M/S LOYAL GEMS, MUMBAI V. ITO-WARD 22(2)(1), MUMBAI

ITA 1563/MUM/2023

AI Insights

M/s. Loyal Gems appealed against the order of the CIT(A), which had dismissed their earlier appeal on technical grounds related to a clerical error in the e-filing form. The error involved incorrectly citing the section of the Income Tax Act under which the original assessment order was passed. The Tribunal found that this mistake was inadvertent and should not have led to the dismissal of the appeal on technical grounds without allowing the assessee an opportunity to clarify. The core issue in the original assessment was the disallowance of 25% of alleged bogus purchases amounting to Rs.97,78,804, which the assessee contested. The Tribunal noted that similar issues had been adjudicated in the assessee's favor in previous years, where the addition was significantly reduced.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136555 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 03-05-2023
• Other Referred Cases: ITA No.7743 to 7745/Mum/2019 for AY 2010-11 to 2012-13
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGANATH B. PASALE
• Keywords: Bogus purchase
• Section: 143(3); 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “SMC” Bench, Mumbai. Before Shri B.R. Baskaran (AM) & Shri Narender Kumar Choudhry (JM) I.T.A. No. 1563/Mum/2023 (A.Y. 2013-14) M/s. Loyal Gems 1040, CC, Bharat Diamond Bourse, Bandra Kurla Complex Bandra East Mumbai- 400 051. PAN : AADFL3293R Vs. ITO-Ward 22(2)(1) Piramal Chamber Mumbai. (Appellant) (Respondent) Assessee by Ms. Dinkle Hariya Department by Shri Naganath B. Pasale Date of Hearing 19.07.2023 Date of Pronouncement 19.07.2023 O R D E R Per B.R.Baskaran (AM) :- The assessee has filed this appeal challenging the order dated 07.03.2023 passed by Ld CIT(A), NFAC, Delhi and it relates to the assessment year 2013-14. 2. The Ld A.R submitted that the Ld CIT(A) has dismissed the appeal pointing out certain discrepancies in Form No.35 filed before him. Explaining the same, the Ld A.R submitted that the assessee filed appeal before the Ld CIT(A) challenging the assessment order dated 08-03-2016 passed by the assessing officer for AY 2013-14 u/s 143(3) r.w.s 147 of the Act. The assessee initially filed appeal manually in Form No.35 before Ld CIT(A), wherein the order appealed against was correctly mentioned as the order passed u/s 143(3) r.w.s 147 of the Act. At that point of time, e-filing of appeals was made mandatory and hence the assessee filed appeal again through e-portal in Form no.35. However, in that form, the order appealed M/s. Loyal Gems 2 against was inadvertently mentioned as order passed “u/s 147 r.w.s 264” of the Act. The Ld A.R submitted that the Ld CIT(A) has taken serious note of the above said inadvertent mistake and observed that the assessee has not attached the order passed u/s 147 r.w.s 264 of the Act in the appeal papers and the same has resulted in false verification. Accordingly, the Ld CIT(A) dismissed the appeal of the assessee highlighting the above said contradictions. 3. The Ld A.R submitted that the assessee has committed an advertent mistake in mentioning the section and the assessee would have clarified the same, had the Ld CIT(A) pointed out the defect. The Ld A.R further submitted that the addition made by the AO is related to the alleged bogus purchases. The Ld A.R submitted that the assessee is a trader and exporter of polished diamonds and it is the allegation of the AO that the assessee has booked bogus purchase bills by obtaining accommodation bills from hawala traders to the tune of Rs.97,78,804/-. The AO disallowed 25% of the value of above said alleged bogus purchases. The Ld CIT(A) did not adjudicate the above said issue on merits, since he dismissed the appeal of the assessee on technical reasons. 4. The Ld A.R submitted that the AO had made identical additions in the hands of the assessee in the earlier years, i.e., in AY 2010-11 to 2012-13, wherein also, the AO disallowed 25% of the value of alleged bogus purchases. The Ld CIT(A) reduced the same to 12.5% of the value of alleged bogus purchases. However, the Tribunal has restricted the addition to 2% of the value of alleged bogus purchases, vide its order dated 27-08-2021 passed in ITA No.7743 to 7745/Mum/2019 for AY 2010-11 to 2012-13. The Ld A.R submitted that the facts prevailing in the current year are identical in nature and accordingly prayed that the addition may be restricted to 2% of the value of alleged bogus purchases, as held by the Tribunal in the earlier years. M/s. Loyal Gems 3 5. The ld D.R, on the contrary, submitted that the ld CIT(A) has not adjudicated the issue on merits. 6. We heard the parties and perused the record. We notice that the Ld CIT(A) has dismissed the appeal pointing out certain discrepancies in the appeal papers filed before him. On a perusal of the record and upon considering the explanations given by Ld A.R, we notice that it was an inadvertent mistake committed by the assessee in mentioning wrong section for the order appealed against. Had the Ld CIT(A) raised a query on this discrepancy, the assessee would have clarified the same. Accordingly, we are unable to agree with the reasoning given by Ld CIT(A) for rejecting the appeal filed by the assessee on technical reasons. Accordingly, we set aside the impugned order passed by Ld CIT(A). 7. Though the Ld A.R submits that the issue contested by the assessee is squarely covered by the decision rendered by the co-ordinate bench, we are of the view that the same is required to be restored to the file of Ld CIT(A), since the first appellate authority has not adjudicated the same on merits. At the same time, since the Tribunal has already taken a particular view on the issue in the assessee’s own case, in our view, the same is required to be followed by Ld CIT(A) in order to maintain consistency. Accordingly, we restore the issues urged on merits to the file of Ld CIT(A) and direct him to adjudicate them by following the decision rendered by the Tribunal in the assessee’s own case in the earlier years, vide its order referred supra. 8. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Pronounced in the open court on 19.7.2023. Sd/- Sd/- (Narender Kumar Choudhry) (B.R. Baskaran) Judicial Member Accountant Member Mumbai.; Dated : 19/07/2023 M/s. Loyal Gems 4 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai. 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai