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

ITA 5963/MUM/2024

AI Insights

The case involves Shri Rajesh Asrani, a trader in gift articles, who appealed against the order of the CIT(A) confirming the disallowance of alleged bogus purchases amounting to Rs.63,85,957/- for the Assessment Year 2010-11. The AO had reopened the assessment based on information from the Maharashtra Sales Tax Department about certain businessmen providing accommodation sales bills without actual supply of materials. The AO disallowed the purchases due to the assessee's inability to provide current addresses of the suppliers, despite the assessee having reconciled the purchases with corresponding sales. The Tribunal found that the disallowance of Rs.27,55,482/- from M/s Shbham International was unjustified as these purchases were not identified as bogus. The Tribunal directed the AO to delete this addition but upheld the disallowance of other purchases due to lack of sufficient evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24125 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA
• Assessee Lawyers: NISHIT GANDHI
• Keywords: Set aside; Unexplained expenditure; Bogus purchase; Gift; Accommodation entries; Bogus
• Section: 148; 133(6); 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “D” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 5963/Mum/2024 Assessment Year : 2010-11 Shri Rajesh Asrani, 201, Mangaldarshan, 14 Turner Road, Bandra (West) Mumbai PAN : ACOPA6039M vs. Income Tax Officer-23(3)(1), Piramal Chambers, Dr.S.S. Rao Marg, Parel, Mumbai. (Appellant) (Respondent) Assessee by : Shri Nishit Gandhi Revenue by : Shri R.R. Makwana, Addl.CIT Date of Hearing : 02-01-2025 Date of Pronouncement : 03-01-2025 ORDER PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dated 06-11-2024 passed by the Ld CIT(A), NFAC, Delhi and it relates to the Assessment Year (AY.) 2010-11. The assessee is aggrieved by the decision of the Ld CIT(A) in confirming the disallowance of entire alleged bogus purchases and also disallowing a purchase amount, which has not been reported as bogus in nature. 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 2 ITA No. 5963/Mum/2024 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:- 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 3 ITA No. 5963/Mum/2024 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. 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 4 ITA No. 5963/Mum/2024 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. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 03-01-2025 Sd/- Sd/- [SUNIL KUMAR SINGH] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated:- 03-01-2025 TNMM 5 ITA No. 5963/Mum/2024 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “D” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "