2022 (5) TMI 191 - AT - Income Tax

Assessment u/s 153A - Addition of bogus purchases - HELD THAT - It is an undisputed fact that in the case of the assessee assessment u/s 143(3) was already made and case of the assessee was unabated for the purpose of making assessment u/s 153A of the Act. In this regard, no addition can be made in respect of unabated assessment which have become final if no incriminating material is found during search. The revenue could not prove contrary that there was incriminating seized material in the case of the assessee and could not disprove the contention of the assessee that material referred in the assessment order was the copy of ledger account of the assessee which was regularly accounted in the books of account of the assessee. Therefore, in the light of the above facts and circumstances we consider that when assessment in the case of the assessee already had been completed prior to date of search in such circumstances in the absence of any incriminating material the addition made by the A.O is not justified, therefore, this ground of appeal of the assessee is allowed.

Summary

Issues:
1. Recalling of ITAT order for deciding certain grounds afresh.
2. Addition of bogus purchases without incriminating material.
3. Adjudication of appeals for different assessment years.

Issue 1: Recalling of ITAT order for deciding certain grounds afresh
The ITAT, Mumbai, allowed the assessee's Miscellaneous Application (M.A.) to recall its order dated 09.11.2017 for deciding ground no. 3(a) to 3(c) afresh on merit. The ITAT found that the assessee had raised significant points regarding the non-consideration of submissions related to Section 153A before the CIT(A) and the ITAT. The ITAT concluded that restoring these grounds for fresh consideration would not prejudice the revenue's interest. Therefore, the ITAT decided to hear these grounds on merit by the regular bench, allowing the M.A. partly.

Issue 2: Addition of bogus purchases without incriminating material
During the appellate proceedings, the issue of addition of bogus purchases from M/s Bright Global Paper Pvt. Ltd. without incriminating material was discussed. The Assessing Officer had treated these purchases as bogus based on findings from search operations. However, the assessee provided details and bank statements to support the genuineness of the transactions. The CIT(A) restricted the disallowance to 15% of the purchases. The ITAT recalled the appeal on this specific issue and upheld the addition to 12.5% of the purchases. Ultimately, it was found that in the absence of incriminating material and with completed unabated assessments, the addition made by the AO was unjustified, leading to the allowance of the assessee's appeal.

Issue 3: Adjudication of appeals for different assessment years
The ITAT also addressed various appeals for different assessment years. For ITA No. 2920/Mum/2015, it was noted that the appeal had already been adjudicated without any issue related to incriminating material, making it infructuous and leading to its dismissal. Similarly, for ITA Nos. 2921 to 2926/Mum/2015 filed by the revenue, since the ITAT had not recalled its order for further adjudication, these appeals were considered infructuous and dismissed. The appeals of the revenue were dismissed, while those of the assessee were partly allowed, with the orders pronounced on 20.04.2022.

This detailed analysis highlights the key issues addressed in the legal judgment by the Appellate Tribunal ITAT Mumbai, providing a comprehensive overview of the decision-making process and outcomes for each issue involved.