×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
08-02-2019, Solaris Speciality, Section 69C, 147, Tribunal Mumbai
This appeal, filed by the assessee, being ITA No. 3386/Mum/2018, is directed against order dated 21.03.2018 passed by learned Principal Commissioner of Income Tax-11, Mumbai (hereinafter called “the Pr. CIT”) u/s 263 of the Income-tax Act, 1961 (hereinafter called “the Act”) for assessment year(AY) 2010-11.
2. The grounds of appeal raised by Assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“ 1. On the Facts and Circumstances of case, The Learned Principal Commissioner of Income Tax has erred in law by passing order u/s. 263 and setting aside the Assessment Order passed u/s. 143 (3) r.w.s.147 for fresh assessment to be made for examining the issue in the light of the provisions of section 69C of the Income Tax Act.
The Learned CIT failed to appreciate that AO has concluded the assessment after examining all the evidences and setting aside of the Assessment Order is merely a change of opinion based on existing set of facts.”
3. The brief facts of the case are that the assessee is engaged in the business of trading of chemicals. The assessee is supplying chemicals to various Government and Public Sector Undertakings and other Private concerns. The assessee filed its return of income on 11.10.2010 declaring total income of Rs. 5 24,94,418/- which was processed by Revenue u/s. 143(1) of the Act on 06.06.2011. Later on based upon the information received by the AO from Sales Tax Department through the office of DGIT (Inv), Mumbai , that the assessee is beneficiary of accommodation entries by way of bogus purchases from M/s. S.M Trading Company aggregating to Rs. 1,16,50,190/- during impugned assessment year and the said M/s. S.M Trading Company is hawala dealer engaged in issuing bogus bills without supplying any material, led the AO to reopen the concluded assessment by invoking provisions of Section 147 of the 1961 Act wherein notice dated 09.03.2015 u/s. 148 of the 1961 Act was issued by the AO to the assessee . The assessee submitted letters dated 08.03.2016 and 15.03.2016 before the AO during reassessment proceedings wherein the assessee co-related said alleged bogus purchases with that of sale and also submitted copies of purchases bills, ledger account, bank statement etc. with the AO in reassessment proceedings. The AO had earlier issued notice dated 23.02.2016 u/s
133(6) to M/s. S.M Trading Company which returned un-served . The assessee could not produce this party before the AO nor could provide correct address before the AO which finally led to additions to the income of the assessee to the tune of 12.5% of the alleged bogus purchases aggregating to Rs. 1,16,50,190/- from said M/s S.M.Trading Company and the additions to the tune of Rs. 14,56,274/- were made by the AO to the income of the assessee, vide re-assessment order dated 15.03.2016 passed by the AO u/s. 143(3) read with Section 147 of the 1961 Act. This aforesaid addition to the income of the assessee as was made by the AO vide reassessment order dated 15.03.2016 attained finality as assessee chose not to further litigates on this issue before higher appellate forums and accepted additions as were made by the AO in order to buy peace and avoid protracted litigation with Revenue. So far so good as there is no dispute remaining between rival parties till this stage.
4. But, the learned Pr. CIT not being satisfied with the reassessment framed by the AO vide reassessment orders dated 15.03.2016 passed by the AO u/s 143(3) r.w.s. 147 of the Act bringing to tax additional income to the tune of 12.5% of alleged bogus purchases, issued show cause notice to the assessee u/s. 263 of the Act, by treating said assessment dated 15.03.2016 as erroneous and prejudicial to the interest of Revenue and proposing to setting aside/cancelling the same.
5. The learned Pr. CIT was of the view that there are no provision u/s. 69C of the Act to disallow unexplained expenditure on proportionate basis and once the amount involved in such bogus purchase was held as unexplained , the entire amount is to be disallowed and by this analogy the Ld. Pr CIT was of the view that the entire alleged bogus accommodation entries of purchase to the tune of Rs. 1,16,50,190/- taken by the assessee company from M/s. S.M was required to be brought to tax as against 12.5% of such purchases being Rs. 14,56,274/- as added by AO u/s. 69C of the Act. The show cause notice was issued by Ld. Pr. CIT to the assessee on 02.02.2018 and the assessee submitted details such as copies of purchase bills from M/s. S.M Trading Company, Stock Register , Ledger Account of S.M.Trading Company etc which as