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Income Tax Officer–Ward 18 (3) 1, Mumbai Versus Shri Rajkumar B Mutreja and Vica-Versa

2016 (7) TMI 607 - ITAT MUMBAI

Addition under section 69C - addition on the basis of the report provided by the State Sales Department and the statements of the parties, as recorded by the Sales Tax Department - Held that:- As find from the record that though the assessee has provided documentary evidences, these documents have not been considered by the authorities below and they made the addition only on the basis of statement of a third person, without giving any opportunity to the assessee. Therefore, in view of this lega .....

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10 challenging the order of ld.CIT(A) dated 7.5.2015. The assessee also filed cross-objection thereto. These were clubbed together and are being disposed of by this common order, for the sake of convenience. 2. First of all, we will deal with the appeal of the revenue. We find from the orders of authorities below that the tax effect involved in the above referred case is below the monetary limit (Rs. 10,00,000/-) prescribed by the Central Board of Director Taxes(CBDT), vide its Circular No.21/20 .....

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stances of the case and in law, the learned Commissioner of Income tax (A) erred in confirming the above addition to the extent of ₹ 5,49,250/- being 25% out of the total alleged purchases of ₹ 21,97,000/- by overlooking several judgments of Mumbai ITAT in which the same has been fully allowed by the jurisdictional Mumbai Tribunal. 2. The AO has erred in charging interest u/s 234A, 234B, 234C and penalty u/s 271(1)( c ) of the Act. B. Relief Prayed: The Appellant therefore prays for .....

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sed due diligence, which revealed that the assessee is involved in taking accommodation entry of bogus purchases from M/s Tara Enterprises amounting to ₹ 9,62,728/- and M/s Sagar Enterprises of ₹ 12,62,560/-; and that the proprietor/principal person of the aforesaid companies have recorded their statements on oath by the Sales Tax Department and in the said statements they have stated that they have not carried out actual trading activity and have only issued bogus bills/accommodatio .....

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of deductible expense is on assessee and only because of payment is made through cheque and assessee has bills of the said party, the purchases do not become genuine, in view of the categorical disowning by the said party on oath before the sales tax department. In reply to the said notice, the assessee filed a copy of bank statement showing payment made to alleged bogus entry providers. On 5.8.2014 the assessee s representative admitted that the persons of the concerned parties were not availa .....

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Being aggrieved by the order of ld.CIT(A), the assessee preferred an appeal before the ld.CIT(A) who, in turn, after considering the facts and submissions of the assessee, partly allowed the appeal and restricted the disallowance to ₹ 549,250/-, being 25% of the purchases. Further aggrieved, the assessee is in appeal before this Bench. 6. The ld.Counsel for the assessee submitted before me that the AO has made an addition only on the basis of information received from the Director General .....

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hases can be made without verifying the facts which are not established. He submitted that the money has come back to the assessee and disregarding the fact that no sales can be made without purchases. The ld. Counsel submitted that the list of defaulters on the website of Maharashtra Sales Tax Department is not a conclusive evidence to sustain the addition only on an adhoc basis. In support of his contentions he relied on the following case laws : a) ACIT V/s Shri Ramila Pravin Shah in ITA No.5 .....

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rla R Shah in ITA No.5295/Mum/2013 (AY-2010-11) dated 2.2.2016; h) Ramesh Kumar and Co V/s ACIT In ITA No.2959/Mum/2014 (AY-2010-11) dated 28.11.2014 i) Hiralal Chunilal Jain V/s ITO in ITA No.4547/Mum/2014 (AY-2009-10) dated 1.1.2016. 7. On the contrary, the ld.DR relied on the orders of the authorities below. 8. I have heard the rival contentions and have perused the material available, including the orders of the authorities below and the case laws relied upon by the parties. 9. I find from t .....

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ement of a third person, without giving any opportunity to the assessee. Therefore, in view of this legal and factual aspect, I feel that if the assessee be given opportunity before the AO to substantiate its case, it will meet the ends of justice and no prejudice would be caused to the revenue. It is seen that this Tribunal has considered this issue in the case of Deepak Popatlal Gala, in ITA No. 5920/M/13 and vide order dated 27.3.2015, it has held as under: 10. The next issue relates to disal .....

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377; 38.69 lakhs from two parties named M/s Umiya Sales Agency Pvt Ltd and M/s Mercury Enterprises, whose names found place in the list provided by the Sales Tax Department. The AO placed full reliance on the enquiries conducted by Sales Tax Department in respect of the parties, referred above. Accordingly, the AO took the view that the purchases to the tune of ₹ 38.69 lakhs have to be treated as unexplained expenditure. Accordingly, he assessed the same u/s 69C of the Act. 11. The ld. CIT .....

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27/Mum/2012 (AY-2009-10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY-2009-10) dated 5.11.2014 In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugned addition on the basis of state .....

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e basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained. The Ld CIT(A) has also appreciated the contentions of the assessee that he was not provided with an opportunity to cross examine the sellers, which is req .....

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