ACIT - 19(3), MUMBAI vs. SUJAN SINGH S. DEORA, MUMBAI

PDF · subscribers
ITA 6058/MUM/2016Status: DisposedITAT Mumbai25 October 2017AY 2009-105 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the entire purchases cannot be added as bogus simply because the suppliers were not produced. Following judicial precedents, the addition was further restricted to 8% of the alleged purchases.

What were the facts?

The Assessing Officer added the entire purchases made by the assessee as bogus, as the assessee failed to prove their genuineness and the suppliers could not be served. The CIT(A) restricted the addition to 15% of the bogus purchases, considering the sales were accepted.

What were the issues?

Whether the entire purchases can be added as bogus when the assessee failed to prove genuineness, and if not, what is the appropriate profit element to be taxed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI

Before: SHRI C.N. PRASAD, HONBLE & SHRI RAJESH KUMAR, HONBLE

For Respondent: Ms. Arju Garodia
Hearing: 05.10.2017Pronounced: 25.10.2017

Heard together (2 matters)

ITA NO.5716/MUM/2016
ITA NO.6059/MUM/2016

Read from the judgment's own cause title. This page is filed under one of them.

2 5715 & 5716/MUM/2016 ITA NO.6058, 6059 & 6060/MUM/2016 Shri Sujan Singh S. Deora O R D E R PER C.N. PRASAD (JM) 1. These appeals are filed by the assessee and Revenue against the orders of the Learned Commissioner of Income Tax (Appeals)-30, Mumbai dated 29.07.2016 for the Assessment Years 2009-10 and 2010-11 arising out of the Assessment Orders passed u/s. 143(3) and 143(3) r.w.s. 147 of the Act.

2.

In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. Therefore, we proceed to dispose off these appeals on merits by hearing Ld.DR.

3.

Briefly stated the facts are that, based on the information received from the DGIT(Investigation) and Sales Tax Department, Government of Maharashtra, the assessments for the Assessment Years 2009-10 and 2010-11 were completed u/s. 143(3) and 143(3) r.w.s.147 of the Act holding that the assessee availed bogus purchase entries from various parties referred to in Page No.2 of the Assessment Order. In the course of assessment proceedings assessee was required to prove of the genuineness of the purchases made and in response to the same assessee submitted that assessee purchased the materials form the parties for the construction works and without materials he cannot complete the work allotted to him. Payments were made through account

3 5715 & 5716/MUM/2016 ITA NO.6058, 6059 & 6060/MUM/2016 Shri Sujan Singh S. Deora payee cheques and the copies of ledger accounts were submitted. Assessee did not produce inward registers, day to day Stock Register, transportation details of materials etc. The Assessing Officer to verify the genuineness of the purchases issued notices u/s. 133(6) to the parties but the notices have returned unserved with an endorsement that notice were “unclaimed”, “left” or “not found”. Therefore, since the assessee could not produce the Stock Registers and could not prove the movement of goods by way of transport receipts and as the parties were also not produced for verification and no records were furnished for consumption of material he has added the entire purchases made by the assessee from the parties as unproved/bogus purchases.

4.

On appeal Ld.CIT(A) agreed with the Assessing Officer that assessee has failed to prove the genuineness of the purchase transactions from the said parties. However, referring to various judicial pronouncements and taking note of the fact that the Assessing Officer has accepted the sales and without their being any purchases there would not have been any sales, Ld.CIT(A) concluded that only the profit element embedded in the purchases to be brought to tax and restricted the addition/disallowance to 15% of the bogus purchases for these two assessment years. Assessee preferred appeals in sustaining the addition/disallowance to 15% and the Revenue is in appeal in granting

5.

Learned counsel for the Revenue vehemently supported the order of the Assessing Officer in bringing to tax the entire purchases as bogus purchases as the assessee could not prove the genuineness of the purchases for both the Assessment Years 2009-10 and 2010-11.

6.

We have heard the Ld. DR, perused the orders of the authorities below. Ld.CIT(A) restricted the addition/disallowance to 15% of the bogus purchases for these two assessment years. The Hon'ble Gujarat High Court in the case of Bholanath Polyfab Pvt. Ltd [355 ITR 290] held that when the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [38 taxman.com 385]. Simply because the parties were not produced the entire purchases cannot be added as held by the Bombay High Court in the case of CIT v. Nikunj Eximp [216 Taxman.com 171]. In view of the above decisions and taking the totality of the facts and circumstances into consideration, we restrict the addition to 8% of the alleged purchases instead of 15% estimated by the Ld.CIT(A). Thus, we direct the Assessing Officer to disallow 8% of the purchases treated as

7.

In the result, appeals of the Revenue are dismissed and appeals of the assessee are partly allowed.

Order pronounced in the open court on the 25th October, 2017.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →