GOLD ANCHER EXIM PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER WARD 12(2)(3), MUMBAI
What did the Tribunal hold?
The Tribunal held that in earlier assessment years (2009-10, 2010-11, and 2011-12), Coordinate Benches of the Tribunal had consistently restricted the addition of profit on ingenuine purchases to 1%. The Tribunal found parity of facts in the present appeals for AYs 2011-12 and 2012-13. Therefore, the Tribunal saw no reason to deviate from the established findings of the Coordinate Benches. The reasoning adopted by the Coordinate Bench, which was followed here, was that the profit element to be estimated on ingenuine purchases should exclude the VAT portion, and only the incidental benefit derived from making purchases in the grey market should be brought to tax. The Tribunal directed the Assessing Officer (AO) to restrict the addition to 1% of the value of ingenuine purchases. The operative direction is to restrict the addition to 1%.
What were the facts?
The assessee, Gold Andher Exim Pvt. Ltd., has filed two appeals (ITA Nos. 2807/Mum/2025 and 2808/Mum/2025) against the orders of the NFAC, Delhi, dated 01/09/2023, for Assessment Years (AYs) 2011-12 and 2012-13, respectively. The appeals involve identical grievances and facts. The core issue revolves around the assumption of a 12.5% gross profit on alleged bogus purchases. The assessee's representative brought to the Tribunal's notice that a Coordinate Bench had previously dealt with similar matters for the assessee in ITA No. 1783/Mum/2020 and other related appeals for AYs 2009-10, 2010-11, and 2011-12. In those prior decisions, the profit element on ingenuine purchases was restricted to 1%.
What were the issues?
1. Whether the Tribunal should restrict the addition of profit on alleged bogus purchases to 1% of the purchase value, following the precedent set by its Coordinate Bench in the assessee's own cases for earlier assessment years. Assessee's Contention: The assessee relies on the Coordinate Bench's decisions in ITA No. 1783/Mum/2020 and other related appeals for AYs 2009-10, 2010-11, and 2011-12, where the profit element on ingenuine purchases was restricted to 1%. The assessee argues that the facts in the present appeals are identical and therefore the same principle should apply. They cite the Coordinate Bench's reasoning that only the incidental benefit derived from making purchases in the grey market should be brought to tax, excluding the VAT portion. Revenue's Contention: The judgment does not record any specific arguments made by the Revenue in these appeals.
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
OR D E R \nPER NARENDRA KUMAR BILLAIYA, AM:\nI.T.A. No. 2807/Mum/2025 & two separate appeals by the assessee preferred against two\nseparate orders dt. 01/09/2023 by NFAC, Delhi [hereinafter “the\nld. CIT(A)"] pertaining to AYs 2011-12 and 2012-13 respectively.\n2.\nSince identical grievance is involved based on identical facts, both\nthe appeals were heard together and are disposed off by this common\norder for the sake of convenience and brevity.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2807/Mum/2025\nΙ.Τ.Α. No. 2808/Mum/2025\n2\n3. The common ground involved in both the appeals relate to the\nassumption of gross profit @ 12.5% on the alleged bogus purchases.\n4.\nAt the very outset, it has been brought to our notice that the Co-\nordinate Bench in the assessee's own case in ITA No. 1783/Mum/2020\nvide order dated 08/10/2021 and in ITA No. 1784, 1785 & 1786/Mum/2020\nfor AY 2009-10, 2010-11 & 2011-12 vide order dated 25/11/2021 has\nrestricted the profit element at 1%. The relevant findings of the Co-\nordinate Bench in ITA No. 1783/Mum/2020, read as under:-\n“3.
We find that there is no dispute that assessee is trading in fabrics and that the\npurchases made from the aforesaid five suppliers were in respect of purchases of\nfabrics. It is not in dispute that the sales made out of purchases made from aforesaid\nfive suppliers were not doubted by the Revenue. It is not in dispute that purchase of\nfabrics does not get eligible for levy of VAT. Hence, the profit element to be estimated\non the value of ingenuine purchases should certainly exclude the VAT portion in the\ninstant case and only incidental benefit that assessee derives by making purchases\nout of cash in the grey market should be ultimately brought to tax. We find that under\nsimilar circumstances, the Co-ordinate Bench of this Tribunal in the case of Max\nRealties LLP vs. DCIT in and ITA No. 161/Mum/2020\nfor A.Y.2010-11 dated 16/08/2021 had estimated the incidental profit element at 1%.\nRespectfully following the said decision, we direct the Id. AO to add only 1% of value\nof ingenuine purchases of Rs.5,67,01,954/- (i.e. Rs.5,67,019/-) and delete the\nremaining portion. Accordingly, the ground raised
by the assessee is partly allowed.”\n5.\nThe Co-ordinate Bench in AY 2009-10, 2010-11 & 2013
14. (supra)\nhas followed the aforementioned findings of the Co-ordinate Bench in\nAY 2008-09.\n6. We are of the considered view that in earlier four assessment\nyears, the Co-ordinate Benches have taken a consistent view by\nrestricting the element of profit to 1%. Therefore, finding parity of facts,\nwe do not find any reason to differ with the findings of the Co-ordinate\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\n \nΙ.Τ.Α. No. 2808/Mum/2025\n3\nBenches (supra). We accordingly the direct the AO to restrict the\naddition to 1%.\n7.\nIn the result, both the appeals of the assessee are partly allowed.\nOrder pronounced in the Court on 19th June, 2025 at Mumbai.\nSd/-\n(SAKTIJIT DEY)\nVICE PRESIDENT\nSd/-\n(NARENDRA KUMAR BILLAIYA)\nACCOUNTANT MEMBER\nMumbai, Dated 19/06/2025\n*SC SPPS\nआदेश की प्रतिलिपि अग्रेषित/
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