SAMIR NAVIN SHAH,MUMBAI V. INCOME TAX OFFICER,CIRCLE 19(3), , MUMBAI

ITA 5421/MUM/2024

AI Insights

The case involves an appeal by Samir Navin Shah against the order of the National Faceless Appeal Centre, Delhi, which confirmed the additions made by the Income Tax Officer regarding alleged bogus purchases. The original assessment under Section 143(3) included a gross profit addition of 8% on purchases from M/s Mayur Exports, which was upheld by the ITAT in a previous appeal. However, in the reassessment under Sections 147/143(3), the entire amount of alleged bogus purchases was added, leading to the current appeal. The ITAT found the reassessment to be a change of opinion without new information, thus restricting the addition to 8% gross profit.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474439 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Assessee Lawyers: SHRIV.P. KOTHARI
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Bogus purchase; Bogus
• Section: 147; 143(3); 250

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER ITA No.5421/Mum/2024 (Assessment Year 2012-13) Samir Navin Shah Shreeji Arcade, Shreeji Chambers, Tata Road No.1 & 2 Opera House, Mumbai-400 004 PAN : AAZPS9084M vs Income-tax Officer, Circle 19(3) Matru Mandir, Mumbai APPELLANT RESPONDENT Assessee by : ShriV.P. Kothari Respondent by : Ms. Kavitha Kaushik,(SR DR) Date of hearing : 04/03/2025 Date of pronouncement : 06/03/2025 O R D E R PER ANIKESH BANERJEE, J.M: The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre, Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income tax Act, 1961 (for brevity the “Act”), date of order 23/08/2024.The impugned order was emanated from the order of the Learned Assistant Commissioner of Income-tax, Circle 19(3), Mumbai (in short the “AO”)passed under section143(3) read with section 147 of the Act, date of order13/12/2019. 2 ITA No.5421/Mum/2024 Samir Navin Shah 2. The assesseehas taken the following grounds of appeal:- “1 (a) The learned CIT(A) NFAC has erred in law and on facts in confirming the addition of Rs. 1,80,93,680/-being purchases from M/s. Mohit Enterprises Rs.68,68,157/- and purchases from M/s. Mayur Exports Rs.1,12,05,525/-treating them as non-genuine without properly considering the facts that the goods purchased have been exported out of India and the sales cannot be effected without making purchases. 2 (b) The learned CIT(A) NFAC has erred in law and on facts in confirming the disallowance of Rs. 1,12,05,525/-being purchase from Mis. Mayur Exports without properly considering the facts that the issue of M/s. Mayur Exports has already considered by his predecessors in Order passed us 143(3) of the Income Tax Act, 1961 making partial disallowance on account of alleged additional gross profit as per the Order dated 27th March. 2015 which was also considered by CIT(A) 52, Mumbai allowing part relief Therefore the appellant pray that this being merely a change of opinion and there is no new information which has not been considered in the original assessment proceedings. 3. Your appellant craves leave to add, alter and/or amend the above grounds of appeal.” 3. The brief facts of the case are that the assessment for the impugned assessment year was originally completed under Section 143(3) of the Act, by the Ld. AO vide order dated 27/03/2015. In the said assessment, an addition was made in respect of bogus purchases from M/s Mayur Exports, amounting to Rs.1,12,05,525/-. Out of the total alleged bogus purchases, the Ld. AO applied a gross profit (GP) rate of 8%, resulting in an addition of Rs.8,96,442/-, and the assessment was completed accordingly. The assessee filed an appeal before the Ld. CIT(A), who, after considering the assessee’s submissions, confirmed the addition of GP at 8% and upheld the assessment order. Aggrieved by the order, the assessee preferred an appeal before the ITAT,Mumbai Bench. The Co- ordinate Bench of ITAT, Mumbai (SMC), in ITA No. 2582/Mum/2018 for AY 2012- 3 ITA No.5421/Mum/2024 Samir Navin Shah 13, pronounced on 27/12/2018, upheld the view taken by the Ld. CIT(A). The ITAT observed that the assessee failed to substantiate the genuineness of the alleged bogus purchases, and therefore, the adoption of gross profit at 8% was held to be justified. Consequently, the assessee’s appeal was dismissed. Subsequently, the case was reopened by issuing a notice under Section 148, and the Ld. AO passed a reassessment order under Sections 147/143(3) of the Act. In the reassessment order, the Ld. AO made an addition for two alleged bogus purchases linked to the Banwarilal Jain Group, namely: Mohit Enterprises – Rs.68,68,157/- Mayur Exports – Rs.1,12,05,525/- The Ld. AR contended that in the original assessment under Section 143(3), the Ld. AO had applied an 8% addition in respect of purchases from Mayur Exports, whereas in the reassessment proceedings under Sections 147/143(3), the entire amount of alleged bogus purchases was added. This, the Ld. AR argued, amounts to a complete change of opinion, which is not permissible in reassessment proceedings. Aggrieved by the reassessment order, the assessee filed an appeal before the Ld. CIT(A), who upheld the assessment order. Dissatisfied with the order, the assessee has now preferred the present appeal before us. 4. We have heard the rival submissions and carefully considered the documents available on record. The Ld. AR has filed a written submission comprising pages 1–116, which has been placed on record. The Ld. DR argued and relied on the order of revenue authorities. 4 ITA No.5421/Mum/2024 Samir Navin Shah The revenue has contended that the addition of 8% on purchases from M/s Mayur Exports, as made by the Ld. AO in the original assessment under Section 143(3), was upheld by the ITAT. The Ld. AR has confirmed that the order of the ITAT, Mumbai Bench-SMC, was not challenged before a higher forum. However, in the reassessment proceedings under Sections 143(3) r.w.s. 147, the Ld. AO deviated from the original assessment and added the entire amount of alleged bogus purchases, which is not justified. 5. The issue stands well settled by the decision of the Coordinate Bench of ITAT, Mumbai, in the assessee’s own case in ITA No. 2582/Mum/2018 (supra). The assessee had accepted the addition of GP at 8% on the alleged bogus purchases. We find no reason to deviate from the ruling of the Coordinate Bench, and accordingly, we restrict the addition to 8% GP on the alleged bogus purchases. It is noted that in the original assessment order under Section 143(3), an addition of Rs.8,96,442/- (8% GP) was made on the alleged bogus purchase of Rs.1,12,05,525/-, which was already confirmed. Therefore, the entire addition of Rs.1,12,05,525/- made in the reassessment order under Sections 143(3)/147 is unsustainable and is accordingly deleted. However, concerning the alleged bogus purchases amounting to Rs.68,68,157/-, we direct that the addition be restricted to 8% of the GP, which works out to Rs.5,49,452/-. Accordingly, the addition is confirmed to the extent of Rs.5,49,452/-.Both the Ld. DR and Ld. AR have accepted the view taken by the Bench in relation to this appeal. 5 ITA No.5421/Mum/2024 Samir Navin Shah 6. Additional Ground:The Ld. AR had raised an additional ground, but as it was not pressed, it is treated as withdrawn. 7. In the result, the appeal of the assessee bearing ITA No.5421/Mum/2024 is partly allowed. Order pronounced in the open court on 06th day of March 2025. Sd/- sd/- (OMKARESHWAR CHIDARA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 06/03/2025 Pavanan Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकरआयुक्त CIT 4. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्डफ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "