×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.
03-06-2019, B.V. Bio-Corp, Section 148, 147, Tribunal Pune
These cross appeals by the assessee and the Revenue are directed against the order of Commissioner of Income Tax (Appeals), Pune-11 dated 29.07.2016 common for the assessment years 2009-10 & 2010-11.
2. Since issues in appeals for both the impugned assessment years are arising from same set of facts, these appeals are taken up together for adjudication and are being disposed of vide this common order. For the sake of convenience, the facts are extracted from the appeals for assessment year 2009-10.
ITA No.2220/PUN/2016 (By Assessee)
ITA No.2329/PUN/2016 (By Revenue)
(Assessment Year 2009-10)
3. The brief facts of the case as emanating from records are: The assessee is engaged in the business of manufacturing and trading of feed concentrates & supplements, disinfectants, pet products, health and nutritional products etc. The assessee is a group concern of Venkateshwara Hatcheries. Information was received by the Department from Sales Tax Department, Govt. of Maharashtra that the assessee company is one of the beneficiaries of suspicious and hawala transactions carried out by hawala operators. The case of the assessee was re-opened after issuing notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). In re-assessment proceedings, the Assessing Officer observed that the assessee had made purchases to the tune of Rs.1,30,28,844/- from M/s. Ajanta Enterprises, a declared hawala dealer by the Sales Tax Department. In the P & L account, the assessee had debited purchases from the aforesaid dealer as Rs.1,25,27,737/- i.e. after reducing the amount of VAT paid by the assessee on behalf of dealer. The Assessing Officer made addition of the aforesaid net amount as non-genuine purchases in the hands of assessee.
4. Aggrieved by the assessment order dated 27.03.2015 passed u/s.143(3) r.w.s. 147 of the Act, the assessee filed appeal before Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after considering the documents on record, facts of the case and various decisions cited by assessee restricted the addition in respect of bogus purchases to 20% of such purchases. Against the findings of the Commissioner of Income Tax (Appeals), both, the assessee and the Revenue are in appeal before Tribunal.
5. The assessee has assailed the order of Commissioner of Income Tax (Appeals) for assessment year 2009-10 by raising following grounds: “On facts and in law,
1] The learned CIT(A) erred in confirming disallowance @ 20% amounting to Rs.25,05,550/- out of the total purchases made by the appellant company of Rs.1,25,27,737/- from M/s. Ajanta Enterprises on the ground that the said purchases were made from suspicious dealer and hence, disallowance to the extent of 20% on the basis of average gross profit declared by the appellant company was reasonable.
2] The learned CIT(A) failed to appreciate that the purchases made by the appellant company from M/s. Ajanta Enterprises were genuine and it had submitted all the documentary evidences to establish receipt and consumption of the material and therefore, such ad-hoc disallowance to the extent of 20% of the total purchases from the said party was not justified at all and the same should be deleted.
3] The learned CIT(A) erred in making disallowance on an ad-hoc basis on presumptions and surmises when he himself has accepted that the appellant has established the receipt and consumption of the material purchased from M/s.Ajanta Enterprises and accordingly, the disallowance confirmed by him may kindly be deleted.
4] Without prejudice to the above grounds, if at all any disallowance is warranted, the appellant submits that the gross profit percentage in this year was 19.02% and the same should be adopted as against 20% applied by the CIT(A) and hence, the addition should be reduced accordingly.
5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
6. The Revenue has challenged the order of Commissioner of Income Tax (Appeals) for assessment year 2009-10 in restricting the disallowance on account of bogus purchases to 20% by raising following grounds:
“1.Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the Assessing Officer has not conducted proper enquiries for the verification of genuineness or otherwise of these purchases wherein the facts that the purchases were made from the bogus /hawala dealers as per the information received from the Maharashtra Sales Tax Department, even though admitted by the CIT(A) himself that the supplier under reference was not a genuine concern.
2. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.1,25,27,737/- and upholding only part of this addition @20% of the bogus purchases even when the assessee himself accepted that the purchases were made only from M/s. Ajanta Enterprises and nowhere else.
3. The order of CIT(A) may be vacated and that of the Assessing Officer be restored.
4. The Appellant craves leave to add, amend or alter any of the above grounds of appeal.”
7. Shri Nikhil Pathak appearing on behalf of the assessee submitted that the assessee in First Appellate Proceedings has demonstrated complete trail of goods purchased from M/s. Ajanta Enterprises. The assessee has furnished along with the bills, purchase order, delivery challan, goods received notes, lorry receipt, stock details, utilization of material, sale of