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11-03-2019, Simrathmal Nemchand Shah, Section 151(2), 147, Tribunal Mumbai

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2 months 6 days ago #8787 by amit
Section - 151(2), 147, 148, 152
Order Date - 11-03-2019
Favouring - Partly
Court - Tribunal Mumbai
Appellant - Simrathmal Nemchand Shah
Respondent - ITO
Citation - 319Taxpundit235
Appeal No. - ITA No. 1681/MUM/2018
Asstt. Year - 2009-10



This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-52, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).

2. The grounds of appeal filed by the assessee read as under:

1. (a) Whether the Ld. CIT(A) was justified in law and facts by holding that the jurisdiction u/s 147/148 has rightly been exercised by the Assessing Officer after recording the reasons and proper approval obtained as per section 151(2).

(b) Whether the Ld. CIT(A) was justified by holding that section147/148, was not wrongly invoked, and it is based on complete information and the reasons were recorded and approval obtained as per the law as well as by holding that the exercise of jurisdiction are not for roving and fishing enquiry.

(c) Whether the Ld. CIT(A) was jus ified by upholding an impugned assessment order is justified and valid because the assumption of jurisdiction is not based upon the piece of information and no requirement of any tangible ma erial to be brought upon record.

2. Whether the Ld. CIT(A) was justified by upholding the order of AO for estimation of additional profit which have been scaled down to @ 9% even without appreciating the written submission, ground wise discussion in the light of paper book filed on 19.01.2018 as well as various citation.

3. Whether the Ld. CIT(A) was justified by upholding the order of AO without appreciating the justification filed by the appellant, towards notice u/s 133(6) if not served by any reasons, no occasion to estimates the charging of profit the facts no dispute on the evidences filed inclusive stock register in P.B. No. 64-81.

3. Briefly stated, the facts are that the assessee filed his return of income for the assessment year (AY) 2009-10 on 17.08.2009 declaringtotal income at Rs.2,23,380/-. The return was processed u/s 143(1) of the Act. Then the Assessing Officer (AO) reopened the assessment u/s 147 by issuing notice u/s 148 dated 26.03.2014. The materials referred to by the AO for reopening the assessment were the information received from the Director General of Income Tax (Investigation), Mumbai (in short ‘DGIT’) that as per the Sales Tax Department, Government of Maharashtra, the following concerns were issuing bogus sales/purchase bills and the assessee was a beneficiary of transactions from them:

After recording the reasons, the AO provided a copy of it to the assessee. During the course of reassessment proceedings, the AO asked the assessee to file the details such as correct and complete address of the said parties, purchase details, invoices/bills, copies of ledger account, detai s of transportation of goods i.e. lorry receipts, documentary evidence reflecting the relevant entries of having received such goods in the premises of the assessee and having consumed such goods, details of payment made to these parties etc. In response to it, the assessee filed inter-alia address of the abovementioned parties. In order to verify the genuineness of the transaction, the AO issued notice u/s 133(6) by registered post to the said parties at the address given by the assessee. However, the notices could not be served and were returned back by the postal authorities with the remarks ‘not known’ or ‘not such address’ or ‘left’ etc. However, during the course of assessment proceedings, as recorded by the AO, the assessee filed a copy of (i) ledger accounts along with copies of purchase invoices of the specified parties, (ii) bank statements evidencing payments made through proper banking channels by issuing account payee cheques in respect of all the parties, highlighting the relevant entries, (iii) chart showing the details of purchases from the alleged parties and (iv) quantitative tally in respect of entire purchases from the above named parties and the corresponding sales.

However, the AO was not convinced with the above details filed by the assessee for the reason that when asked to produce the said parties for examination, the assessee failed to do so. Also as per the AO, the assessee failed to file important documents such as delivery challans, transport receipts, octroi receipts, receipt of weighbridge, excise gate pass, goods inwards register etc. Also holding that mere filing of evidence in support of purchases and payment through account payee cheques cannot be conclusive in a case where genuineness of transaction is in doubt and then following the judgment of the Hon’ble Gujarat High Court in CIT v. Simit P. Sheth (2013) 356 ITR 451 (Guj), the AO estimated the profit @ 12.5% on such non-genuine purchases of Rs.78,91,343/-. Thus the AO brought to tax an amount of Rs.9,86,418/-.

4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). Following the decision by the Hon’ble Supreme Court in Raymond Woollen Mills 236 ITR 34 and Rajesh Jhaveri Stock

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