MR RAJESH ASRANI,MUMBAI V. INCOME TAX OFFICER-23(3)(1), MUMBAI

ITA 5964/MUM/2024

AI Insights

Mr. Rajesh Baldevdas Asrani appealed against the order of the National Faceless Appeal Center/Commissioner of Income Tax (Appeals), which affirmed the addition of Rs.30,17,583 to his income as bogus purchases under section 69C of the Income Tax Act, 1961. The addition was based on information from the Maharashtra Sales Tax Department indicating that the assessee had availed bogus purchase bills without actual delivery of goods. The Tribunal noted that in a similar case for the Assessment Year 2010-11, the additions were deleted, and following this precedent, the Tribunal decided in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33853 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Other Referred Cases: ITA no. 5963/M/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN UNAVEKAR; LD.
• Assessee Lawyers: NISHIT GANDHI; LD
• Keywords: Set aside; Unexplained expenditure; Bogus purchase; Gift; Bogus
• Section: 148; 250; 133(6); 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.5964/M/2024 Assessment Year: 2011-12 Mr. Rajesh Baldevdas Asrani, 201, Mangaldarshan, 14 Turner Road, Bandra (West), Mumbai Maharashtra – 400 050 PAN: ACOPA6039M Vs. Income Tax Officer- 23(3)(1), Piramal Chambers, Dr. SS Rao Marg, Parel, Mumbai Maharashtra – 400 012 (Appellant) (Respondent) Present for: Assessee by : Shri Nishit Gandhi, Ld. A.R. Revenue by : Shri Kiran Unavekar, Ld. Sr. D.R. Date of Hearing : 16 . 01 .2025 Date of Pronouncement : 19.02.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 06.11.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2011-12. ITA No.5964/M/2024 Mr. Rajesh Baldevdas Asrani 2 2. In the instant case, the original return filed by the Assessee on dated 24.09.2011 declaring total income at Rs.14,51,210/- was processed u/s 143(1) of the Act on dated 15.10.2011. Subsequently, the information was received from the DGIT (Investigation), Mumbai on the basis of information received from Maharashtra Sales Tax Department with regard to providing certain bogus purchase bills without delivery of actual goods and the Assessee had also allegedly been shown to have availed bogus purchase bills to the extent of the amount of Rs. 30,17,132 in total from the following parties. Sr. No. Name of the Party who has issued bogus bills to the assessee Amount of such bogus bills in Rs. 1 CN Corporation 3,58,578 2 Globe I impex (India] 3,78,628 3 Keval Enterprises 1,86,134 4 Meridian Trading 1,26,683 5 U.B. Traders 4,09,301 6 Rup International 15,57,808 Total 30,17,132 3. Consequently, on the basis of aforesaid information, the case of the Assessee was reopened by recording reasons for reopening u/s 147 of the Act and issuing the notice dated 18.03.2017 u/s 148 of the Act to the Assessee, who in response vide letter dated 06.04.2017 enclosed copy of the return filed on 24.09.2011 and requested to treat the same as return filed in response to the notice u/s 148 of the Act and asked to provide the reasons for reopening the said assessment, which were provided to the Assessee. Thereafter, statutory notices were issued to the Assessee, who from time to time filed the details and documents, which were taken into consideration by the Assessing Officer (AO) who by observing “that ITA No.5964/M/2024 Mr. Rajesh Baldevdas Asrani 3 the Assessee being engaged in the business of trading in gift articles as per the requirement of the customers and as per information from Maharashtra Sales Tax Department, is a beneficiary of hawala transactions amounting to Rs.30,17,132/- from hawala parties, who have filed affidavit/statements for indulging into providing only accommodation bills and had not entered into any process of sales/purchase/transfer of any goods/material” show caused the Assessee. 3.1 The Assessee provided all the relevant details such as, the copies of invoice bills, ledger extracts and copy of bank statements to substantiate his purchases, quantitative details and reconciliation of purchases with corresponding sales affected and having made the payments through cheques to prove the genuineness. 3.2 However, as per the AO, the Assessee neither provided the latest address or the whereabouts of the purchase parties nor produced the said parties for verification, therefore, the AO presumed that the Assessee has failed to discharge the initial burden qua genuineness of the purchases as per sections 101, 102 & 106 of the Evidence Act, the onus lies upon the Assessee to prove all the expenses including purchases to the satisfaction of the AO. 3.3 The AO in para no.4.4(a) though mentioned the fact that in the replies the Assessee’s representative stated to have filed copies of the invoice bills, ledger extracts and copy of bank statement and quantitative details and reconciliation of the purchases with corresponding sales affected and also claimed to have made payments through cheques, however, in para no.4.4(b) has ITA No.5964/M/2024 Mr. Rajesh Baldevdas Asrani 4 mentioned that AR has not submitted purchase bill, stock register, inward and outward register, which prove that the purchases shown to have been made by the Assessee from the above firms, is bogus. The AO ultimately treated the amount of Rs.30,17,583/- as bogus purchases and added back in the income of the Assessee u/s 69C of the Act. 4. The Assessee, being aggrieved, challenged the impugned addition by filing first appeal before the Ld. Commissioner but failed, as the Ld. Commissioner affirmed the said addition by dismissing appeal of the Assessee vide impugned order. 