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Income Tax Appellate Tribunal, SMC BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This is the appeal filed by the Revenue against the order of CIT(A)- 1, Nashik, dated 19-08-2016 for the Assessment Year 2010-11.
Grounds raised by the Revenue are as under : “1. Whether on the facts and in the circumstances of the case, the Learned CIT(A)-1, Nashik was justified in deleting the addition of Rs.19,26,253/- for A.Y.2010-11 on account of alleged bogus purchases from Hawala dealers/parties. 2. Whether on the facts and in the circumstances of the case, the Learned CIT(A)-1, Nashik was justified in deleting the purchases treated as bogus when the appellant had not been able to produce the certain parties from whom purchases were made when letters sent to the parties were returned undelivered or the parties did not respond? 3. Whether the Learned CIT(A)-1, Nashik erred in assuming that the purchases were only inflated when it was clear from the conduct of the assessee, the parties found missing and results of the investigation of another Govt. Department (Sales Tax), that the purchases could not be
proved as genuine and therefore the disallowance by the AO was justified?
Whether the Learned CIT(A)-1, Nashik erred in presuming that simply because no addition was made in the case of Sales, it was accepted as genuine and further assuming that thereby purchases should be genuine?
Whether the Learned CIT(A)-1, Nashik erred in accepting the affidavits from suppliers without any explanation from the assessee why the suppliers could not appear before the AO when they were called for examination?
The appellant prays that the order of the Learned CIT(A)-1, Nashik may please be cancelled and the order of Assessing officer may please be restored.
The appellant prays to adduce such further evidence to substantiate his case.
The appellant prays leave to add, alter, clarify, amend and or withdraw any grounds of appeal as and when the occasion demands.”
Briefly stated relevant facts are that assessee is an individual and
is engaged in the business of manufacturing of trading in electrical
goods. Assessee filed the return of income on 29-09-2010 declaring
total income of Rs.6,76,940/- for the assessment year under
consideration. On the basis of information received from the
Investigation Section of Sales Tax Department, AO issued notices
u/s.148 of the Act to the assessee. AO found that assessee made
purchases from the following parties. Details are given below :
Name of the party Amount of alleged bogus purchases Bharat Enterprises 1,17,265/- Kushal Impex 17,035/- Aroma Industries 45,007/- Leo Impex 5,53,540/- Laxmi Enterprises 11,27,608/- Picasso Mercantile 37,461/- Company Pvt. Ltd. Asian Impex (India) 28,337/
Eventually, AO came to the conclusion that the purchases made by the
assessee are bogus ones and determined the income at Rs.26,03,190/-.
In the First Appellate Proceedings, CIT(A) after elaborately
discussing various case laws came to the conclusion that this is not a
case of bogus purchases but a case of inflated purchases and at best
from bogus parties. Therefore, AO is directed to restrict the
disallowance of purchases to 25% of purchases made by the assessee
for the year under consideration. The operational para No.4.88.3 of the
order of CIT(A) is extracted here as under :
“4.88.3 Thus, in my opinion the facts on record demonstrate that this is not a case of bogus purchase but a case of inflated purchases and at best from bogus parties. The appellant has purchased goods of A.Y. 2010-11 – Rs.19,26,253/- and A.Y. 2011-12 - Rs.63,43,426/-. Considering the facts and circumstances of the case, the AO is directed to restrict the disallowance to 25% of purchases for A.Y. 2010-11 – Rs.4,81,563/- & A.Y. 2011-12 of Rs.15,85,856/-.”
Aggrieved with the order of CIT(A) the Revenue filed the present
appeal before the Tribunal with the grounds extracted above.
Ld. DR for the Revenue relied on the orders of AO strongly and
submitted for confirming the entire addition of Rs.19,26,253/- instead
of restricting to 25% of the said purchases.
On the other hand, Ld. Counsel for the assessee relied on the
order of CIT(A). He submitted that it is a case where assessee
successively demonstrated the trail of goods and payment of
consideration for purchase of the goods. In such cases, the disallowance
is uncalled for merely on his failure to produce the parties before the
authorities.
I heard both the sides and perused the orders of the Revenue.
The only issue under consideration is against restriction of addition to
25% by the CIT(A). Revenue desires confirming of 100% of the addition
made by the AO. This is a case where infact the assessee is not in
appeal against the order of CIT(A) restricting the addition to 25%of the
purchases. On considering the fact that the assessee furnished
relevant documents in respect of the trail of goods from the place of
purchase to the assessee’s premises by virtue of copies of bills, ledger
account extracts, bank account extracts etc., in my view, the fact of
transaction of purchase of goods and the trail of them stands
established. However, in order to block any leakage of gross profit,
where the goods may have been purchased from open market, I find the
order of the CIT(A) is fair and reasonable and does not call for any
interference. Accordingly, the grounds raised by the Revenue are
dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced on this 23rd day of March, 2018.
Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 23rd March, 2018. Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-1, Nashik 3. आयकर आयु� / The CIT-1, Nashik 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune