ITO-42(1)(2), MUMBAI V. GAUTAM MOHANLAL PARMAR, MUMBAI

ITA 334/MUM/2023

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the CIT(A), which had reduced the disallowance on non-genuine purchases from 100% to 12.5%. The assessee, Shri Gautam Mohanlal Parmar, a proprietor of M/s. Metro Aluminium & Doors, was accused of making non-genuine purchases amounting to \\u20b9.9,24,144 from M/s. Power Tech Trading Co., which were deemed to be accommodation entries without actual transaction of goods. The Assessing Officer initially disallowed the entire amount, but the CIT(A) later reduced this disallowance based on submissions and evidence presented by the assessee. The Revenue challenged this reduction, arguing that the CIT(A) erred in not appreciating the nature of the transactions as confirmed by the Sales Tax Department.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123845 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2023
• Other Referred Cases: Metal Trading Corporation v. Income Tax Officer
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 147; 133(6); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NO. 334/MUM/2023 (A.Y: 2011-12) Income Tax Officer – 42(1)(2) Room No. 745, 7 th Floor Kautilya Bhavan, C-41 to C-43 G-Block, Bandra Kurla Complex Bandra (E), Mumbai -400051 v. Shri Gautam Mohanlal Parmar Shop No. 2, Blue Star Crystal Near Chamunda Circle Sodawala Lane, Borivali (W) Mumbai - 400092 PAN: AKYPP6296R (Appellant) (Respondent) Assessee Represented by : None Department Represented by : Shri S.N. Kabra Date of conclusion of Hearing : 05.04.2023 Date of Pronouncement : 16.05.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the revenue against order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 07.12.2022 for the A.Y.2011-12 in restricting the disallowance to 12.5% of purchases of 2 ITA NO. 334/MUM/2023 (A.Y: 2011-12) Shri Gautam Mohanlal Parmar ₹.9,24,144/- as against the entire purchases disallowed as non- genuine/bogus by the Assessing Officer. 2. Brief facts of the case are, the assessee is a proprietor of M/s. Metro Aluminium & Doors and has been trading in Alluminium frames and doors, filed return of income for the A.Y.2011-12 on 30.09.2011 declaring income of ₹.5,49,147/- and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the DGIT(Inv.)., Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessment was reopened u/s. 147 of the Act based on the information received from DGIT(Inv.)., Mumbai, that the assessee has availed accommodation entries from M/s. Power Tech Trading Co., who is said to be providing accommodation entries without there being transportation of any goods. In the reassessment proceedings, the assessee was asked to prove the genuineness of the purchases made from M/s. Power Tech Trading Co., amounting to ₹.9,24,144/-. Since, assessee could not submitted relevant documents and produced the parties before Assessing Officer. Accordingly, Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of 3 ITA NO. 334/MUM/2023 (A.Y: 2011-12) Shri Gautam Mohanlal Parmar materials and the assessee inflated the purchases. Assessing Officer observed that the notices issued u/s. 133(6) of the Act to the party are returned unserved and the assessee has not produced the party before the Assessing Officer. It is the finding of the Assessing Officer that the assessee failed to produce the parties in support of its claim that purchases are genuinely made from the party. Therefore, Assessing Officer treated purchases of ₹.9,24,144/- as non-genuine and added to the income of the assessee. 3. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions, Ld.CIT(A) considering the evidences and various submissions of the assessee restricted the disallowance to the extent 12.5% of the non-genuine purchases. 4. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - “1) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition to 12.5% of bogus purchases from M/s Power Tech Trading Co. as profit embedded therein without appreciating that the assessee had obtained bogus bills from M/s Power Tech Trading Co. (TIN 27900637131V) who was held to be a mere accommodation entry provider by the Sales Tax Department after conducting enquiries and recording statements of its main persons?" 4 ITA NO. 334/MUM/2023 (A.Y: 2011-12) Shri Gautam Mohanlal Parmar 2) "Whether on the facts circumstances of the case and in law, the Ld. CIT(A) was correct in ignoring the fact that the assessee has failed to prove the genuineness of the purchases?" 3) "On the facts and in the circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal, though, the tax effect is below the monetary limit prescribed in the CBDT Circular no. 14/2019 dated 08.08.2019 r.w. Circular No. 3/2018 dtd. 11.07.2018 as amended on 20.08.2018 as the case falls in the exception provided in para 10(e) of the said Circular in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities". 4) "The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored". 5) The appellant craves leave to amend or alter or add a new ground which may be necessary.” 5. Inspite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. Therefore, I proceed to dispose of this appeal with the assistance of Ld.DR. 6. Ld. DR brought to our notice relevant facts of the case and he vehemently supported the orders of the Assessing Officer. Ld. DR prayed that the order of the Ld.CIT(A) be set-aside. 7. Considered the submissions of Ld.DR and material placed on record, On a perusal of the order of the Ld.CIT(A), I find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and following the decision of the ITAT Mumbai bench in the case of Metal 5 ITA NO. 334/MUM/2023 (A.Y: 2011-12) Shri Gautam Mohanlal Parmar Trading Corporation v. Income Tax Officer in ITA.No. 2600 & 2601/Mum/2018 restricted the disallowance to 12.5% of the non-genuine purchases of ₹.9,24,144/-, while holding so, the Ld.CIT(A) restricted the disallowance to the extent of 12.5% of the bogus purchases. On a careful perusal of the order of the Ld.CIT(A) and the reasons given therein, I do not find any infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Accordingly, Ground raised by the revenue is dismissed. 8. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 16 th May, 2023. Sd/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER Mumbai / Dated 16/05/2023 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum