ITO, Ward-3(3)(5), Surat V. Shri Vimalchand M. Jain, Surat

ITA 1508/AHD/2017

AI Insights

The case involves an appeal by the Income Tax Officer, Ward-3(3)(5), Surat against Shri Vimalchand M. Jain concerning the assessment year 2007-08. The core issue was the disallowance of non-genuine purchases amounting to Rs. 3,12,23,392, which was later reduced to Rs. 1,56,82,850 by the Commissioner of Income Tax (Appeals). The Revenue challenged this reduction, arguing that the entire amount should have been disallowed or the books rejected entirely. The Tribunal's earlier decision had quashed the reassessment order, and the High Court's dismissal of the Revenue's appeal on procedural grounds led to the dismissal of the current appeal as infructuous.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 302075 (ITAT-SURAT)
• Duration Of Justice: 18 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-12-2022
• Assessment Year: misc
• Appeal Filed On: 18-12-2003
• Other Referred Cases: M/s Mayank Diamonds Pvt. Ltd., M/s Vijay Proteins Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 1508/Ahd/2017 (Assessment Year: 2007-08) (Virtual hearing) I.T.O., Ward-3(3)(5), Surat. Vs. Shri Vimalchand M. Jain, Prop.- M/s Gem Art, C/o- 901, Rajhans Tower, Mini Bazar, Varachha Road, Surat. PAN No. ACUPJ 0819 L Appellant/ assessee Respondent/ revenue Department represented by Shri Ashok B. Koli, CIT-DR Assessee represented by Shri Himanshu Gandhi, CA. Date of hearing 12/12/2022 Date of pronouncement 12/12/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-3, Surat (in short, the ld. CIT(A) dated 22/03/2017 for the Assessment year (AY) 2007-08. The revenue has raised following grounds of appeal: “1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition made by the AO on account of disallowance on non-genuine purchases from Rs. 3,12,23,392/- to Rs. 1,56,82,850/-. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in directing to make an addition of Rs. 12.5% of unverified purchases which is not as per law. Once purchases are not genuine then either entire such purchases are to be disallowed or books of accounts ought to have been rejected and G.P. estimated. ITA No.1508/Ahd/2017 ITO Vs Sh. Vimalchand M Jain 2 3. On the facts and circumstances of the case and in law, the ld. CIT(A) has not considered the fact that case facts of M/s Mayank Diamonds Pvt. Ltd. referred by him are entirely different from this case. 4. On the facts and circumstances of the case and in law, the ld. CIT(A) has not considered the fact that facts that A.O. has rightly disallowed 25% of non genuine purchases keeping in view the decision in the case of M/s Vijay Proteins Ltd. reported in 55 TTJ 76. 5. On the facts and circumstances of the case and in law, it is therefore, prayed that the order of the ld. CIT(A) Surat may be set aside to that extent and that of the AO’s may be restored to extent.” 2. At the time of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that the assessment order dated 28/03/2015 passed under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act) impugned in this appeal, has already been quashed by the Tribunal in assessee’s appeal in ITA No. 1460/Ahd/2017 dated 27/03/2019. Further appeal filed by the Revenue before the Hon’ble High Court has been dismissed on 20/07/2022 alongiwth a batch of appeals wherein office objection raised by the Registry of High Court was not removed. The revenue’s appeal against the assessee was one of such appeal being Tax Appeal No. 10929/2020. The ld. AR of the assessee submits that once the assessment order has been quashed, the appeal filed by the Revenue would not survive/has become infructuous. 3. On the other hand, the learned Commissioner of Income Tax- Departmental Representative (ld. CIT-DR) for the Revenue has not disputed the factual position. The ld. CIT-DR for the revenue submits ITA No.1508/Ahd/2017 ITO Vs Sh. Vimalchand M Jain 3 that in case, the order of Tribunal dated 27/08/2019 in ITA No. 1490/Ahd/2017 is reversed or modified as the case may be, by Hon’ble High Court, the revenue may be given liberty to get this appeal revive. 4. We have considered the rival submissions of both the parties and perused the orders of lower authorities carefully. On perusal of assessment order, we find that the case of assessee was reopened on the basis of information from investigation wing that the assessee was one of the beneficiary of purchases shown from bogus/Hawala dealers. The assessee has availed the entry/shown purchases from M/s Gem Art (Avi Export) which was one of the entity managed by Rajendra Jain, Sanjay Chaudhary and Dharmichand Jain from whom the assessee has shown purchases of Rs. 12.48 crores. The Assessing Officer while passing the re-assessment order made addition @ 25% of such bogus purchases, thereby made addition of Rs. 3.12 crores. On appeal before the ld. CIT(A), the additions were restricted to 12.5% of the impugned purchases in order dated 22/03/2017. The assessee filed its appeal before the Tribunal. The appeal of assessee was adjudicated vide order dated 27/08/2-019 in ITA No. 1460/Ahd/2017, wherein the Coordinate Bench held that initiation of reassessment as well as approval/sanction by Additional Commissioner are invalid and accordingly, quashed the assessment order. Against such order, the Revenue filed appeal before the Hon’ble Jurisdictional High Court vide Tax Appeal No. 10929/2020 ITA No.1508/Ahd/2017 ITO Vs Sh. Vimalchand M Jain 4 which has been dismissed on 20/07/2022 for want of non-removing of office objection. Considering such fact, the appeal of revenue is dismissed as infructuous. However, the revenue is given liberty to get the appeal revive in case the order of Tribunal dated 27/08/2019 in ITA No. 1490/Ahd/2017 is reversed or modified by High Court. 5. In the result, this appeal of Revenue is dismissed. Order pronounced in the open court on 12 th December, 2022 at the time of hearing of this appeal. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 12/12/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat