INCOME TAX OFFICER 3(2), THANE V. M/S.SAB CREATIONS PRIVATE LIMITED, MUMBAI

MA 71/MUM/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8625 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-11-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Set aside
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER M . A . N o . 7 1 / M u m / 2 0 2 1 ( A r is in g o u t o f I T A N o . 4 6 1 7 /M u m / 2 0 1 8 ) ( A s se ss m e n t Y e a r : 2 0 1 3 - 1 4 ) ITO,Ward-3(2) Rom No.8, 6 th Floor B-Wing, Wagle Industrial Estate Thane(W), Thane-400 064 V s. Sab Creations Pvt.Ltd. 8A, Eden Woods, Cedar CHS Gladys Alwaries Marg Pokharan Road No.2 Thane-400 601 PA N / G I R N o . A A K C S9 8 9 9 Q (Appellant) : (Respondent) Appellant by : Shri H.B.Irani-DR Respondent by : None D a t e o f H e a r i ng : 22.10.2021 D a t e o f P r o no un c e m e nt : 12 .11.2021 Per Shamim Yahya, A. M.: By way of this miscellaneous application the revenue seeks rectification of mistake apparent from the record u/s.254(2) of the I.T.Act,1961 in the order of this Tribunal in ITA No. 4617/Mum/2018 for assessment year 2013-14 vide order dated 11.09.2019. 2. In the said order ITAT has held as under:- “This is an appeal by the assessee wherein the assessee is aggrieved that the learned CIT-A has erred in sustaining 100% disallowance on account of bogus purchases vide order dated 28.2.2018 pertaining to A.Y. 2009-10. 2. Brief facts of the case are that the assessee in this case is an individual. The authorities below have not been bothered to mention as to what is the business of the assessee. The assessment was accordingly reopened upon receipt of information from the Sales Tax Department that the assessee has made bogus purchases. The assessee submitted the purchase vouchers and the payments 2 M A N o . 7 1 / M / 2 1 were made through banking channel. However the suppliers were not produced before the assessing officer. Sales in this case were not doubted. 3. The income tax officer in this case has made 100% addition on account of bogus purchases resulting in disallowance of Rs. 10,72,673/-. Upon assessee’s appeal learned CIT(A) confirmed the same. 4. Against above order assessee is in appeal before the ITAT. I have heard both the counsel and perused the records. 5. Upon careful consideration I find that assessee has provided the documentary evidence for the purchase. Adverse inference has been drawn due to the inability of the assessee to produce the suppliers. I find that in this case the sales have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). In this case the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to government agency. 6. In the present case the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee, I find that as held by honourable High Court of Bombay in its recent judgement in the case of principle Commissioner of income tax versus M Haji Adam & Co (ITA number 1004 of 2016 dated 11/2/2019 in paragraph 8 there off) ,the addition in respect of bogus purchases is to be limited to the extent of bringing the gross profit rate on such purchases at the same rate as of other genuine purchases. 7. I respectfully following the aforesaid judgement of the honourable High Court set aside the matter to the file of the assessing officer with the direction to restrict the addition as regards the bogus purchases by bringing the gross profit rate on such bogus purchases at the same rate as that of the other genuine purchases. Needless to add the assessee should be granted adequate opportunity of being heard. 8. In the result, assessee’s appeal is partly allowed.” 3. Now, the revenue has filed miscellaneous application containing as under:- 3 M A N o . 7 1 / M / 2 1 I. This Miscellaneous Application arises out of ITA No. 4617/Mum/2019 dated 11.09.2019 between the Income Tax Officer-3(3), Thane Vs M/s. Sab Creations Private Limited against order pronounced by the Hon'ble Tribunal for A.Y. 2013-14 vide its order dated 11.09.2019 wherein the Hon’ble ITAT disposed off the appeal filed by the assessee & set aside the order u/s 143(3) dated 11.03.2016 to the file of AO for fresh adjudication. 2. The appellant submits the following brief facts of the case and issues involved in the impugned order of the ITAT as under: 2.1 The assessee company filed return of income on 30.09.2013, declaring total income of Rs.6,23,140/-. The case was selected for scrutiny. The assessment was completed on 11,03.2016018 and assessed total income of Rs. 24,99,176/-, addition made on account of disallowance u/s. 40A(3) of Rs. 16,00,000/- and u/s. 41(1) of I.T. Act, 1961 of Rs. 2,76,036/-. 2.2 Against the aforesaid addition, the assessee preferred appeal before the first appellate authority. During the appellate proceedings, no arguments were taken on this disallowance. The CIT (A) does not find any reason to be at variance with the order passed by the AO as the appellant has filed to furnish the confirmations from the respective creditors in spite of specific requisition during the assessment proceedings. The addition made of Rs. 27,60,376/- was accordingly upheld. 2.3 Aggrieved with the decision of the CIT (A)-2, Pune the assessee filed appeal before the Hon'ble ITAT, SMC Bench, Mumbai vide order ITA No. 4617/Mum/2018 dated 11.09.2019 has set aside and restored the matter before the AO to decide the matter afresh by giving an opportunity of being heard to the assessee in accordance with law. It is seen that the Hon'ble ITAT, Mumbai adjudicated on the issues other than on which the addition was made by the AO. Therefore the issues on which the decision was given by the Hon'ble ITAT, Mumbai and the issues under dispute are different. The assesee is in appeal before the Hon'ble ITAT in both years i.e. AY 2009-10 and AY 2013-14. The Hon'ble ITAT, Mumbai passed the order for A.Y. 2013-14 but the facts mentioned in order to relevant year 2009-10. 3. On perusal of the said order it is observed that the Hon'ble ITAT disposed off the case on the issues on which the additions were not made for AY 2013-14. It is seen that the assessee in this case is in appeal for AY 2009-10 and 2013-14. It is further intimated that the Hon'ble ITAT vide the impugned order disposed off the appeal for AY 2013-14 adjudicating on the additions made for AY 2009-10. Therefore, the issues which is addition made by the AO and issues of decision given by the Hon'ble ITAT, Mumbai are different. The details are as under:- A.Y. Assessment completed Issues 2009-10 147 r.w.s. 143(3) Disallowance of bogus purchases 4 M A N o . 7 1 / M / 2 1 2013-14 143(3) Disallowance u/s. 40A(3) and 41(1) The Hon'ble ITAT, Mumbai passed the order for A.Y. 2013-14 but the facts mentioned in order to relevant year 2009-10. 4. Therefore, it is respectfully submitted that there is mistake apparent from record within the meaning of Sec.254(2) of the Income Tax Act, 1961 and request the Hon'ble Bench of the ITAT to recall the impugned order and repost the same for fresh hearing. 5. Under the said premises, applicant most humbly prays that the Hon'ble Bench may graciously pass necessary orders allowing the Miscellaneous Application and oblige. 4. I have heard the Ld. DR. Despite several notices, assessee did not appear. Notice to the assessee was duly served by AO. It is noted that ITAT has apparently be in mistake in adjudicating the appeal with reference to different facts than which were subject matter of appeal. Hence, this order is recalled. The registry is directed to fix the case for hearing in normal course. 5. In the result, this miscellaneous application is allowed. Order pronounced in the open court on 12.11.2021 Sd/- (Shamim Yahya) Accountant Member Mumbai; Dated : 12.11.2021 Thirumalesh , Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File 5 M A N o . 7 1 / M / 2 1 BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai