M/S. C. M.. BRIGHT BARS PVT. LTD, MUMBAI V. DCIT 5 (1), Mumbai

ITA 2122/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8407 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 22-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Principle of natural justice; Set aside
• Section: 148; 69C; 143(3); 142(1); 133A; 143(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI BASKARAN BR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA Nos. 2122 & 2123/Mum/2021 (A.Ys: 2010-11 & 2011-12) M/s CM Bright Bars Pvt Ltd,705, B Wing, Shanti Kamal, Dr. Babasaheb Ambekar Road, Chinchpokli (E), Mumbai-400012. Vs. DCIT – 5(1) Aayakar Bhavan, M.K.Road, Churchgate, Mumbai – 400020. PAN/GIR No. : AABCC4577A Appellant .. Respondent Appellant by : Mr.Viraj Mehta.AR Respondent by : Mr.Ujjawal Kumar. AR Date of Hearing 24.08.2022 Date of Pronouncement 25.08.2022 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: These two appeals are filed by the assessee against the separate orders of the Commissioner of Income Tax (Appeals)-10, Mumbai passed u/s 143(3) r.w.s 147 and 250 of the Act. Since the issues in these two appeals are common and identical, hence are clubbed, heard and consolidated order is passed. For the sake of convenience, we shall ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 2 - take up the ITA No.2122/Mum/2021 for the A.Y 2010- 11 as a lead case and the facts narrated. The revenue has raised the following grounds of appeal: 1. Reopening under section 147/148 is bad in law The Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as the "Ld. CIT(A)"] erred in confirming the action of the Ld. A.O. in reopening the assessment of the Appellant by issuance of the notice under section 148 of the Act without recording valid and proper reasons to show that any income chargeable to tax has escaped assessment. Hence, the notice under section 148 and subsequent assessment order passed under section 143 r.w.s. 147 is bad in law and the same may be quashed and set aside. 2. Reopening is invalid as section 151 is not complied The Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as the "Ld. CIT(A)"] erred in confirming the action of the Ld. A.O. in reopening the assessment of the Appellant even though the proper procedure as prescribed u/s 151 is not complied/followed. Hence, the notice under section 148 is bad in law and the same may be quashed and set aside. 3. Addition made u/s 69C of Rs. 2,83,10,347/- as unexplained bogus purchases The Ld. CIT(A) erred in confirming the addition made by Ld. Assessing Officer [hereinafter referred to as the "Ld. AO"] u/s 69C as unexplained bogus purchases of Rs. 2,83,10,347/-. Such addition is bad in law & erroneous in facts and therefore liable to be deleted. ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 3 - 4.Addion made u/s 68 of Rs. 3,75,00,000/- as unexplained share application money The Ld. CIT(A) erred in confirming the addition made by Ld. Assessing Officer [hereinafter referred to as the "Ld. AO"] u/s 68 as unexplained share application money of Rs. 3,75,00,000/-. Such addition is bad in law & erroneous in facts and therefore liable to be deleted. 5. Disallowance of Depreciation u/s 32 of Rs. 21,81,339/ The Ld. CIT(A) erred in confirming the disallowance of depreciation made by Ld. AO u/s 32 of Rs. 21,81,339/-. Such disallowance is bad in law & erroneous in facts and therefore depreciation be allowed. 6. Passing the order against violation of natural justice The Ld. CIT(A) erred in passing the order without providing proper opportunity of hearing to the appellant. Thereby, passing the order without proper opportunity of hearing is erroneous and liable to be set aside. 7. The Appellant craves leave to add, alter, rescind or amend any of the above grounds of appeal. 2. The brief facts of the case that the assessee company is engaged in the business of trading in ferrous and non-ferrous metals. The assessee has filed the return of income for the A.Y 2010-11 on 15.10.2010 disclosing a total income of Rs. 9,07,340/- and the return of income was processed u/s 143(1) of the Act. Subsequently the notice u/s 148 of the Act ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 4 - was issued and the return of income filed on 15.10.2010 is treated as compliance to notice u/s 148 of the Act. Further, the Assessing Officer (A.O) has issued the notice u/s 143(2) and 142(1) of the Act along with the questionnaire. