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2021 (7) TMI 278 - AT - Income TaxMaintainability of appeal on low tax effect - Reopening of assessment u/s 147 - information received from the DGIT(Inv.), Mumbai - bogus purchases - Whether this appeal is filed because it is covered by exception mentioned in para 10 of the CBDT Circular No. 3/2018 dated 11.07.2018? - HELD THAT - On a perusal of the assessment order, we find, that the A.O. had specifically stated that he had received information from the DGIT(Inv.), Mumbai. In the backdrop of the aforesaid facts, we are of the considered view that as the very genesis for reopening the case of the assessee and the making of impugned addition/disallowance was based on the information received from the DGIT(Inv.), Mumbai, and not on the basis of any information received from an external source in the nature of law enforcement agencies, viz. CBI/ED/DRI/SFIP/Directorate General GST Intelligence (DGGI), therefore, as stated by the ld. A.R., and rightly so, the exception carved out in Para 10(e) of the CBDT Circular No. 3/2018 (as amended on 20.08.2018) would not come into play. Accordingly, we are of the considered view that as the 'tax effect' involved in the present appeal filed by the revenue is lower than that contemplated in the CBDT circular No. 17/2019, therefore, the appeal of the revenue is not maintainable.
Issues:
Appeal against deletion of addition of bogus purchases as genuine purchases. Analysis: 1. The appeal was filed by the revenue against the order passed by the CIT(A)-12, Mumbai, regarding the addition of bogus purchases totaling ?17,17,258. The original assessment was reopened under section 147 of the Income Tax Act, 1961 based on information about the alleged bogus purchase bills. 2. The Assessing Officer (A.O.) disallowed the entire amount of the impugned purchases due to the failure of the assessee to substantiate their genuineness. Consequently, the income of the assessee was assessed at ?2,28,77,920. 3. The CIT(A) found that the A.O. did not properly consider the submissions made by the assessee. The CIT(A) allowed the claim that no transaction was made with one of the parties, Banjara Enterprises, and vacated the addition related to it. Regarding other purchases, the CIT(A) analyzed each transaction in detail and partially allowed the appeal by disallowing depreciation and certain purchase claims. 4. The revenue appealed the CIT(A)'s decision, arguing that the addition of ?12,13,802 for bogus purchases should not have been deleted. The revenue claimed that the appeal was maintainable under the CBDT Circular No. 3/2018 based on the tax effect involved. 5. The authorized representative for the assessee contended that the exception in the circular did not apply as the addition was not based on external agency information. The ITAT observed that the reopening and addition were based on information from the DGIT(Inv.), Mumbai, not external law enforcement agencies as specified in the circular. Therefore, the appeal of the revenue was deemed not maintainable. 6. Consequently, the ITAT dismissed the revenue's appeal, stating that the tax effect involved did not meet the criteria specified in the CBDT circular for maintaining the appeal. This detailed analysis covers the issues raised in the appeal, the assessment by the A.O., the CIT(A)'s decision, and the ITAT's final judgment based on the CBDT circular provisions.
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