DCIT CENT .CIR 2(3) , MUMBAI V. AVINASH CONSTRUCTION, PUNE

ITA 1825/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4177 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 06-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD BHASKRAN
• Keywords: Bogus purchase; Tax effect
• Section: 147; 143(3); 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI RAHUL CHAUDHARY, JM ITA No. 1825/Mum/2021 (Assessment Year 2010-11) T h e DCIT Ce n tra l C i rcle 2 (3 ) Ro o m No . 9 0 3 , 8 t h Flo o r, P ra ti sh th a B h a va n , M.K . Ro a d ,Ch u rch g a te , Mu m b a i-4 0 0 0 2 0 Vs. Avinash Construction 2, Abil House, Ganesh Khind Road, Range Hill Corner, Pune City, Mumbai-411 400 (Appellant) (Respondent) PAN No. AAEFA6358H Assessee by : Shri Vijay Mehta, AR Revenue by : Shri Vinod Bhaskran, DR Date of hearing: 07.04.2022 Date of pronouncement : 23.06.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by the learned Dy. Commissioner of Income-Tax, Central Circle 2(3), Mumbai (the learned Assessing Officer) against the order passed by the Pr. Commissioner of Income-tax (Appeals)-48, Mumbai [the learned CIT (A)] dated 28 th July, 2021 for A.Y. 2010-11, where appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Income Tax Act, 1961 (the Act) by the learned Assessing Officer, whereby 100% of bogus purchases amounting to ₹83,52,733/- was added but the learned CIT Page | 2 ITA No.1825/Mum/2021 Avinash Constructions; A.Y. 10-11 (A) restricted the addition to the extent of only 15% being profit embedded in the purchases of ₹83,52,733/- amounting to ₹12,52,910/-. The learned Assessing Officer raised the following grounds of appeal:- “1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance to 15% of the suspected bogus purchases as against 100% disallowance made by the Assessing Officer in the Assessment Order. 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that reliance was placed on a statement of a person who has stated on oath before the DIT(Inv.) authorities and Sales Tax Department, Maharashtra with regards to bogus purchases made by the assessee from various parties without supply of actual goods. 3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in not following the decision of Hon'ble Apex Court in the case of N. K Protems Ltd. Vs. DCIT in SLP (Civil) No. 769 of 2017 dated 16.01.2017 where addition of 100% of such bogus purchases has been confirmed by Hon'ble Apex Court. 4. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering the assessee's own admission that impugned purchases are bogus as he suo moto Page | 3 ITA No.1825/Mum/2021 Avinash Constructions; A.Y. 10-11 disallowed 15% of the alleged purchases in the return of income filed on 16.10.2016 in response to notice issued u/s 153 A of the Act. 5. Whether, on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in not considering the CBDT's latest Circular No. 17/2019 (F.No.279/Misc./142/2007-ITJ(Pt)) dated 08.08.2019 and the case fall under exceptions provided in para 10 as per circular No.03/2018 dated 11.07.2018 and amendments dated 20.08.2018.” 02. The brief facts of the case shows that assessee is a partnership firm carrying the business of developers and filed its return of income on 4 th October, 2010 at ₹8,86,46,980/-. Regular assessment under Section 143(3) of the Act was made on 25 th March, 2013 at a total income of ₹9,13,94,802/-. 03. Subsequently, the case of the assessee was reopened by issue of notice dated 27 th August, 2014 for the reason that assessee was one of the beneficiaries of transactions shown by hawala operators indicated before the Sales Tax Authorities. The information received was that assessee has obtained the bills of purchase of material without receiving the actual material from M/s Macos Iron and Steel Limited amounting to ₹83,52,733/-. During the course of assessment proceedings assessee submitted, general details. However, assessee could not submit the detail of receipt of material, therefore the learned Page | 4 ITA No.1825/Mum/2021 Avinash Constructions; A.Y. 10-11 Assessing Officer made addition of 100% of such bogus purchases amounting to ₹83,52,733/-. Assessment order under Section 143(3) read with section 147 of the Act was passed on 30 th March, 2016, determining the total income of the assessee at ₹9,97,47,535/-. Assessee preferred the appeal before the learned CIT (A), who relying on several judicial precedents as well as in the case of the assessee for A.Y. 2009-10, where the learned CIT (A) restricted the disallowance to 15% and so restricted the same during this year. Therefore, the learned Assessing Officer is aggrieved. 04. We have heard the rival parties and perused the orders of the lower authorities. We find that the order of the learned CIT (A) for A.Y. 2009-10 in assessee’s own case reached before the co-ordinate bench in ITA No.1373/Pun/2017, wherein along with the bunch of 149 appeals, the co- ordinate Bench vide order dated 27 th July, 2018 dismissed the appeal of Revenue on account of low tax effect. Even otherwise, we find that the learned CIT (A) has over and above the decision in assessee’s own case has followed the decision of Hon'ble Bombay High Court in the case of PCIT vs. Mohammed Haji Adam & Co. In view of this, we do not find any infirmity in the order of the learned CIT (A) in restricting the disallowance to the extent of 15% of the bogus purchases. The issue is also covered in favour of the assessee by the several judicial precedents of the co- ordinate Benches on identical facts and circumstances. In Page | 5 ITA No.1825/Mum/2021 Avinash Constructions; A.Y. 10-11 view of this, the order of the learned CIT (A) is upheld and the appeal of the learned Assessing Officer is dismissed. 05. In the Result, the appeal of the learned Assessing Officer is dismissed. Order pronounced in the open court on 23.06.2022. Sd/- Sd/- (RAHUL CHAUDHARY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 23.06.2022 Sudip Sarkar, Sr.PS 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// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai