Certain relief provided to the assessee on account of alleged bogus purchases by ITAT

The Income Tax Appellate Tribunal (ITAT) has granted relief to an assessee concerning allegations of bogus purchases. The revenue department appealed an order from the Commissioner of Income Tax (Appeals) that had provided relief to the assessee. The case involved alleged bogus purchases of Rs. 52.00 Lacs from nine entities, which led to the reopening of the assessment. Despite the assessee providing purchase bills and bank statements, the Assessing Officer made an aggregate disallowance of Rs. 41.34 Lacs.

IN THE INCOME TAX APPELLATE TRIBUNAL
“D” BENCH, MUMBAI

BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND
HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(Hearing Through Video Conferencing Mode)

I.T.A. No.6893/Mum/2019
Assessment Year: 2010-11)

ITO-24(1)(5)
607, Piramal Chambers
Jeejeebhoy Lane, Lalbaug
Mumbai – 400 012
PAN No. : AAYPS-4717-Q
Appellant)

Vs.

Shri Devdas Manjayya Sehrugar
Gala No.9, Ark Ind. Premises CSL
Makwana Road, Andheri East
Mumbai – 400 059

Assessee by : None
Revenue by : Shri Rajendra Joshi– Ld. Sr. DR

Date of Hearing : 25/05/2021
Date of Pronouncement : 01/06/2021

 O R D E R

Manoj Kumar Aggarwal (Accountant Member)

1. Aforesaid appeal by revenue for Assessment year [AY in short] 2010-11 contest the order of Ld. Commissioner of Income Tax (Appeals)-36, Mumbai [in short CIT(A) ] dated 26/08/2019 which has provided certain relief to the assessee on account of alleged bogus purchases. 

2. Though none appeared for assessee, however, material on record was sufficient for disposal of the appeal. The Ld. DR pleaded for restoration of assessment framed by Ld. AO.

3.1 The material facts are that the assessee being resident individual stated to be engaged in manufacturing of engineering goods consisting of molds, dies etc. was assessed for the year under consideration u/s 143(3) r.w.s. 147 on 26/02/2016. The original return filed by assessee was processed u/s 143(1). However, pursuant to receipt of certain information from DGIT (Inv.) / Sales Tax Department, Mumbai, it transpired that the assessee made alleged bogus purchases of Rs.52.00 Lacs from nine entities as detailed in the assessment order. Accordingly, the case was reopened as per due process of law and the assessee was required to file requisite details to substantiate the purchases.

3.2 In support of purchases, the assessee furnished copies of purchase bills, monthly details of sale & purchase along with bank statements evidencing payment through banking channels. However, notices issued u/s 133(6) did not elicit satisfactory response. The assessee could not produce any of the suppliers for confirmation of transactions. The Ld. AO, after considering entire factual matrix as well as in the background of various judicial pronouncements, made aggregate disallowance of Rs.41.34 Lacs which has been worked out in para-13 of the order. 

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