ASST CIT 22(1), MUMBAI V. M/S JAYDEV CHEMICAL INDUSTRIES , MUMBAI

ITA 1302/MUM/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9433 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 25-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: USHA GAIKWARD
• Keywords: Bogus purchase
• Section: 148; 143(3); 142(1); 133(6); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA No.1302/Mum/2020 (A.Y: 2010-11) ACIT – 22(1) Room No. 322, 3 rd Floor Piramal Chambers, Lalbaug, Mumbai – 400 012. Vs. M/s Jaydev Chemical Industries 401, Om Apts, Dr. MB Raut Road, Shivaji Park, Dadar Mumbai – 400 028. ./ज आइआर ./PAN/GIR No. : AACFJ1584C Appellant .. Respondent Appellant by : Smt. Usha Gaikward, DR Respondent by : None Date of Hearing 07.09.2021 Date of Pronouncement 13.09.2021 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-33 Mumbai, passed u/s 143(3) and 250 of the Income Tax Act, 1961. The revenue has raised the following grounds of appeal. (a) " On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting addition made by the A.O amounting Rs.17,42,454/- i.e. 53.22% of total purchases of Rs.32,74,060/- to 25%, ignoring the fact that the action of the Assessing Officer was based on credible information received from the ITA No. 1302/Mum/2020 Jaydev Chemical Industries, Mumbai. - 2 - Maharashtra Sales Tax Department and that the assessee, during the course of assessment proceedings, failed to prove the genuineness of the purchase transactions. (b) On the facts and in the circumstances of the case and in law, the id. CIT(A) has erred in estimating addition on account of bogus purchase to 25% of such purchases as against the estimation by the AO of 53.22% of bogus purchases without appreciating the fact that the assessee had failed to establish the genuineness of the alleged parties from whom purchases is claimed to have been made during the year. (c) On the facts and in the circumstances of the case and in law, the id. CIT(A) has erred in estimating addition on account of bogus purchase to 25% of such purchases as against the estimation by the AO of 52.22% of bogus purchases without appreciating the fact that the assessee could neither produce the delivery challans or the transport bills/invoices nor could produce the alleged parties from whom purchases is claimed to have been made during the year? (d) On the facts and in the circumstances of the case and in law, the id. CIT(A) has erred in estimating addition on account of bogus purchase to 25% of such purchases as against the estimation by the AO of 53.22% of bogus purchases without appreciating the fact that the Sales Tax Department as well as the DGIT (Inv.), Mumbai during their course of investigations found the alleged parties to be providing only accommodation/bogus purchase bills? (f) This case is filed because it is covered under the exception provided in para 10(e) of the CBDT's Circular No.3 of 2018 dated 11.07.2018 as amended vide F.No.279/Misc. 142/20O7- ITJ(Pt) dated 20.08.2018. (g) The appellant prays that the order of the CIT(A) on the above ground be reversed and that of the Assessing Officer be restored. (h) The appellant craves leave to amend or alter any ground ITA No. 1302/Mum/2020 Jaydev Chemical Industries, Mumbai. - 3 - or add a new ground which may be necessary. 2. The Brief facts of the case are that, the assessee is a partnership firm engaged in the business of manufacturing of chemicals. The assessee has filed the return of income for the A.Y 2010-11 on 25.09.2010 declaring a total income of Rs. 1,14,56,616/-. The A.O has received the information from DGIT (Inv) that the assessee has obtained bogus bills from the parties whose names mentioned in the list of accommodation bills providers as per the Maharashtra sales tax department and the assessee is one of the beneficiary. The A.O. found that the assessee has made purchases from six parties aggregating to Rs.32,74,060/-. Hence the A.O. has reason to believe that there is a income escaping the assesseement and issued notice u/s 148 of the Act. In compliance the assessee has filed the return of income electronically on 25.09.2010 declaring a total income of Rs. 1,14,56,616/-.Subsequently, the A.O has issued notice u/s 143(2) and 142(1) of the Act along with questionnaire. In compliance, the Ld. AR of the assessee has appeared from time to time and furnished the information. The A.O to test check the genuineness of the transactions has issued the notice u/s 133(6) of the Act on the parties, but the notices were returned un served ITA No. 1302/Mum/2020 Jaydev Chemical Industries, Mumbai. - 4 - by the postal department. Therefore the A.O. has issued show cause notice and the assessee has filed the written submissions and produced the books of accounts, financial statements and evidences but the A.O was not satisfied with the explanations and dealt at Para 4 & 4.1 of the order and finally considering the facts, operational profit, the A.O. has made an addition of non genuine purchases @ 53.22% which worked out to Rs. 17,42,455/- and assessed the total income of Rs. 1,31,99,070/- and passed the order u/s 143(3) r.w.s 147 of the Act. 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 on the disputed issue. Finally the CIT(A) considered the decision of the CIT(A) for A.Y. 2011-12 in assesses own case and restricted the addition to the extent of 25% of bogus purchases and observed at Page 3 Para 7 of the order, which is read as under: “7. I have carefully gone through the findings given in the assessment order and the submissions of the appellant. There is no dispute on the fact that the assessee made purchases of Rs. 32,74,060/- form the six parties listed by the AO who were identified as entry providers by the sales tax department on the basis of their detailed investigation and enquires. ITA No. 1302/Mum/2020 Jaydev Chemical Industries, Mumbai. - 5 - Notices u/s 133(6) issued to those parties were returned unserved by the postal authority. The Appellant could not produce the parties for verification. Even the current whereabout of those parties was not communicated to the AO by the assessee. Therefore, verification of purchase could not be done. In such a situation, inflation of expenses cannot be ruled out. Therefore, on principles disallowance made by the AO is sustained. However, it is found that disallowance made by the AO @ 53.22% of Rs. 32,74,060/- is excessive and unjustified. I have also gone appellate order passed by CIT(A) on 23.03.2016 in case of assessee itself for A.Y 2011-12 wherein disallowance @ 25% on such alleged bogus purchase was sustained. Considering the entirety of facts it is found reasonable and justified to restrict the disallowance @ 25% of the bogus amount of purchase involved. In view of above, disallowance of Rs. 8,18,515/- being 25% of bogus purchase of Rs. 32,74,060/- is confirmed and balance disallowance of Rs. 9,23,940/- is hereby deleted. The grounds are partly allowed. 4. Aggrieved by the CIT(A), the Revenue has filed an appeal before the Honble Tribunal. At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in restricting the addition to 25% irrespective of facts that no proper information was filed in the Assessment proceedings and relied on the Assessing officer order. 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 as envisaged by the Ld.DR that the CIT(A) has erred in restricting the addition to the extent of 25% of the bogus purchases overlooking the Assessing officer addition of ITA No. 1302/Mum/2020 Jaydev Chemical Industries, Mumbai. - 6 - 52.22% of Bogus purchases. We find that the Ld.CIT(A) took a reasonable view that the only profit percentage has to be added and estimated @ 25% of bogus purchases and relied on the CIT(A) appellate order for A.Y.2011-12 . Whereas, the Ld.DR could not controvert the observations of the Ld. CIT(A) with any new cogent evidence and material but 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 and the assessee own case 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. 6. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 14.09.2021. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 14.09.2021 KRK, PS ITA No. 1302/Mum/2020 Jaydev Chemical Industries, Mumbai. - 7 - /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, हमद द / DR, ITAT, Mumbai 6. % -. / 0 / Guard file. ान ु सार/ BY ORDER, " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai