DEPUTY COMMISSIONER OF INCOME TAX - 19(3), MUMBAI vs. S. RASIKLAL AND CO., MUMBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal upheld the CIT(A)'s order, relying on the decisions of the Bombay and Gujarat High Courts. The Tribunal found no reason to interfere with the appellate order and dismissed the revenue's appeal.
What were the facts?
The revenue filed an appeal against the CIT(A)'s order which restricted the addition on account of bogus purchases to 12.5% of the gross profit. The AO had initially disallowed 100% of the purchases made from alleged hawala dealers.
What were the issues?
Whether the disallowance of 100% of purchases made from alleged hawala dealers is justified, or if a partial disallowance based on gross profit is appropriate.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- PCIT v. S.V. Jiwani31 citing145 Taxmann.com 230 · 2022 · HC
Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNT MEMBER & SHRI ANIKESH BANERJEE
O R D E R Per Anikesh Banerjee (JM):
The instant appeal of the revenue was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter called, ‘Ld. CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2009-10, date of order 19/10/2023. The impugned order emanated from the order of the Learned Assistant Commissioner of Income-tax -19(3), Mumbai (hereinafter 2 ITA 4609/Mum /2023 S. Rasiklal and Co. called, ‘Ld. AO”) passed under section 143(3) read with section 147 of the Act, date of order 27/03/2015.
We heard the Ld.DR and perused the material placed on record. During the impugned assessment year, the assesse has made purchases amount to Rs.3,73,60,738/- from M/s Impex Gems and M/s Jewel Diam, i.e. concerns of Shri Bhanwarilal Jain, which were managed and controlled by the hawala dealers as detailed in the assessment order. The Ld.AO disallowed the entire purchases amounting to Rs.3,73,60,738/- and added with the total income of the assesse. The assesse company, being aggrieved with the appeal order, filed an appeal before the Ld. CIT(A). The Ld.CIT(A), considering the judicial rulings, has accepted the plea of the assesse and restricted the addition on the gross profit @12.5% of the total purchases, thereby restricting the addition only @12.5% of gross profit of the total purchases. Being aggrieved, the revenue filed an appeal before us.
When the appeal was called up for hearing, none was present on behalf of the assesse. However, considering the merit of the case, we proceeded to dispose of the appeal exparte qua for the assesse after hearing the Ld. DR and on perusal of the material placed on record.
In our considered view, we find that the Ld.CIT(A) has taken the view at paragraph 5.11, which is extracted below:- “5.11 In view of the matter, considering the factual matrix of the case, I am of the opinion that the ratio of the decision of the Hon'ble High Court of Bombay in the case of PCIT vs. S.V. Jiwani [2022] 145 taxmann.com 230 (Bombay) (supra), apart from the decision of Hon'ble High Court of Gujarat in the case of CIT vs. Simit Sheth (supra), is squarely applicable mutatis mutandis to the instant case. Accordingly, the AO is directed to restrict the addition to the extent of 12.5% of the non-genuine/suspicious/bogus purchases instead of disallowing 100% of the purchases in the assessment order. Thus, the ground No.1 raised by the assesse is treated as partly allowed.”
3 ITA 4609/Mum /2023 S. Rasiklal and Co.
The assessee has not preferred any appeal against the confirmation of the addition made at 12.5% of the gross profit on account of bogus purchases. The Ld.CIT(A) confirmed the said addition by respectfully relying on the judgment of the Hon’ble Bombay High Court in the case of PCIT v. S.V. Jiwani [(2022) 145 taxmann.com 230 (Bom)]. In view of the above, and in deference to the binding precedent of the Hon’ble jurisdictional High Court, as well as in adherence to the principles of judicial discipline, we find no reason to interfere with the impugned appellate order. Accordingly, the order passed by the Ld. CIT(A) is hereby upheld.
In the result, the appeal of the assessee bearing
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