INCOME TAX OFFICER- 42(1)(1), MUMBAI, MUMBAI vs. BHAVIK JAYANT GANDHI, KANDIVALI(W), MUMBAI

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ITA 2639/MUM/2023Status: DisposedITAT Mumbai29 February 2024AY 2010-117 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Revenue's appeal was infructuous. The Ld. CIT(A) had not adjudicated any issue on merits in the impugned order dated 14.06.2023. Instead, the Ld. CIT(A) had disposed of the duplicate appeal filed by the assessee on a technical ground, observing that the original manual appeal filed on 11.04.2016 had already been accepted and decided on merits. Therefore, the present appeal filed by the Revenue against the order disposing of the duplicate appeal was dismissed as there was no prejudice caused to the Revenue. The Tribunal noted that the Revenue should have filed an appeal against the original appellate order which was disposed of by the Ld. CIT(A) on merits. No finding was given on the merits of the additions made by the AO or the extent of the addition.

What were the facts?

The Revenue is in appeal against the order of the Ld. CIT(A) dated 14.06.2023 for Assessment Year 2010-11. The assessee, an individual dealing in chemicals, had filed a return declaring an income of ₹4,13,610/-. The assessment was reopened under Section 147 of the Income-tax Act, 1961, based on information from the DGIT (Investigation) regarding accommodation entries. The Assessing Officer (AO) treated purchases of ₹15,914,124/- as non-genuine, citing unserved notices under Section 133(6) and the assessee's failure to produce the parties. The assessee appealed to the Ld. CIT(A), initially filing manually on 11.04.2016 and later e-filing a duplicate appeal on 04.01.2019 with condonation of delay. The Ld. CIT(A) disposed of the e-appeal as infructuous, stating that the original manual appeal had already been decided on merits.

What were the issues?

1. Whether the Ld. CIT(A) erred in restricting the addition to 8.57% on account of bogus purchases, without appreciating that the Sales Tax Department, Maharashtra, had proved the parties were involved in providing accommodation entries and the assessee was a beneficiary (Question of law and fact, relating to Section 69B). 2. Whether the Ld. CIT(A) erred in not appreciating that the assessee failed to produce the parties for verification, despite an opportunity provided by the AO (Question of law and fact, relating to Section 69B). 3. Whether the Ld. CIT(A) erred in not appreciating the ratio of the decision of Gujarat High Court in N.K. Proteins Ltd., confirmed by the Supreme Court, that in the event of bogus purchases, addition on the whole of such purchases is required (Question of law, relating to Section 69B). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Ld. CIT(A) erred in restricting the addition and not appreciating the findings of the AO regarding bogus purchases and the assessee's failure to produce parties. The revenue relied on the decision in N.K. Proteins Ltd. (Gujarat High Court) and its confirmation by the Supreme Court. The revenue also sought to entertain the appeal despite the tax effect being below the monetary limit, citing an exception for information received from law enforcement agencies.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(1),Section 133(6),Section 69B

AI-generated summary — verify with the full judgment below

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

Before: SHRI ABY T VARKEY, HONBLE

For Respondent: Shri Ashok Kumar Ambastha
Pronounced: 29.02.2024

O R D E R PER S. RIFAUR RAHMAN (A.M) 1. This appeal is filed by the revenue against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] dated 14.06.2023 for the A.Y. 2010-11.

(A.Y. 2010-11) BHAVIK JAYANT GANDHI 2. Brief facts of the case are, assessee an individual deriving income from business (dealing in chemicals), filed return of income on 24.09.2010 for the A.Y.2010-11 declaring income of ₹.4,13,610/- and the return was processed u/s.143(1) of the Income-tax Act, 1961 (in short “Act”). Subsequently, Assessing Officer received information from the DGIT (Investigation), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessment was reopened U/s. 147 of the Act based on the information received from DGIT (Investigation), Mumbai, that the assessee has availed accommodation entries from various dealers who are said to be providing accommodation entries without there being transportation of any goods.

3.

In the reassessment proceedings, the assessee was required to prove the genuineness of the purchases made from the parties as referred in Assessment Order. In response, Assessee furnished purchase bills, delivery challans, details of payments made for the purchases and details of corresponding sales of the goods purchased and submitted the purchases are genuine. Further, he submitted that purchases were genuine as the payments were made through banking channels.

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(A.Y. 2010-11) BHAVIK JAYANT GANDHI 4. After considering the submissions of the assessee, Assessing Officer rejected the same and treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of materials and the assessee might have made purchases in the gray market. Assessing Officer observed that the notices issued u/s. 133(6) of the Act to the parties are returned unserved with a remark “not known” and the assessee has not produced the parties before the Assessing Officer. It is the finding of the Assessing Officer that the assessee failed to produce the parties in support of its claim that purchases are genuinely made from the parties. Therefore, Assessing Officer treated entire purchases of ₹.15,914,124/- made from the alleged parties as non-genuine and completed the assessment on 23.02.2016.

5.

Aggrieved with the above order, assessee preferred appeal before the Ld. CIT(A) and filed the appeal manually on 11.04.2016. Due to technical error on the Income Tax Site, the assessee has e-filed the appeal on 04.01.2019 with condonation of delay. After considering the fresh appeal which is a duplicate appeal once again filed by the assessee, he has disposed off the appeal after condoning the delay observing as under:-

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(A.Y. 2010-11) BHAVIK JAYANT GANDHI “5.4 Considering the above facts and the decision of the Hon'ble jurisdictional ITAT, even though the appeal was not e-filed but filed manually as there was some difficulty in e-filing and CBDT has taken due cognizance of such difficulty and extended the time limit vide its circular, and it is seen that the appellant has also filed a manual appeal for the same year on the same issues on 11.04.2016 and the manual appeal filed on 11.04.2014 was accepted and is decided on merits. Therefore this e-appeal filed by the appellant is a duplicate appeal on the same issues for the same A.Y and therefore it has become infructuous and requires no further adjudication. Therefore, no adjudication is being made on the grounds of appeal as the issues have already be dealt with in the manual appeal filed on 11.04.2016 Conclusion: In the result, this duplicate appeal of the assessee is treated as dismissed for statistical purposes. purposes.”

6. From the above, Ld. CIT(A) has disposed off the duplicate appeal without dealing on merit and observed that the original manual appeal was accepted and decided the issue on merit in the original manual appeal.

7. Aggrieved, revenue is in appeal before us raising following grounds in its appeal: -

(i). "On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in restricting the addition to 8.57% on account of bogus purchases, without appreciating the fact that the Sales Tax Department, Maharashtra has proved beyond doubt that the parties declared as hawala traders were involved in providing of the accommodation entry of purchases and the assessee was one of the beneficiary of accepting accommodation for the purchases. ' (ii). "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that the assessee

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(A.Y. 2010-11) BHAVIK JAYANT GANDHI failed to produce the parties for verification, in spite of opportunity provided by the AO. " (iii). "On the facts and circumstances of the case and in law, the Ld.ClT(A) erred in not appreciating the ratio of the decision of Gujarat High Court in the case of N.K. Proteins Ltd. wherein it was confirmed that in the event of bogus purchases, the addition on the whole of such purchases was required to be made and this particular ratio was confirmed by the Hon'ble Supreme Court in SLP No.CC No. 769 of 2017 dated 1601.2017, by dismissing the SLP of that assessee. (iv). "On the facts and circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal though the tax effect is below the monetary limit prescribed in the CBDT Circular no. 17/2019 dated 08.08.2019 r.w. Circular No. 3/2018 dtd. 11.07.2018 as amended on 20.08.2018 as the case falls in the exception provided in para 10(e) of the said Circular in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities. ' (v). "The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the AO be restored. ' (vi). "The appellant craves leave to amend or alter any ground or add a new ground. '”

8.

Inspite of issue of notice none appeared nor any adjournment was sought. Therefore, we proceed to dispose off this appeal with the assistance of Ld.DR on merits.

9.

At the time of hearing, Ld. DR brought to our notice relevant facts of the case and heavily relied on the order of the Assessing Officer. He prayed that the order of the Ld. CIT(A) may be set-aside.

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(A.Y. 2010-11) BHAVIK JAYANT GANDHI 10. Considered the submissions of the Ld. DR and material placed on record, we observe that the revenue has filed the present appeal against the duplicate set appeal filed before Ld. CIT(A). Ld. CIT(A) has decided the issue only on technical ground and observed that the issue with respect to merit was decided on original manual appeal filed before him, which was passed on different appellate order against the appeal filed on 11.04.2016. Therefore, the Ld. CIT(A) has not adjudicated any issue on merits in the impugned order passed on 14.06.2023. Therefore, the appeal filed by the revenue is infructuous and the revenue should have filed appeal against the original appellate order which was disposed off by the Ld. CIT(A). In this appellate order only the pending duplicate appeal was dismissed. There is no prejudice caused to the revenue. Accordingly, present appeal is dismissed.

11.

In the result, appeal filed by the revenue is dismissed.

Order pronounced in the open court on 29th February, 2024.

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