5. The Assessee being aggrieved with the impugned order has preferred this appeal and at the outset has submitted that in the Assessee’s own case for the A.Y. 2010-11, the identical addition of Rs.36,30,475/- has also been made in the identical facts and circumstances of the case and the information received from Maharashtra Sales Tax Department as involved in this, which travelled up to the Tribunal and the Hon’ble Co-ordinate Bench of the Tribunal by considering the peculiar facts and circumstances in totality, and vide order dated 03-01-2025 in ITA no. 5963/M/2024 ultimately deleted the identical addition, by observing and holding as under: “2. The assessee is a trader in gift articles. The AO received information that the Maharashtra Sales tax department has found that certain businessmen are indulging in providing only accommodation sales bills without actually supplying the materials. It was noticed that, during the year under consideration, the assessee has purchased goods from following six parties, who were identified as accommodation bill providers:- Sr. No. Name of the Party who has issued bogus bills to the assessee Amount of such bogus bills in Rs. ITA No.5964/M/2024 Mr. Rajesh Baldevdas Asrani 5 1 Dhruv sales corporation 6,07,157 2 Repute Enterprises 3,20,852 3 V.S. Enterprises 3,12,000 4 Palak Enterprises 10,54,239 5 U.B. Traders 5,72,066 6 Rup International 3,58,578 Total 36,30,475 Hence, the AO reopened the assessment of the year under consideration by issuing notice u/s 148 of the Act on 18-03-2017. 3. During the course of assessment proceedings, the AO asked the assessee to furnish the details of purchases made from the above said persons along with quantity details and payment details. The assessee submitted name and quantum of purchases made from above said six parties. In addition, he also furnished the details relating to one party named M/s Shbham International from whom, the assessee had purchased goods to the tune of Rs.27,55,482/-. Later the assessee furnished the addresses of all the parties. The AO issued notices u/s 133(6) of the Act to them, but all of them were returned back. Hence, the AO asked the assessee to furnish current address of the parties. The assessee stated that he has stopped dealing with those parties and accordingly expressed his inability to furnish current addresses of the above said parties. The AO had also proposed to disallow the entire amount of purchases aggregating to Rs.63,85,957/- (Rs.36,30,475/- (+) Rs.27,55,482/-) u/s 69C of the Act. In response thereto, the assessee contended that the provisions of sec.69C shall apply only to unexplained expenditure only and the same will not apply to the assessee, since all purchases have already been accounted for in the books of accounts. The AO, however, did not agree with the above said contentions. The AO also noticed that the assessee has furnished all the documents to prove the purchases, quantity details and also reconciled the purchases with corresponding sales. However, since the assessee could not furnish the current addresses of the above said parties, the AO took the view that the purchases aggregating to Rs.63,85,957/- are bogus in nature and accordingly disallowed the same u/s 69C of the Act. The Ld CIT(A) also confirmed the same and hence the assessee has filed this appeal. 4. We heard the parties and perused the record. The Ld.AR submitted that the AO has identified only six parties as accommodation entries providers and the assessee had purchased goods to the tune of Rs.36,30,475/- from them. However, the AO has considered the purchases made from M/s Shbham International also bogus in nature and accordingly disallowed the sum of Rs.27,55,482/- also, which is not justified. ITA No.5964/M/2024 Mr. Rajesh Baldevdas Asrani 6 We agree with the said contentions of the assessee. If the purchases made from M/s Shbham International is not identified as bogus in nature, then there is no reason to disallow the same. Accordingly, we direct the AO to delete the addition of Rs.27,55,482/-. 5. With regard to the purchases made from the alleged accommodation entry providers, we notice that the assessee has furnished documents to prove those purchases, quantity details and also reconciled the purchases with the corresponding sales. There should not be any dispute that the assessee could not have effected sales without purchasing them. We notice that the AO has disallowed the purchases only for the reason that the assessee could not furnish the current addresses of those suppliers. We noticed that the assessee has submitted he has stopped dealing with those parties and accordingly expressed his inability to furnish current addresses. We also notice that the impugned purchases have been made in the financial year 2009- 10 and the reassessment has been done in the year 2017, i.e., after expiry of about seven years. Hence, the AO should have accepted the inability of the assessee unless he could prove that the same was false. Further, the AO did not find any fault or deficiency in the documents furnished by the assessee to prove the purchases. We notice that the AO himself has stated that the assessee has furnished the quantity details and reconciled the purchases with the corresponding sales. Under these set of facts, we are of the view that the AO was not justified in disallowing the entire amount of purchases made from the alleged accommodation entry providers, merely for the reason that the assessee could not furnish the current addresses. Accordingly, we set aside the order passed by the Ld CIT(A) and direct the AO to delete disallowance of purchases made by him. 6. Coming to the instant case, since the identical addition has been made by the AO in the A.Y. 2010-11 as well, but the same is deleted by the Hon’ble Co-ordinate Bench of the Tribunal in the aforesaid case, while considering the peculiar facts and circumstances as applicable to the instant case ; hence respectfully following the decision of the Hon’ble Co-ordinate Bench of the Tribunal, this Court is inclined to delete the addition under consideration on the same footing, as of the Hon’ble Co-ordinate Bench of the Tribunal. Thus, the addition under consideration is deleted. ITA No.5964/M/2024 Mr. Rajesh Baldevdas Asrani 7 7. In the result, the appeal filed by the Assessee stands allowed. Order pronounced in the open court on 19.02.2025. Sd/- (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "