ITO WARD-2(1), THANE V. SHRI RAJESH KUMAR G. JAIN, BHAYANDER

ITA 1251/MUM/2021

AI Insights

The case involves an appeal by the revenue against the order of the Commissioner of Income Tax (Appeals)-1, Thane, which had deleted a significant portion of the addition made by the Assessing Officer (A.O.) on account of bogus purchases. The A.O. had initially made an addition of Rs. 80,08,830/- to the assessee's income, suspecting the genuineness of purchases from 13 parties. The CIT(A) later restricted this addition to Rs. 6,53,022/-, representing 12.5% of the bogus purchases, considering it as the profit element. The revenue challenged this decision, arguing that the CIT(A) erred in deleting the addition despite the assessee's failure to prove the genuineness of the transactions. The Tribunal, however, found no infirmity in the CIT(A)'s order and dismissed the revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125850 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-05-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2021
• Other Referred Cases: Pooja Paper Trading Co. Vs. ITO, CIT Vs. Simit P Sheth
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 131; 143(3); 142(1); 250; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1251/Mum/2021 (A.Y: 2010-11) ITO, Ward – 2(1) Room No. 25, 6 th Floor, B-Wing, Ashar IT Park Wagle Industrial Estate Thane (W) – 400604. Maharashtra. Vs. Shri Rajesh Kumar G Jain, Flat No. 305, Janki Orchid, 90 feet Road, Bhayander West, Thane – 401101 Maharashtra. PAN/GIR No. : AAEPJ5345H Appellant .. Respondent Appellant by : Shri T.Shankar. DR Respondent by : None Date of Hearing 19.05.2022 Date of Pronouncement 20.05.2022 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals)-1 passed u/s 143(3) and 250 of the Act. The revenue has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-1, Thane erred in deleting the addition of Rs. 64,36,332/- out of the total addition of Rs.80,08,830/- made on account of bogus ITA No. 1251/Mum/2021 Shri Rajesh Kumar G. Jain, Mumbai. purchases, despite holding that the purchases were not genuine and the assessee failed to prove genuineness of the transactions. 2. On the facts and in the circumstances of the case and in law, Ld. CIT erred in deleting the above addition despite the fact that the assessee failed to discharge his onus of providing the purchases. 3. The appellant prays that the order of the Ld. CIT(A) may be set aside and that of the AO be restored. 4. The appellant craves leave to add, amend or alter or any ground / grounds which may be necessary. 2. The brief facts of the case are that the assessee is engaged in the business of supply of building material. The assessee has filed the return of income for the A.Y 2010-11 on 21.09.2010 declaring a total income of Rs. 3,73,640/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with questionnaire are issued. In compliance, the Ld. AR of the assessee appeared from time to time and submitted tax audit report, audited profit and loss account, balance sheet and books of accounts were produced. The Assessing officer (A.O.) in the course of hearing found that the assessee has made purchases from the 13 parties and the A.O to test check the genuineness of the transactions has issued notice u/s 133(6) of the Act on the 13 parties and the said notices ITA No. 1251/Mum/2021 Shri Rajesh Kumar G. Jain, Mumbai. were returned un-served by postal authorities, whereas in respect of one party M/s Abhishek Enterprises they have filed the reply stating that they have not done any transaction with the assessee. Therefore the A.O further called for the additional information and issued show cause notice and the statement was recorded u/s 131 of the Act. Finally the A.O has considered the material information and the statement recorded and doubted the genuineness of transactions and made addition of Rs. 80,08,830/- and with other additions the A.O. has assessed the total income of Rs.1,49,24,810/- and passed order u/s 143(3) of the Act on 25.03.2013. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). The CIT(A) in the appellate proceedings considered the grounds of appeal, findings of the A.O in the scrutiny assessment, submissions of the assessee/ remand report on the disputed issue. Finally the CIT(A) considered the judicial decisions of the Honble High Court and Honble Tribunal and restricted the addition to the extent of 12.5% of bogus purchases and confirmed the disallowance of purchase of Rs.6,53,022/- and party allowed the ITA No. 1251/Mum/2021 Shri Rajesh Kumar G. Jain, Mumbai. appeal. Aggrieved by the CIT(A) order, the revenue has filed an appeal before the Honble Tribunal. 4. At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in restricting the addition to 12.5% irrespective of facts that no proper information was filed in the Assessment proceedings. None appeared on behalf of the assessee. 5. We heard the Ld.DR submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.DR that the CIT(A) has restricted the addition to the extent of 12.5% of the bogus purchases considering profit element embedded. We found that the CIT(A) has dealt on the facts and considered the Hon’ble High Court/Honble Tribunal decisions and took a view. Further, We find the Jurisdictional Honble High Court in the case of Pooja Paper Trading Co. Vs. ITO, (104 taxmann.com 95) and Honble Gujarat High court in CIT Vs. Simit P Sheth (2013) (356 ITR 451) has upheld the disallowance restricting profit element on such purchases. 6. We find that the Ld.CIT(A) took a reasonable view that the only profit percentage has to be added and ITA No. 1251/Mum/2021 Shri Rajesh Kumar G. Jain, Mumbai. estimated @ 12.5% of bogus purchases. The Ld.DR could not controvert the observations of the Ld. CIT(A) with any new cogent evidence and material to take a different view and relied only on the A.O order. We are of the opinion that the CIT(A) dealt on the facts and considered the profit element in the bogus purchases and also the A.O has not disputed the sales. The Ld.CIT(A) has relied on the decisions of Hon’ble High Court and passed a reasoned order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal raised by the revenue. 7. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 20.05.2022 Sd/- Sd/- (M BALAGANESH) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 20.05.2022 KRK, PS Copy of the Order forwarded to : 1. The Appellant ITA No. 1251/Mum/2021 Shri Rajesh Kumar G. Jain, Mumbai. 2. The Respondent. 3. The CIT(A) 4. Concerned CIT 5. DR, ITAT, Mumbai 6. Guard file. आदेशान ु सार/ BY ORDER, //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai