ASST. CIT-32(1), MUMBAI V. SHRI MANGALSINGH RATHORE, MUMBAI

ITA 107/MUM/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5816 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 07-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 148; 69C; 143(3); 133(6); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VP AND SHRI AMARJIT SINGH, JM आयकर अपील सं/ I.T.A. Nos. 107 & 109/Mum/2021 (निर्धारण वर्ा / Assessment Years: 2010-11 & 2011-12) ACIT-32(1) Room No.702, 7 th Floor, Kautilya Bhavan, Bandra Kurla Complex, Bandra (E), Mumbai-400051. बिधम/ Vs. Mangalsingh Mothisingh Rathore B-406, Mayur CHS, Sodawala Cross Lane, Borivali (W), Mumbai-400092. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAIPR6967M (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 07/12/2021 घोषणा की तारीख /Date of Pronouncement: 22/12/2021 आदेश / O R D E R PER AMARJIT SINGH, JM: The revenue has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals) -44, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys.2010-11 & 2011-12. ITA. NO.107/Mum/2021 2. The revenue has filed the present appeal against the order dated 27.08.2020 passed by the CIT(A)-44, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2010-11. 3. The revenue has raised the following grounds: - "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restricting the addition to 12.5% of the bogus purchases against 100% addition made by AO on account of bogus purchases". Revenue by: Shri C. T. Mathews (Sr. AR) Assessee by: None ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 2 2. 'Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in not considering that the addition was made oil basis of information received from Sales Tax Department, Maharashtra through DIT (Inv.) with regard to bogus purchases made by the assessee from dealers without supply of actual goods." 3. Whether oil facts and in the circumstances of the case and in law, the Ld. CIT (A) as erred in not considering that the hawala dealers have admitted on oath before the Sales Tax Authorities that they have not sold any material to anybody." 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in not considering that the assessee could not prove the genuineness and creditworthiness of the purchases transitions during the course of assessment proceedings." 5. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in not considering the facts which are similar to the facts ill decision of Hon'ble Supreme Court in the case of N. K. Proteins v DCIT (SLP (Civil) No. 769/2017 dated 16.01.2017, wherein it was held that when the transactions have been found to the bogus that there is no point in restricting it to a certain percentage and required to the disallowed in their entirely. 6. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restricting the addition on account of agricultural income to Rs. 8,86,159/- 7. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has failed to appreciate that the yield of 66215 ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 3 Kgs of Agricultural produce (Zeera, Sarson, Til & Isabgol) from 2.9 hectares of land is almost impossible." 8. "The appellant prays that the order of the CIT (A) on the above grounds be set aside Hill that of the Assessing Officer be restored." 9. The appellant craves leave to amend or to alter any ground or add a new ground which may be necessary.” 4. The brief facts of the case are that the assessee filed his return of income on 12.10.2010 declaring total income to the tune of Rs.1,22,99,431/- for the A.Y.2010-11. The assessment of the assessee was reopened u/s 148 of the Act on the basis of an information received from the DGIT(Inv.), Mumbai in which it was conveyed that the assessee has taken the bogus purchase entry of Rs.2,74,96,694/- from the following 13 parties: - ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 4 Notice was issued and representative of the assessee has informed that the scrutiny assessment u/s 143(3) of the Act has already been completed on 14.03.2013 in which the assessment has been completed by verifying the 13 hawala parties but the names of the four parties were not mentioned whose names are hereby mentioned below:- After the reply of the assessee, the AO raised the addition in connection with the said four parties to the tune of Rs.67,70,504/-. The total income of the assessee was assessed to the tune of Rs.1,90,69,935/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who restricted the addition to the extent of 12.5% of the bogus purchase but the revenue was not satisfied, therefore, the revenue has filed the present appeal before us. ISSUE Nos. 1 to 5 5. We have heard the argument advanced by the Ld. Representative of the Department and has gone through the case filed carefully. Before going further, we deem it necessary to advert the finding of the CIT(A) on these issues: - “3 Ground No 1 raised by the assessee relates to the addition of Rs.67.70.504 being 100% of the purchases as non-genuine purchases to maintain consistency with the earlier order. The AO has mentioned ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 5 in the order that as per the information from the Sales tax department purchases were made by the assessee from the above mentioned parties. During the course of assessment proceedings, the assessee contended that the purchases were genuine. AO asked the assessee to furnish all the relevant evidence to establish that goods were actually purchased and show cause as to why this amount of Rs.67,70,504 should not be disallowed. In reply. the assessee submitted pui chase invoice, ledger account. bank account statement highlighting the payment, corresponding sales etc. AO did not accept the contention of the assessee for the reasons mentioned on page 4 of assessment order. Finally, the AO concluded in Page no. 7 that in the assessee's own case the matte of bogus purchases was already decided by disallowing the entire 100% bogus purchases for AY 2010-11 vide order u/s 143(3) of the Act dated 14.03.2013 and he.lc that Rs.67,70,504 being 100% of the purchases as non-genuine purchases and added the same to the total income of the assessee. 3.1 During the appellate proceedings, the appellant made his submissions through the AR to make a point that purchases cannot be treated as unproved expenditure/bogus merely on the basis of the list of suspicious dealers put up by the Sales tax department The statements given by vendors cannot be relied upon without cross- examination of the parties. The appellant filed ledger accounts and copies of bank statements highlighting the payments for these purchases to establish genuineness of the purchases and placed reliance on certain case laws in its submissions. The AR also submitted that in assessee's own case for the same assessment year Hon'ble ITAT Mumbai in ITA No. 5699/M/2014 dated 05.02.2018 estimated the profit at 12.5% of the impugned bogus purchases and the same may be followed while adjudicating the present appeal. ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 6 3.2 I have considered the assessment order and the submissions of the appellant including tie case laws cited. The AO held in the assessment order that the appellant produced the details with regard to purchases made. Assessee also filed copies ledger account of parties and also the bank statement showing earn and every payment for purchases. It is noticed that on account of non-production of suppliers, delivery challans and transportation bills etc. tie AO add 100% as non- genuine purchases. It is seen that many Benches of ITAT and Hon’ble High Courts have held that when purchases are supported by sufficient documentary evidences, then merely because of non- appearance before the AO or non-production of minor documents like delivery challans and lorry receipts, one cannot conclude that the purchases were not made by the asses see. It is seen in the earlier round in the same case (AY 2010-11) where same kind of addition of 100% of bogus purchases were made in the original assessment u/s 143(3) of the Act dated 14.03.2013. Hon’ble ITAT Mumbai ITA No. 5699/M/2014 dated 05.02.2008 estimated the profit at 12.5% of the impugned bogus purchases. As alternate plea, the appellant requested to followed the ITAT order in his own case. 3.3 Respectfully following the decision of the Hon’ble ITAT in assessee's own case for the same assessment year (2010-11). the addition made by the AO is restricted to 12.5% of such purchases Therefore the AO is directed add 12.5% of Rs.67,70,504 working out to Rs.8,46,313 and modify the addition accordingly. Appellant gets para relief. These grounds are partly allowed.” 6. On appraisal of the above mentioned finding, we noticed that the CIT(A) has restricted the addition to the extent of 12.5% of the bogus purchase in view of the decision of Hon’ble ITAT in the assessee’s own ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 7 case for the A.Y.2010-11 bearing ITA. No.5699/Mum/2014 dated 05.02.2018. The decision has not been changed or varied till date, therefore, we are of the view that the CIT(A) has rightly followed the decision of Hon’ble ITAT in the assessee’s own case for the A.Y.2010-11 in earlier round bearing ITA. No.5699/Mum/2014 dated 05.02.2018. Accordingly, we are of the view that the CIT(A) has rightly estimated the income @ 12.5% of the bogus purchase which nowhere seems unjustifiable. Accordingly, we affirm the finding of the CIT(A) on this issue and decide these issues in favour of the assessee against the revenue. ISSUE NOs.6 to 8 7. Issue nos. 6 to 8 has wrongly been taken by revenue in this appeal because no issue of arise on the basis of adjudication by the CIT(A), hence, these issues are not liable to be taken for adjudication. ISSUE NO.9 8. Issue no.9 is general in nature which nowhere required for adjudication. ITA. No.109/Mum/2021 8. The revenue has filed the present appeal against the order dated 18.09.2020 passed by the CIT(A)-44, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2011-12 10. The revenue has raised the following grounds: - “1. "Whether oil facts and in the circumstances of the case and in law, the Ld. CIT (a) has erred in restricting the addition to 12.5% ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 8 of the bogus purchases against 100% addition made by AO on account of bogus purchases". 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (a) has erred in not considering that the addition was made oil basis of information received from Sales Tax Department. Maharashtra through DIT (Inv.) with regard to bogus purchases made by the assessee from dealers without supply of actual goods." 3. Whether oil facts and in the circumstances of the case and in law, the Ld. CIT (a) has erred in not considering that the hawala dealers have admitted on before the Sales Tax Authorities that they have not sold any material to anybody.' 4. Whether on facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred ill considering that the assessee could not prove the genuineness and creditworthiness of the purchases transitions during the course of assessment proceedings." 5. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in not considering the facts which are similar to the facts in the decision of Hon'ble Supreme Court in the case of N. K. Proteins v DCIT (SLP (Civil) No. 769/2017 dated 16.0 1.2017, wherein it was held that when the transactions have been found to be bogus there is no point in restricting it to a certain percentage and required to be disallowed in their entirely. 6. 'The appellant that the order of the CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored." 7. "The appellant craves leave to amend or to alter any ground or add a new ground which may be necessary.” ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 9 11. The brief facts of the case are that the assessee filed his return of income on 29.09.2011 declaring total income to the tune of Rs.1,39,43,124/-. The case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The case of the assessee was reopened on the basis of information received from the DGIT(Inv.), Mumbai in which it was conveyed that the assessee has taken the bogus purchase entry of Rs.21,91,986/- from the following three parties: - Sr. No. Name of the Party TIN No. Amount Remarks 1 Shree Sundha Steels 2747006625V Rs.20,25,171 Notice u/s 133(6) returned unserved 2 Vani Enterprises 27980662598V Rs.1,31,040 Notice u/s 133(6) returned unserved 3 Shreyans Corporation 27750735135V Rs.35,775 Notice u/s 133(6) returned unserved Total Rs.21,91,986/- 12. After the reply of the assessee, the addition to the extent of Rs.21,91,986/- was raised u/s 69C of the Act. The assessee has also claimed the agricultural income of Rs.31,12,180/-. Since the assessee was having the small piece of land, therefore, the assessee was asked who explain the income, the assessee has given the following details: - ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 10 13. The assessee has claimed the agricultural income to the extent of 29,49,618/- which was not found justifiable, therefore, the same was also added to the income of the assessee. The claim of the LTCG of Rs.1,14,715/- and claim of the exempt income to the tune of Rs.14,976/- was also not found justifiable, therefore, the same was also added to the income of the assessee and the total income of the assessee was assessed to the tune of Rs.1,92,14,419/-. Feeling aggrieved, the assessee filed an appeal ITA Nos. 107 & 109/Mum/2021 A.Ys.2010-11 & 2011-12 11 before the CIT(A) who partly allowed the claim of the assessee but the revenue was not satisfied, therefore, filed the present appeal before us. ISSUE NOS. 1 TO 6 14. These issues are in connection with the restriction of addition to the extent of 12.5% of the bogus purchase. These issues are discussed and decided while deciding the appeal of the assessee bearing ITA. No.107/Mum/2021 for the A.Y.2010-11 above, therefore, the finding of the said appeal on these issues are quite applicable as mutatis mutandis. Therefore, we decide these issues in favour of the assessee against the revenue on similar lines. 15. In the result, the appeals filed by the revenue are hereby dismissed. Order pronounced in the open court on 22/12/2021 Sd/- Sd/- (PRAMOD KUMAR) (AMARJIT SINGH) उपधध्यक्ष / VICE PRESIDENT न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated : 22/12/2021 Vijay Pal Singh (Sr. PS) आदेश की प्रनिनिनप अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदध, आयकर अपीलीय अदधकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उप/सहधिक पंजीकधर /(Dy./Asstt. Registrar) आिकर अपीिीि अनर्करण, मुंबई / ITAT, Mumbai