ITO 8(2)(2), MUMBAI vs. SNEHA ALLOYS PVT. LTD., MUMBAI

ORDER PER N.K. PRADHAN, AM This is an appeal filed by the revenue. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner (Appeals) – 14, Mumbai and arises out of the order u/s 144 of the Income Tax Act, 1961 (the ‘Act’). 2. The grounds of appeal filed by the revenue read as under: i. The Learned CIT(A) has erred on facts and in law in restricting the addition to 12.5% on account of bogus purchases indicated by the Sales Tax Department only instead of the entire purchases (except case of M/s. Ispat Energy Ltd.) as confirmed by the assessee. ii. The Learned CIT(A) has erred on facts and in law in not appreciating that during the course of survey proceedings Shri Shivratan Luharuka, the director and the shareholder of the company, has stated that the actual delivery of the all goods purchases had never taken place except in the case of M/s. Ispat Energy Ltd. iii. The Learned CIT(A) has erred on facts and in law in not appreciating that this being a case of utter disregard and subversion of law, the burden of proof cast on the assessee was of a very high degree and assessee failed to discharge this burden. iv. The Learned CIT(A) has erred on facts and in law, in not giving effect to Section 114(g) of the Indian Evidence Act which clearly lays down that if a fact in knowledge of a party is not explained, adverse inference can be drawn against the party possessing the knowledge of facts / information. v. The Ld. CIT(A)’s order is contrary to law and facts and deserves to be set aside.

3. We find that the Assessing Officer (AO) has made an addition of Rs. 21,88,881/- to the total loss of Rs. 68,570/- shown by the assessee in its return of income for the A.Y. 2006-07. The assessee preferred an appeal against the order of the AO before the learned CIT(A). We find that the learned CIT(A) restricted the addition made by the AO to 12.5% of Rs. 21,88,881/-. The tax effect thus falls below the monetary limit of Rs. 10,00,000/- for filling appeal before the ITAT as per CBDT Circular No. 21 of 2015 dated 10.12.2015. Both the learned counsels agree to the fact that the tax effect in the instant appeal is below the monetary limit.

4. The monetary limits have been made applicable retrospectively in the said Circular as would be evident from the following: ‘’This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts / Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn / not pressed.’’