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Facts
The assessee, a partnership firm dealing in diamonds, filed appeals for Assessment Years 2009-10 and 2013-14. The appeals challenged additions made by the Assessing Officer on account of alleged bogus purchases. The initial assessment order for AY 2009-10 was passed at a total income of ₹98,58,590/- after an addition of ₹49,30,193/- (5% of purchase cost). For AY 2013-14, the addition was ₹1,47,66,834/- (5% of purchases).
Held
The Tribunal considered that the assessee had provided purchase invoices, confirmations, export documents, and bank statements to support the genuineness of purchases. Furthermore, a key witness, Mr. Rajendra Jain, whose retracted statement formed the basis of the addition, confirmed the retraction. The Tribunal also noted that in a similar case for AY 2014-15 with identical allegations, the Assessing Officer had accepted the genuineness of transactions.
Key Issues
Whether the additions made by the Assessing Officer on account of alleged bogus purchases are justified, especially when the primary evidence (a retracted statement) has been disowned and the assessee has provided supporting evidence for genuine transactions and exports.
Sections Cited
Section 143(3), Section 147, Section 148, Section 142(1), Section 131(1)
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
PER PRASHANT MAHARISHI, AM:
These are the two appeals filed by Star Brillian, Mumbai (assessee/ appellant) for A.Y. 2009-10 & 2013-14, involving similar issue. Both were heard together and disposed of by this common order.
ITA No.1551/Mum/2020 is filed for A.Y. 2009-10, filed against the appellate order passed by the Commissioner of Income-tax (Appeals)-59, Mumbai [the learned CIT (A)] dated 31st January, 2020, wherein the appeal filed by the assessee against the assessment order passed by the Income Tax Officer, Ward 19(3)(4), Mumbai [ the Ld AO ]
Aggrieved assessee preferred the appeal before the learned CIT (A), where assessee challenged the reopening of the assessment as well as the addition on merits. The learned CIT (A) dismissed the appeal of the assessee against the reopening of the assessment. However, on the merits assessee submitted that details of purchase and corresponding details of sales against each purchase, copies of the purchase invoices with corresponding sale invoices of the purchases and sale register for the entire year, ledger account of the parties and the copy of bank statement. It was further submitted that sales from the alleged purchases Assessee exported the goods, have been verified by the custom authorities with necessary evidences. The assessee further submitted the PAN, return of income, bank statement and also the copy of affidavit of all the alleged suppliers confirming the goods supplied by them. Therefore, the claim of the assessee is that the addition made by the learned Assessing Officer is incorrect. The learned CIT (A) after considering the explanation held that disallowance of 5% of the purchases is not at all justified. He directed the learned Assessing
We have carefully considered the rival contentions and perused the orders of the lower authorities. Assessee has not pressed the grounds of appeal with respect to the reopening of the assessment. Therefore, now the only issue that remains is whether the addition made by the learned Assessing Officer at the rate of 5% of alleged bogus purchases reduced by the learned CIT (A) at the rate of 3% is correct or not. It is found that assessee was directed by the co-ordinate bench to produce Mr. Rajendra Jain, before the learned Assessing Officer. The assessee has produced him before the learned Assessing Officer which is confirmed by the learned Assessing Officer. In his statement Mr. Rajendra Jain has categorically stated that his original statement given during the course of search has already been retracted by him and he stands by such retraction in the case of this assessee. Therefore, the original addition made by the learned Assessing Officer based on the statement of Mr. Rajendra Jain now does not stand. Now, the issue is to be examined independently of any admission or retraction made by Mr. Rajendra Jain. Admittedly, in this case, the assessee is exporter of diamond. The alleged purchases from the parties which
On careful perusal of the above facts and for identical reason as we have given in addition for A.Y. 2009-10, and specifically for the reason that in assessee's own case for
In the result, the appeals of the assessee for both the years are allowed.
Order pronounced in the open court on 15.03.2024.
Sd/- Sd/- (RAHUL CHAUDHARY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 15.03. 2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, Mumbai 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai