APEX DIAMONDS, MUMBAI V. ACIT-19(1), MUMBAI

ITA 422/MUM/2023

AI Insights

The case involves M/s. Apex Diamonds, the appellant, who contested an order from the National Faceless Appeal Centre (NFAC) regarding the assessment year 2013-14. The appellant challenged the addition of Rs. 6,28,502 to their income, which was deemed as profit from alleged bogus purchases. The Assessing Officer had identified transactions with entities considered as entry/accommodation bill providers and added the estimated profit margin from these transactions to the assessee's income. The CIT(A) upheld this addition, leading the appellant to appeal before the Tribunal. The Tribunal found that the lower authorities had not adequately examined the financial records and other evidence provided by the assessee, leading to the decision to set aside the CIT(A)'s order and direct a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301087 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 12-02-2023
• Other Referred Cases: M/s. Mohammed Haji Adam & Co. (ITA No. 1004 of 2016)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “A”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.422/M/2023 Assessment Year: 2013-14 M/s. Apex Diamonds, AE-4012, Bharat Diamond Bourse, G-Block, Bandra Kurla Complex, Maharashtra- 400 051 PAN: AAOFA7813R Vs. ACIT, 19(1), Matru Mandir Building, 1 st & 2 nd Floor, Nana Chowk, Bhatia Hospital Lane, Javji Dadaji Marg, Grant Road West, Maharashtra- 400 007 (Appellant) (Respondent) Present for: Assessee by : Shri Sunil Hirawat, A.R. Revenue by : Shri Manoj Kumar Sinha, D.R. Date of Hearing : 19 . 04 . 2023 Date of Pronouncement : 28 . 04 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Apex Diamonds (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 06.01.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2013-14 on the grounds inter-alia that :- “1. On facts and in law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as Ld. CIT-A) had erred is not appreciating the fact that the Gross Profit on alleged bogus purchases is more than the overall Gross ITA No.422/M/2023 M/s. Apex Diamonds 2 Profit of the appellant. Under the facts and in law the addition of Rs. 6,28,502/- ought to have been deleted. 2. On facts and in law, Ld. CIT-A had erred is not following the decision of the Hon'ble Bombay High Court (Jurisdictional) in the case of M/s. Mohammed Haji Adam & Co. (ITA No. 1004 of 2016) submitted before Learned Commissioner of Income Tax Appeals-30, Mumbai on 06.05.2019. 3. On facts and in law, Ld. CIT-A had erred in passing the appellate order on 06.01.2023 before the date of hearing fixed on 12.01.2023. 4. On facts and in law, Ld. CIT-A had erred in pushing the appeal to unwanted and unnecessary litigation for no fault of the appellant. Under the facts and circumstances of the matter suitable direct cost (appeal fees and counsel fees) and indirect cost (harassment and mental agony) ought to have been awarded to the appellant.” 2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : assessee’s return of income filed for the year under consideration declaring total income of Rs.63,51,215/- was subjected to scrutiny and notice under section 143(2) of the Income Tax Act, 1961 (for short ‘the Act’) was issued however, subsequently Assessing Officer (AO) noticed that the assessee had transaction with Mukti Exports and Navkar Diamond Rs.56,53,584/- and Rs.22,02,702/- respectively, who are entry/accommodation bill providers to the tune of Rs.78,56,286/- to the assessee. On failure of the assessee to substantiate the transaction of purchase with aforesaid entities the AO proceeded to hold that aforesaid entries are bogus bills/entry providers to various interested parties and the assessee is one such beneficiary. The same conclusion was drawn by the investigation wing and as such the AO proceeded to estimate the profit margin embedded in the transactions in question with the aforesaid entities @ 8% of the value of the transactions i.e. Rs.78,56,286/- and the amount of Rs.6,28,502/- to the total income of the assessee and thereby ITA No.422/M/2023 M/s. Apex Diamonds 3 framed the assessment under section 143(3) read with 147 of the Act. 3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition made by the AO by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 5. Undisputedly assessment in this case has been framed by the AO on the basis of information received from the investigation wing. It is also not in dispute that during the assessment proceedings financials of the assessee were not examined by the AO as well as the Ld. CIT(A) who have rather proceeded to make the addition qua the alleged bogus purchases on the basis of guess work and estimation without bringing on record the evidence to substantiate these allegations. 6. In the backdrop of the aforesaid undisputed facts the Ld. A.R. for the assessee contended that financials of the assessee contain each and every bills qua the alleged bogus purchases which have not been examined by the AO as well as the Ld. CIT(A) and drew our attention towards page 5 to 7 of the paper book containing statement of the stock register qua each and every purchase made by the assessee during the year under consideration. The AO also ITA No.422/M/2023 M/s. Apex Diamonds 4 brought on record affidavit of the aforesaid alleged bogus entities stating therein that all the payments qua the alleged bogus purchases have been made through banking channel and they had sold and delivered the goods to the assessee through brokers. The AO also raised these contentions before the Ld. CIT(A) but have not been examined. 7. In view of what has been discussed above, we are of the considered view that when the assessee has brought on record complete details of the alleged bogus purchases and stated to have made the payment through banking channel and the alleged bogus suppliers have also filed the affidavit stating therein that the goods were sold and delivered to the assessee by them against the payment received through banking channel, the entire issue required to be re-examined by the AO as they have erred in resorting to estimation and guess work instead of examining the evidence brought on record by the assessee. So the impugned order passed by the Ld. CIT(A) is hereby set aside and the AO is directed to frame the assessment afresh after providing opportunity of being heard to the assessee by examining all the documentary evidence relied upon by the assessee. 8. Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 28.04.2023. Sd/- Sd/- (GAGAN GOYAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 28.04.2023. * Kishore, Sr. P.S. ITA No.422/M/2023 M/s. Apex Diamonds 5 Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.