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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI C.N. PRASAD, JM & SHRI RAJESH KUMAR, AM
सुनवधई की तधयीख /Date of Hearing : 9.1.2017 घोषणध की तधयीख /Date of Pronouncement : 20.1.2017 आदेश / O R D E R PER RAJESH KUMAR, A. M: These are the two appeals filed by the assessee challenging the common order of ld. CIT(A)-1, Thane, dated 24.2.2016 for the assessment years 2010-11 and 2011-12.
Grounds of appeal taken by the assessee in both the appeals are common except figures, therefore, for the sake of convenience, we reproduce grounds taken by the assessee in assessment year 2010-11 and adjudicate this appeal accordingly. “The Ld. Commissioner of Income Tax (Appeals)- I, Mumbai [hereinafter referred to as "Ld. CIT(A)"] erred in passing the order dated 24.02.2016 confirming the action of the A.O. in disallowing the interest expenditure without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the order passed by Ld. CIT(A) is without any basis and the same may be quashed. ADDITION ON ACCOUNT OF NON GENUIUNE PURCHASES Rs.57,148/- a. The CIT(A) erred in upholding the action of the Ld. A. O. in making addition on account of non genuine purchase amounting to Rs. 57148/- without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition on account of non genuine purchases is not at all justified and the same may be deleted. b. The Ld. CIT(A) failed to appreciate that the addition on account of non genuine purchase amounting to Rs. 57148/- is genuine.The Appellant, therefore, prays that the addition on account of non genuine purchases of Rs. 57148/- is without any basis and the same may be deleted.”
3. At the time of hearing, the ld.AR submitted before the Bench that ground no.1 raised in these appeals are not arising out of CIT(A)’s order, and are not being pressed.
Since ground no.1 taken by the assessee did not arise from the appellate order and at the time of hearing did not press, we dismiss it as not pressed. 5. The facts of the case are that the assessee filed return of income on 24.9.2010 declaring total income of Rs.4,19,880/- which was processed under section 143(1) of the Income Tax Act, 1961 on 22.6.2011. The assessee also filed revised return on 22.6.2011 declaring same income as made in the original return of income. The assessee was engaged in the business of trading in ferrous and non ferrous metal, iron and steel. 6. The issue raised in the ground of appeal
no.2 is against the confirmation of addition towards non genuine purchases by ld.CIT(A) to the tune of Rs. 57148/-
7. The brief facts of the case are that during the course of assessment proceedings, the AO found on the basis of information forwarded by the Sales Tax Department, Government of Maharashtra that the assessee has made some purchases from entry provider amounting to Rs.4,57,190/- who was hawala dealers as per the list published in the website of Sales tax Department of Government of Maharashtra and was engaged in the business of supplying bogus bills only without doing any actual business. The AO also issued notices u/s 133(6) of the Act to the suppliers which were returned unserved with the remarks “NOT KNOWN”. Therefore, the AO issued notice to the assessee dated 18.11.2011 to prove genuineness of the purchase made by the assessee from the said party either by producing party or by giving correct address at which the notices could be served. When the assessee failed to respond , the AO came to the conclusion that the assessee has not discharged the onus cast upon it of proving the genuineness of purchase and therefore treated the said purchases of Rs.4,57,190/- as bogus and non genuine and added the same to the total income of the assessee.
8. In the appellate proceedings, the ld.CIT(A) partly allowed the appeal of the assessee by sustaining the addition of Rs.54,148/- by observing that the GP ratio shown by the appellant during the assessment year 2010-011 was better than GP rate of preceding year and thus restricted the disallowance to 12.5% of the total purchases.
9. We have carefully considered the rival contentions, perused the material placed before us during the course of hearing including the decision of authorities below as also the decisions relied upon by the parties. The ld.AR vehemently submitted before us that the ld. CIT(A) accepted the purchases but made addition on adhoc basis and in whimsical manner by just making disallowance at the rate of 12.5% of the tainted total purchases from the said dealer. The ld. AR further stated that the purchases were duly recorded in the books of account. The ld. AR also submitted that the sales were not disputed either by the AO or by the FAA. The assessee is a small businessman dealing in miscellaneous items of non-ferrous, copper, brass and metal, AISI sheets by product etc. The assessee cuts and prepare the material in customized manner as per the requirements of the customers. We also noticed that the movement of the material and final sale was also placed before the AO by the assessee. We find from the submissions before the authorities the assessee produced bills of purchases and sales, movement of material into final sales, payment through banking channels and thus, the assessee has discharged the onus cast on it by the statute. Once, the assessee has discharged the onus cast upon it ,then the burden shifts to the revenue to make further investigations and unprove the case of the assessee and acting on the information of the Sales Tax Department, GOM only without making other investigation and verification cannot be a ground for holding that the purchases were bogus and non-genuine. Under these circumstances, in order to cut leakage of revenue the addition @ 2% of bogus purchases i.e Rs. 4,57,190/-is directed to be made by the AO which comes to Rs. 9,144/- by setting aside the order of CIT(A). The AO is directed accordingly.
10. In the result, the appeal of the assessee is partly allowed as indicated above.
11. We have already decided an identical issue in 2010-11 wherein we have directed the addition to be made @ 2% of the bogus purchases. The facts of the present case are also identical to the one as decided by us in 2274/Mum/2016(supra). Therefore, our findings in would, mutatis mutandis, apply to this appeal also.
12. Resultantly, 2% of Rs.20,78,163/- would come to Rs.41,563/- is disallowed.The AO is directed accordingly.
13. In the result, the appeals of the assessee stands partly allowed.