ITO 25(2)(3), MUMBAI vs. SANJAY V DHRUV, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) Per Pawan Singh, J.M. �या�यक सद�य iou iou �संह के अनुसार: iou iou 1. This appeal by Revenue u/s. 253 of the Income-Tax Act is directed against the order of ld. CIT(A)-35, Mumbai dated 21.08.2014 for AY 2011-12. In the appeal the assessee has raised as many as eight grounds of appeal

. However, as per our considered opinion there is only one substantial ground of appeal is that “Whether the ld. CIT(A) erred in deleting the addition of Rs. 45,20,339/- u/s 69C of the Act”. Rest of the grounds of appeal is argumentative in nature.

2. The brief facts of the case are that the assessee is a proprietor of M/s. Deal Well Enterprises engaged in the trading of chemicals, filed its return of income for relevant AY on 28.09.2011 declaring total income at Rs. 2,21.972/-. The assessment u/s 143(3) of the Act was completed on 26.03.2014. The Assessing Officer (AO) while making the assessment made the addition of Rs. 45,20,339/- as unexplained expenditure u/s 69C on account of bogus purchases. On appeal before the ld. CIT(A), the entire addition was deleted. Aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before us.

3. We have heard the representatives of the parties and gone through the orders of the authorities below. The ld. DR for the Revenue supported the order of AO. On the other hand, ld. AR of the assessee argued that the grounds of appeal raised by the Revenue is squarely covered in favour of the assessee by the decision of assessee’s own case for AY 2010-11 in ITA No. 5089/Mum/2014. The ld. AR of the assessee filed the copy of decision 2 Shri Sanjay V. Dhruv of the Tribunal dated 29.02.2016. The ld. DR for the Revenue not disputed the decision of Tribunal. On specific query from ld. DR for the Revenue, if any appeal is filed against the decision of Tribunal for AY 2010-11. The ld. DR for the Revenue shown her ignorance, if the appeal is filed before the Hon’ble High Court.

4. We have considered the contentions of the parties and gone through the decision of Tribunal in assessee’s own case for earlier years. The Co-ordinate Bench of this Tribunal in Revenue’s appeal for AY 2010-11 in ITA No. 5089/Mum/2014 dated 29.02.2016 passed the following order: 7. We have considered the submissions of the parties and perused the material available on record. It is evident from the assessment order that on the basis of information obtained from the Sales Tax Department, Assessing Officer issued notices under section 133(6) to three parties out of which two notices were returned un-served by the postal authorities and in case of one of the parties through notice was served, there was no response. Therefore, he called upon the assessee to produce the concerned parties. As the assessee failed to produce the concerned parties, the Assessing Officer, therefore, primarily relying upon the information obtained from the Sales Tax Department, Shri Sanjay V. Dhruv held the purchases to be bogus and made addition under section 69C of the Act. Though, it may be a fact that assessee was not able to produce the concerned parties before the Assessing Officer, for whatever may be the reason, fact remains during assessment proceedings itself the assessee had produced confirmed ledger copies of concerned parties, bank account statement, purchase bills, delivery challans, etc., to prove the genuineness of the purchases. It is also a fact on record that the Assessing Officer has not doubted the sales effected by the assessee. Thus, it is logical to conclude that without corresponding purchases being effected the assessee could not have made the sales. Moreover, the Assessing Officer has not brought any material on record to conclusively establish the fact that purchases are bogus. Merely relying upon the information from the Sales Tax Department or the fact that parties were not produced the Assessing Officer could not have treated the purchases as bogus and made addition. If the Assessing Officer had any doubt with regard to purchases made, it was incumbent upon him to make further investigation to ascertain the genuineness of the transactions. Without making any enquiry or investigation the Assessing Officer cannot sit back and make the addition by simply relying upon the information obtained from the Sales Tax Department and issuing notices under section 133(6) of the Act. As the Assessing Officer has failed to make Shri Sanjay V. Dhruv any enquiry or investigation to prove the fact that the purchase transactions are not genuine whereas the assessee has brought documentary evidences on record to prove genuineness of such transactions which are not found to be fabricated or non-genuine, the action of the Assessing Officer in ignoring them cannot be accepted. Moreover, as rightly observed by the learned Commissioner (Appeals), when the payment to the concerned parties are through proper banking channel and there is no evidence before the Assessing Officer that the payments made were again routed back to the assessee, the addition made under section 69C cannot be sustained. Moreover, the decisions relied upon by the learned A.R. on careful analysis were found to be squarely applicable to the facts of the present appeal. Therefore, finding no infirmity in the order