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the details. The AO found that the assessee is engaged in the business of alloy exports and metal exports. The survey u/s 133A of the Act conducted on 08.01.2013 at the business premises. The revenue authorities found that the assessee has obtained bogus purchase bills and accommodation entries from the parties listed in the Maharashtra Sales Tax Department Website and the assessee is one of the beneficiary. During the course of survey operations, statement was recorded in respect of bogus purchase transactions. 3. The Assessing Officer to test check the genuineness of the transactions has called for the details from the assessee to support the claim. The AO found that the assessee has obtained the bogus purchases bills from six parties aggregating to Rs. 2,83,10,347/- and called for details of purchase orders, bills raised and nature ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 5 - of expenditure. The assessee could not substantiate the purchase transactions with the evidences and finally the A.O. based on the material information available on record dealt on facts, statements and judicial decisions and made an addition of bogus purchases u/sec69C of the Act of Rs. 2,83,10,347/-. On the second disputed issue, the A.O. found that the assessee has raised share application money in the year under consideration and called for the details of sources of share application money along with the documentary evidence and confirmation. The assessee has filed the information by letter dated 18-03-2014 without any supporting evidences. The A.O. was not satisfied with the information and invoked the provisions of section 68 of the Act as the assessee could not prove the genuineness, creditworthiness and identity of the investors and the share application money was treated as unexplained cash credit of Rs.3,75,00,000/-. Similarly the A.O. has disallowed the claim of deprecation on Assets of Rs.21,81,339/- and assessed the total income of Rs.6,89,09,022/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 28-03-2014. ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 6 - 4. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) considering the grounds of appeal, findings of the scrutiny assessment has issued notices and there was no compliance. Finally the CIT(A) based on the information on record has confirmed the action of the assessing officer and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Hon’ble Tribunal. 5. At the time of hearing, the Ld. AR submitted that the CIT(A) has passed an ex-parte order and notices of hearing were issued but the assessee could not comply as the asseessee was passing through the financial crisis. Further the assessee has good case on merits and can substantiate with the material information on the disputed issues and prayed for an opportunity of hearing before the lower authorities. Contra, the Ld. DR supported the order of the CIT(A). 6. We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no appearance in spite of providing adequate opportunity ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 7 - of hearing and the notices were issued and dismissed the appeal ex-parte confirming the action of the assessing officer. We find the Ld.CIT(A) has issued the notices of hearing referred at page 1 of the order, but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. We find that the assessee has raised grounds of appeal challenging the additions of the assessing officer and there could be various reasons for non appearance which cannot be overruled. We considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case before the CIT(A) along with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh on merits and the assessee should cooperate in submitting the information for early disposal of the appeal and allow the grounds of appeal of the assessee for statistical purposes. 7. Hence, the appeal filed by the assessee is allowed for statistical purposes. ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 8 - ITA No. 2123/Mum/2021, A.Y 2011-12 8. As the facts and circumstances in this appeal are identical to ITA No. 2122/Mum/2021, for A.Y 2010-11 (except variance in figures and additional issue of disallowance u/sec14A of the Act) and the decision rendered in above paragraphs would apply mutatis mutandis for this case also. Accordingly, the disputed issues in this appeal are also restored to the file of the CIT(A) on similar directions and the grounds of appeal are allowed for statistical purposes. 9. In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 25.08.2022. Sd/- Sd/- ( BASKARAN BR) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 25.08.2022 KRK, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) ITA 2122 & 2123/Mum/2021 M/s CM Bright Bars Pvt Ltd., Mumbai. - 9 - 4. Concerned CIT 5. DR, ITAT, Mumbai 6. Guard file. आदेशान ु सार/ BY ORDER, //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai