited
69C, 148, 133(6), 145, 143(3), 147
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Income Tax Appellate Tribunal, “K(SMC
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAJ KUMAR CHAUHAN, JM
ACTUBE Enterprise, Mumbai (assessee /appellant) against the appellant order passed by the Addl. Commissioner of Income Tax (Appeal) ADDL/JCIT (A)-3, Kolkata [the learned CIT (A)], for A.Y. 2011-12, dated 22nd March, 2024, wherein the appeal filed by the assessee against the assessment order passed by the Income Tax Officer, ward 25(2)(1), Mumbai (the learned Assessing Officer under Section
The only ground of appeal of the assessee is confirmation of the addition of ₹18,67,913/- under Section 69C of the Act on account of non-genuine purchases.
3. The brief fact shows that the assessee is engaged in the business of manufacturing and supplying goods for railway workshop and engineering consumables. It filed its return of income on 6th September, 2011, at ₹19,890/-. Notice under Section 148 of the Act was issued on 22nd February, 2016, for the reason that assessee was found to have purchased invoices without goods from accommodation parties named in Sales tax Inquiries.. The learned Assessing Officer found that assessee has purchased invoices of ₹18,67,913/- from four different parties. These parties were found to be bogus hawala dealers. During the course of assessment, notices under Section 133(6) of the Income-tax Act, 1961 (the Act) were issued to the parties and assessee was also asked to produce those parties. However, assessee failed to do so. The learned Assessing Officer rejected the books of account of the assessee by applying provisions of Section 145 of the Act and made addition of 100% of the bogus supply. Accordingly, the total income of the assessee was assessed at ₹18,87,810/-.
Before the learned CIT (A), assessee did not succeed and appeal was dismissed. Therefore, the assessee is in appeal before us.
The learned Authorized Representative submitted that identical issue arose in case of the assessee for A.Y. 2010-11 and matter reached to the Hon'ble High Court wherein in Income Tax
The learned Departmental Representative supported the order of the learned lower authorities.
We have carefully considered the rival contentions and perused the orders of the learned lower authorities. The assessee was found to have obtained the invoices from bogus hawala parties of purchases amounting to ₹18,67,913/-. On identical facts and circumstances, the co-ordinate Bench in assessee’s own case in dated 5th August, 2019, for A.Y. 2010-11 has held that the addition to the extent of only 12.5% is chargeable to taxes. This order was challenged by the Revenue before the Hon'ble High Court, wherein the appeal of the Revenue was disposed off by order dated 12th April, 2022. In view of the decision of the co-ordinate Bench in assessee’s own case confirmed by decision of the Hon'ble High Court on the challenge of the order of the ITAT, we direct the learned Assessing Officer to restrict the addition to the extent of 12.5% of such bogus purchases. Accordingly, the appeal of the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 26.07. 2024.