Mahendra T Jain, Surat V. Assessing Officer, Ward 3(3)(3), Surat

ITA 375/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6131 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-07-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 03-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Revision of order; Set aside
• Section: 263; 144; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No. 375/Srt/2024 (Assessment Year 2012-13) (Hybrid hearing) Mahendra T. Jain, C/o-Ketan H. Shah, Advocate, 512, Times Square-I, Opp. Ram Baug Bungalow, Thaltej Shilaj Road, Thaltej, Ahmedabad-380059 (Gujarat). PAN No. AAVPJ 2151 L Vs. Assessing Officer, Ward 3(3)(3), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Ketan Shah, A.R. Department represented by Shri Ritesh Mishra, CIT-DR Date of Institution of Appeal 04/04/2024 Date of hearing 02/07/2024 Date of pronouncement 02/07/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 11/03/2024 for the Assessment Year (AY) 2012-13, wherein the assessee has raised following grounds of appeal: “1. On the facts and circumstances of the law, the initiation of proceedings u/s 263 itself bad in law and void and liable to be quashed. 2. The AO has erred in making addition of Rs. 2,13,33,09,051/- by treating the purchase on behalf of the others as Appellant purchases since no purchases debited, there is no question of any addition and the same may please be deleted. 3. The Learned AO has erred in not appreciating the fact that Appellant is a commission agent and therefore, has no concern with the purchases made by others and therefore, no addition is required. ITA No. 375/Srt/2024 Mahendra T. Jain Vs A.O. 2 4. The Learned AO has erred in not appreciating the fact that no cross examination has been allowed in reference to the search conducted in the case of Bhanvarlal Jain and therefore, the whole proceeding is bad in law and void. 5. The Learned AO has erred in not appreciating the fact that without prejudice, it is contended that in any case, GP addition is required to be made at the rate of 6% as upheld by ITAT in group matter and confirmed by Guj. High Court. 6. The Learned NFAC, CIT(A) has erred in not appreciating the various submissions made before him and mechanically passed an order dated 11-03-2024, it is prayed that based on submission made, there is no justification for making any addition. 2. Rival submissions of both the parties have been heard and record perused. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that the assessment was completed under Section 144 r.w.s. 263 of the Income Tax Act, 1961 (in short, the Act) on 29/03/2022. The Assessing Officer passed assessment order as per direction of order of ld. Pr.CIT dated 29/03/2021 wherein the assessment order passed under Section 143(3) r.w.s 147 of the Act dated 15/12/2018 was set aside with the direction to frame assessment order de novo. The Assessing Officer while passing the assessment order, treated the purchases made from various parties by treating them as entity of Bhanwarlal Jain and his group as bogus purchases and disallowed entire purchases in place of 25% allowed in earlier assessment order passed on 15/12/2018. As per Assessing Officer, the department was having information that Bhanwarlal Jain and his group was indulging in providing entry of bogus purchases without actual delivery of goods. On further appeal before the ld. CIT(A), the addition was confirmed. The ld. AR of the assessee submits that the grounds of appeal raised by the assessee is in fact covered by the decision of Surat Bench wherein in a series of decisions, similar disallowances of purchases shown/ claimed from Bhanwarlal Jain and ITA No. 375/Srt/2024 Mahendra T. Jain Vs A.O. 3 his group, were restricted to the extent of 6%, which has been affirmed by the Hon'ble Jurisdictional High Court in the case of Pr.CIT Vs Surya Impex (2023) 148 taxmann.com 154 (Guj). The ld AR of the assessee submits decisions passed by this bench in series of case on the issue of bogus purchases may be followed. 3. On the other hand, the learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue has supported the orders of Assessing Officer as well as ld. CIT(A). The ld CIT-DR of the revenue submits that investigation wing of Mumbai made a full-fledged investigation in the search action carried out at the premises of Bhanwarlal Jain and his group and gave its report that Bhanwarlal Jain and his group was indulging in providing of bogus entry in the form of purchase bills without actual delivery of goods. The Assessing Officer made addition on the basis of such investigation report and as per the direction of ld PCIT. The ld CIT-DR of the revenue submits that 100% disallowance made and confirmed by the ld CIT(A) may be upheld. 4. We have considered the submissions of both the parties and perused the orders of the lower authorities carefully. We have also deliberated on case law relied by the ld. AR of the assessee in the case of Pr.CIT Vs. Surya Impex (supra). We find that during the assessment, in pursuance of order of ld. Pr.CIT dated 19/03/2021, the Assessing Officer noted that the assessee has shown purchases of Rs. 213.33 crores from various entities. All such entities were managed by Bhanwarlal Jain group. The Assessing Officer on the basis of report of Investigation Wing, wherein it was informed that in the search carried out in the said group on 13/10/2014 it was found that Bhanwarlal Jain ITA No. 375/Srt/2024 Mahendra T. Jain Vs A.O. 4 was managed by 70 benami concerns in the name of his relatives or employees. The Assessing Officer on the basis of report of Investigation Wing, disallowed the entire purchases. We find that in the original assessment passed under Section 143(3) r.w.s. 147 of the Act on 15/12/2018, similar disallowances were made to the extent of 25% of purchases from all such parties. However, in the order passed in pursuance of direction of ld. PCIT the Assessing Officer disallowed entire purchases without disputing the sale of assessee. On further appeal, the ld. CIT(A) confirmed the action of Assessing Officer by taking view that the assessee has not produced evidence to prove beyond doubt that he was acting as a commission agent. The assessee has not explained the manner in which transactions were carried out. 5. On carful perusal of orders of lower authorities, we find that the assessee neither contested before ld PCIT the proceedings under section 263 nor file any evidence to substantiate the purchases despite allowing sufficient opportunity, again no filed any submissions before the Assessing Officer in the order giving effect to the order of ld PCIT. Again despite filing appeal before ld CIT(A) the assessee has not contested the appeal. The ld CIT(A) in para -4 of his order recorded that nine opportunities were allowed to the assessee but the assessee not responded to all such notices. Though, the assessee in ground No. 6 has raised plea that ld CIT(A) passed order without appreciating various submissions, however, no evidence is filed before us, in the form of screen shot or copy of ITBA portal, to substantiate such fact. Thus, we instead of deciding the issue on merit, deem it appropriate to restore all the issues to the file of Assessing Officer to decide all the issues afresh. Needless to direct ITA No. 375/Srt/2024 Mahendra T. Jain Vs A.O. 5 that the Assessing Officer shall grant reasonable opportunity to the assessee. The assessee is also directed to file all the documents and submission without any further delay and not to cause further delay. 6. In the result, this appeal of assessee is allowed statistically. Order announced in open court on 02 nd July, 2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 02/07/2024 *Ranjan Copy to: 1. Assessee – 2. Revenue – 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat