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03-07-2019, Sea Linkers, Section 101, 103, 106, Tribunal Mumbai

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3 months 1 week ago #9976 by amit
Section - 101, 103, 106, 147, 148
Order Date - 03-07-2019
Favouring - Revenue
Court - Tribunal Mumbai
Appellant - Sea Linkers Private Ltd.
Respondent - ACIT
Citation - 719Taxpundit65
Appeal No. - I.T.A. No.2297/Mum/2017
Asstt. Year - 2010-11



This appeal, filed by assessee, being ITA No. 2297/Mum/2017, is directed against appellate order dated 28.02.2017, passed by learned Commissioner of Income Tax (Appeals)-14, Mumbai (hereinafter called “the CIT(A)”) in appeal number CIT(A)-14/IT-378/15-16, for assessment year 2010-11 , the appellate proceedings had arisen before learned CIT(A) from assessment order dated 11.03.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2010-11.

2. The grounds of appeal raised by assessee in memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-

“Being aggrieved by the order of the Commissioner of Income Tax (Appeals)-14, the appellant prefers the following amongst other grounds:

1 On the facts and in the circumstances of the case, and in law, the Learned CIT(A) has erred in upholding the reopening of the assessment on the premise that information received from the Sales tax department that the purchases are bogus constitutes enough reason to believe for re opening of the assessment, and also holding at Para 4 of his order that "at the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief whether the material would conclusively prove escapement is not the concern at that stage. This is because the formation of belief by the AO is within the realm of subjective, satisfaction. Therefore, as the case was re-opened on the basis of specific information received by the AO, the reassessment proceedings is held as valid."

2 On the facts and in the circumstances of the case, and in law, the Learned Commissioner of Income tax (Appeals), erred inter alia

a) in sustaining the addition to the extent of 12.5% of the alleged bogus purchases by holding in para 5.3 of his order "Looking into the entirety of the facts, therefore in my considered opinion only the profit derived out of such transactions should be assessed to tax and relying on the decision in the case of Bholenath Poly Fab Pvt. Ltd, addition to the extent of 12.5% of such tainted purchases is considered reasonable and sustained as suppressed profit element embedded in such purchase. This estimation is in addition to the gross profit shown by the appellant "

b) by consciously overlooking that the purchases were made by account payee cheques to these suppliers whose identity was established by the fact of payment to them being confirmed by Bankers and no evidence has been produced by him for receipt of cash by the assessee as alleged by him .

c). by holding in his order that the purchases made by the assessee were "bogus purchases", while not disputing the sales made from these purchases, which are genuine and which were booked in the regular books of accounts and which were also verified by him from the assessment records in presence of the Learned AO.

d). in not considering the quantitative disposal statements of purchase made from these alleged bogus parties and sales there from, which was filed before him. as well as the Learned AO and which was also verified by him from the assessment records in presence of the Learned AO.

e). in not considering the fact that on the alleged bogus purchases , the appellant has disclosed profits which is higher than the average rate of gross profit disclosed by the appellant;

f) in not considering the fact that the Learned Assessing Officer has not found any infirmities in the sales books of accounts or other materials nor has he found any evidence to prove that purchases from these parties are bogus.

3 Hence, it is submitted that the re opening of the assessment being bad in law be quashed or in the alternative, the addition of Rs.420,694/- [@12.5% of the alleged bogus purchases of Rs. 33,65,552/-] upheld by the Learned Commissioner of Income tax (Appeals) being arbitrary and contrary to the principles of natural justice and equity be deleted in toto.”

3. The brief facts of the case are that the assessee is in the business of manufacturing & dealers in Wire Ropes, Chain Pulley Blocks etc. .

3.2 The assessee originally filed its return of income on 27.09.2010 which was processed u/s 143(1) of the 1961 Act. Thereafter, the case

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