SIRAJ AHMED SHAH,MUMBAI V. WARD 42 (1) (4) AND CIT, MUMBAI

ITA 3815/MUM/2024

AI Insights

The case involves Siraj Ahmed Shah, an individual engaged in the business of wholesale scrap and ferrous waste goods, who appealed against the order of the CIT(A) which upheld an addition of Rs. 6,23,54,005 to his income on account of bogus purchases under section 69C of the Income Tax Act, 1961. The assessee had initially declared a loss in his return, which was accepted under section 143(1), but later assessed with a substantial income addition under section 143(3). The CIT(A) dismissed the appeal due to the absence of an application under Rule 46A for admitting additional evidence. The Tribunal found merit in the assessee's argument that the additional evidence was crucial to substantiate the genuineness of the transactions and directed the CIT(A) to reconsider the case after allowing the submission of the additional evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34715 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Additional evidence; Bogus purchase; Principle of natural justice; Bogus
• Section: 143(3); 250; 143(1); 69C

Judgement Text

"Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA NO. 3815/MUM/2024 (A.Y: 2021-22) Siraj Ahmed Shah Shop No. RWG 194, Ganesh Nagar, Charkop Kandivali West, Maharashtra – 400 067 PAN: EAQPS3991Q Vs. ITO Ward 42(1) (4), Kautilya Bhavan, Bandra Kurla Complex, Maharashtra – 400 051 (Appellant) (Respondent) Assessee Represented by : Shri Naimish Joshi, Ld. AR Department Represented by : Dr. Kishor Dhule, Ld. DR Date of conclusion of Hearing : 18.12.2024 Date of Pronouncement : 02.01.2025 O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order of Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi [hereinafter referred to as the “CIT(A)”], passed under section ITA No. 3815/Mum/2024 Siraj Ahmed Shah Page | 2 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 04.07.2024 for the A.Y. 2021-22. 2. The brief facts of the case are that, the assessee is an individual and engaged in the business of wholesale scrap and ferrous waste goods in the trade name of M/s US Enterprises. The assessee has filed the return of income for the year under consideration on 30.03.2022 declaring loss of Rs. (-) 41,10,405/-. The return of income was processed u/s 143(1) of the Act accepting the return of income. However, the AO passed the order u/s 143(3) of the Act, assessed the total income of Rs. 6,23,54,005/- by making an addition 6,23,54,005/- on account of bogus purchase u/s 69C of the Act. 3. Aggrieved by the order of AO, assessee preferred the appeal before Ld. CIT (A) and Ld. CIT(A) refused to admit the additional evidence on the ground that application under Rule 46A was not filed and no cogent reason was assigned for admitting the additional evidence, hence dismissed the appeal of the assessee observing as under:- In the light of above facts and discussions from point no.-(i) to (xx), in absence of the Application under Rule 46A of the Income-tax rules, negligent behaviour of the appellant assessee during the course of assessment proceedings and in front of this Appellate authority, this Appellate authority is in the view that, the grounds of appeal no.-1 to 3 of the appellant assessee are hereby rejected and ITA No. 3815/Mum/2024 Siraj Ahmed Shah Page | 3 addition amounting of Rs 6,23,54,005/- u/s 69C of the Income-tax Act, 1961 made by the Assessing officer is found to be correct and is hereby UPHELD. 4. Aggrieved with the order of Ld. CIT(A), assessee preferred the appeal before us on the following grounds:- Payment to the suppliers, which can be duly verified by the banking entries and from the banker of the suppliers whether such payments has been received or not. The Sales Returns are also been filed by all the suppliers basis which I have availed GST input credit and sold goods to the end user. The evidence of such GST returns by suppliers is available with the GST Portal. The filing of such returns and such returns IP Domain can be obtained from the GST Department to authenticate the GST Returns of the suppliers. I have purchase bills from all the suppliers including the E-Way Bills which is with the GST Department for the purpose of GST Assessment due to default of GST payment by the suppliers. The said purchases are also been sold legitimately to the end user through proper sales having Sales Register, GST Sales Returns, Receipts of payments against sales in the banking mode. 5. At the outset, Ld. AR submitted that there was a justified ground for not submitting additional evidence in support of its case regarding the genuineness of the transaction as it was not the case of bogus purchase. He further submitted that Ld. CIT(A) was not justified in denying the admission of additional evidence. Thus, the matter be restored to the file of ITA No. 3815/Mum/2024 Siraj Ahmed Shah Page | 4 Ld. CIT(A) for adjudicating afresh after giving the opportunity to the assessee for moving application under Rule 46A. 6. On the other hand Ld. DR submitted that there was no reason assigned by the assessee to admit the additional evidence, however the Tribunal may consider the request of assessee as per law. 7. We have considered the rival submissions and perused the material placed on record. It is evident from the extracts of the order of Ld. CIT(A) that he has not allowed the additional evidence while dismissing the appeal of the assessee. It is clear that the appeal has been dismissed for the reason that application under Rule 46A was not moved by the assessee and negligent behavior of assessee during the course of assessment and before the First Appellate Authority. We are convinced by the submission of Ld. AR with respect to the reasons for not submitting the application under Rule 46A before the Ld. CIT(A) and in the interest of natural justice, one opportunity is given to the assessee to move an application under Rule 46A before the Ld CIT(A) and Ld. CIT(A) may consider the said application as per law. For these reasons, the impugned order is set aside and matter is restored to the file of Ld. CIT(A) for deciding afresh after giving ITA No. 3815/Mum/2024 Siraj Ahmed Shah Page | 5 opportunity to assessee who shall present its case before the Ld. CIT(A) within 60 days. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 02.01.2025. Sd/- Sd/- (AMARJIT SINGH) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 02.01.2025 Dhananjay, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mumbai "