ITO WARD-2(1), THANE vs. SHRI RAJESH KUMAR G. JAIN, BHAYANDER

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ITA 1251/MUM/2021Status: DisposedITAT Mumbai24 May 2023AY 2010-116 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, agreeing that only the profit element embedded in bogus purchases should be added. The Tribunal found the CIT(A)'s estimation of 12.5% profit to be a reasonable view, supported by High Court decisions.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 80,08,830/- on account of bogus purchases after finding that notices to 13 parties were returned unserved and one party denied any transaction. The CIT(A) restricted the addition to 12.5% of the bogus purchases, considering the profit element.

What were the issues?

Whether the CIT(A) erred in restricting the addition on account of bogus purchases to the profit element instead of the full amount, and whether the assessee discharged their onus of proving the genuineness of purchases.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250,Section 133(6),Section 131

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

For Appellant: Shri T.Shankar. DR
Hearing: 19.05.2022Pronounced: 20.05.2022

O R D E R

PER PAVAN KUMAR GADALE JM:

1.

The appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals)-1 passed u/s 143(3) and 250 of the Act. The revenue has raised the following grounds of appeal:

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-1, Thane erred in deleting the addition of Rs. 64,36,332/- out of the total addition of Rs.80,08,830/- made on account of bogus

Shri Rajesh Kumar G. Jain, Mumbai. purchases, despite holding that the purchases were not genuine and the assessee failed to prove genuineness of the transactions.

2. On the facts and in the circumstances of the case and in law, Ld. CIT erred in deleting the above addition despite the fact that the assessee failed to discharge his onus of providing the purchases.

3.

The appellant prays that the order of the Ld. CIT(A) may be set aside and that of the AO be restored.

4. The appellant craves leave to add, amend or alter or any ground / grounds which may be necessary.

2.

The brief facts of the case are that the assessee is engaged in the business of supply of building material. The assessee has filed the return of income for the A.Y 2010-11 on 21.09.2010 declaring a total income of Rs. 3,73,640/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with questionnaire are issued. In compliance, the Ld. AR of the assessee appeared from time to time and submitted tax audit report, audited profit and loss account, balance sheet and books of accounts were produced. The Assessing officer (A.O.) in the course of hearing found that the assessee has made purchases from the 13 parties and the A.O to test check the genuineness of the transactions has issued notice u/s 133(6) of the Act on the 13 parties and the said notices

Shri Rajesh Kumar G. Jain, Mumbai. were returned un-served by postal authorities, whereas in respect of one party M/s Abhishek Enterprises they have filed the reply stating that they have not done any transaction with the assessee. Therefore the A.O further called for the additional information and issued show cause notice and the statement was recorded u/s 131 of the Act. Finally the A.O has considered the material information and the statement recorded and doubted the genuineness of transactions and made addition of Rs. 80,08,830/- and with other additions the A.O. has assessed the total income of Rs.1,49,24,810/- and passed order u/s 143(3) of the Act on 25.03.2013.

3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). The CIT(A) in the appellate proceedings considered the grounds of appeal, findings of the A.O in the scrutiny assessment, submissions of the assessee/ remand report on the disputed issue. Finally the CIT(A) considered the judicial decisions of the Honble High Court and Honble Tribunal and restricted the addition to the extent of 12.5% of bogus purchases and confirmed the disallowance of purchase of Rs.6,53,022/- and party allowed the Shri Rajesh Kumar G. Jain, Mumbai.

appeal. Aggrieved by the CIT(A) order, the revenue has filed an appeal before the Honble Tribunal.

4.

At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in restricting the addition to 12.5% irrespective of facts that no proper information was filed in the Assessment proceedings. None appeared on behalf of the assessee.

5.

We heard the Ld.DR submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.DR that the CIT(A) has restricted the addition to the extent of 12.5% of the bogus purchases considering profit element embedded. We found that the CIT(A) has dealt on the facts and considered the Hon’ble High Court/Honble Tribunal decisions and took a view. Further, We find the Jurisdictional Honble High Court in the case of Pooja Paper Trading Co. Vs. ITO, (104 taxmann.com 95) and Honble Gujarat High court in CIT Vs. Simit P Sheth (2013) (356 ITR 451) has upheld the disallowance restricting profit element on such purchases.

6.

We find that the Ld.CIT(A) took a reasonable view that the only profit percentage has to be added and Shri Rajesh Kumar G. Jain, Mumbai.

estimated @ 12.5% of bogus purchases. The Ld.DR could not controvert the observations of the Ld. CIT(A) with any new cogent evidence and material to take a different view and relied only on the A.O order. We are of the opinion that the CIT(A) dealt on the facts and considered the profit element in the bogus purchases and also the A.O has not disputed the sales. The Ld.CIT(A) has relied on the decisions of Hon’ble High Court and passed a reasoned order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal raised by the revenue.

7.

In the result, the appeal filed by the revenue is dismissed.

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