FAB TRADE PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER, WARD 15(1)(2) , MUMBAI

ITA 564/MUM/2023

AI Insights

The case involves Fab Trade Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2011-12. The primary issues in the appeal were the additions made under section 69C of the Income Tax Act, 1961, related to unapproved purchases, and additions under section 68 concerning unexplained cash credits. The Assessing Officer had initially made these additions based on information from the Sales Tax department about bogus purchase bills. The CIT(A) upheld the AO's decision due to the assessee's non-compliance with hearing notices. The Tribunal, however, decided to remit the case back to the CIT(A) for a fresh hearing, highlighting the importance of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299291 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 23-05-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 23-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit
• Section: 148; 69C; 142(1); 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F”, BENCH MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.564/Mum/2023 (Assessment Year: 2011-12) Fab Trade Pvt.Ltd., 610, Thacker Tower CHS, Plot No.86, Sector-17, Vashi, Navi Mumbai-400703. बनाम/ Vs. ITO-15(1)(2), Room No.15B, Aayakar Bhavan, Mahrishi Karve Road, Mumbai-400020. स्थायी लेखा सं./जीआइआर सं./PAN/ GIR No. : AABCF1786A (अपीलाथी /Appellant) (प्रत्यथी / Respondent) अपीलाथी ओर से / Appellant by : None प्रत्यथी की ओर से/Respondent by : Ms.Vranda U Matkari.DR सुनवाई की तारीख / D a t e o f H e a r i n g 24/05/2023 घोषणा की तारीख /D a t e o f P r o n o u n c e m e n t 25/05/2023 आदेश / ORDER PER PAVAN KUMAR GADALE - JM: The assessee has filed an appeal against the order of Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”] passed under section 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year (“AY”) 2011-12. The assessee has raised following grounds of appeal:- "Ground No. 1: Based on the facts and circumstances of the case and in law, the Learned CIT (A) erred in levying additions of 2 I T A N o . 564/ M u m / 2 0 2 3 F a b T r a d e P v t . L t d . Rs.7,03,345/- under section 69C of the Income Tax Act (the Act), on account of unapproved purchases. Further, the Learned CIT(A) erred in adding back a total sum of Rs.7,03,345/- i.e. a gross profit @ 12.5 % on Rs. 56,26,761/- towards unapproved purchases made from alleged hawala parties. Ground no. 2: Based on the facts and circumstances of the case and in law, the Learned CIT(A) erred in levying additions of Rs.1,08,00,000/- u/s 68 of the Act on account of unexplained cash credits. Ground no. 3: The Appellant craves leave to add, to alter or to amend the aforesaid ground of appeal.” 2. The Brief facts of the case are that the assessee company is engaged in the business of chemicals and solvents. The assessee has filed the return of income for AY 2011-12 on 29.09.2011 disclosing a total income of Rs.23,33,890/- and return of income was processed u/s 143(1) of the Act. The Assessing Officer(AO) has received information from Sales tax department that the assessee has obtained bogus purchase bills/accommodation entries of Rs.56,26,761/-. Therefore, the AO has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act and the assessee has filed a letter to treat the original return 3 I T A N o . 564/ M u m / 2 0 2 3 F a b T r a d e P v t . L t d . of income filed on 29.09.2011as due compliance. The assessee was provided reasons for re-opening the assessment and also notice u/s 143(2) and U/sec 142(1) of the Act . The assessee has submitted that available information to substantiate the purchases and the AO found that the assessee has obtained bogus purchases bills form four parties aggregating to Rs.56,26,761/- and to test check the genuineness of the transactions, the AO has issued the notice and there was no response from the parties. Hence, the AO has issued a show cause notice on the assessee to submit the additional information on the claims. Since the assessee has not filed complete details and failed to produce the parties. The AO was not satisfied with the genuineness of the transactions and considered the gross profit rate, judicial decisions and estimated the income @ 12.5% of the alleged bogus purchases of Rs.56,26,761/- which works out to Rs.7,03,345/-. Similarly, the AO has made an addition of share capital including premium of Rs.1,08,00,000/- as unexplained cash credit u/sec68 of the Act as the assessee could not substantiate the genuineness, identity and creditworthiness of the investor and finally assessed the income of Rs,1,38,37,240/- and passed the order u/s 143(3)r.w.s147 of the Act dated 23.12.2016. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices. Therefore the CIT(A) considering the 4 I T A N o . 564/ M u m / 2 0 2 3 F a b T r a d e P v t . L t d . information on record has confirmed the action of the A.O and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal. 4. At the time of hearing, none appeared on behalf of the assessee and the Ld. DR supported the order of the CIT(A). 5. We heard the Ld.DR’s 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 of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld. CIT(A) has issued the notices of hearing referred at Page 2&3 Para 3 & 3.1 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. Whereas the assessee has raised grounds of appeal challenging the additions of the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case 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 and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early 5 I T A N o . 564/ M u m / 2 0 2 3 F a b T r a d e P v t . L t d . disposal of the appeal. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes. 6. In the result, the appeal filed by assessee is allowed for statistical purposes. Order pronounced in the open court on 25.05.2023. /- sd/- sd/- (PADMAVATHY S) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 2505/2023 *Amit Kumar, Sr. PS* आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT 5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीलीय अतधकरण, मुम्बई / ITAT, Mumbai