DCIT-4(2)(1), AAYAKAR BHAVAN vs. GEMSONS PRECISION ENGINEERING PVT LTD, MUMBAI

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ITA 3673/MUM/2024Status: DisposedITAT Mumbai11 March 2025AY 2009-103 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A). The Tribunal noted that a Co-ordinate Bench of the Tribunal, in the assessee's own case for AY 2011-12 (ITA No. 791/Mum/2024), had taken a similar view and confirmed the addition at 12.5% on account of alleged bogus purchases. Furthermore, the Tribunal observed that for AY 2010-11, the CIT(A) had also restricted the addition to 12.5% of the alleged bogus purchases, and the Revenue had not filed an appeal for that year. Based on these precedents and the facts of the case, the Tribunal found no reason to interfere with the CIT(A)'s finding. The appeal of the Revenue was accordingly dismissed, confirming the addition of Rs. 10,50,472/-.

What were the facts?

The Revenue has appealed against the order dated 22.05.2024 passed by the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year (AY) 2009-10. The Assessing Officer (AO) initiated scrutiny assessment based on information from the Sales Tax Department, alleging bogus purchases of Rs. 84,03,781/- by the assessee, Gemsons Precision Engineering Pvt. Ltd. Upon receiving no plausible reply from the assessee, the AO added the entire amount of Rs. 84,03,781/-. The assessee appealed to the CIT(A), arguing that while purchases were deemed bogus, the corresponding sales were accepted. The CIT(A) restricted the addition to 12.5% of the alleged bogus purchases, confirming an addition of Rs. 10,50,472/-, representing the profit element.

What were the issues?

1. Whether the CIT(A) erred in restricting the addition on account of alleged bogus purchases to 12.5% of the total amount, instead of the full amount as determined by the AO, under Section 69B of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that since the corresponding sales were accepted by the AO, only the profit element embedded in the alleged bogus purchases should be added. The assessee relied on the decision of the Co-ordinate Bench in its own case for AY 2011-12 (ITA No. 791/Mum/2024) and noted that for AY 2010-11, the CIT(A) had restricted the addition to 12.5% and the Revenue had not appealed. Revenue's Contention: The learned Departmental Representative (DR) strongly supported the findings of the AO and argued for the addition of the full amount of alleged bogus purchases.

Which sections of the Income-tax Act were involved?

Section 69B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI NARENDRA KUMAR BILLAIYA

For Appellant: Shri Bharat Shah, CA, Shri Bhangepatil Pushkaraj
For Respondent: Shri Bhangepatil Pushkaraj
Hearing: 04.03.2025Pronounced: 11.03.2025

Appellant /Assessee by : Shri Bharat Shah, CA Revenue / Respondent by : Shri Bhangepatil Pushkaraj Ramesh, Sr. DR Date of Hearing : 04.03.2025 Date of Pronouncement : 11.03.2025 O R D E R PER: NARENDRA KUMAR BILLAIYA, AM: This appeal by the Revenue is preferred against the order dated 22.05.2024 by National Faceless Appeal Centre, Delhi (for short “NFAC”) pertaining to AY 2009-10.

Gemsons Precision Engineering Pvt. Ltd 2. The sum and substance of the grievance of the Revenue is that the CIT(A) erred in restricting the addition to 12.5% of the alleged bogus purchases.

3.

Briefly stated the facts of the case are that during the course of scrutiny assessment proceeding on the basis of information received from Sales Tax Department through the Directorate General of Income Tax (Investigation). The AO came to know that the assessee was the beneficiary of bogus purchases amounting to Rs. 84,03,781/-.

4.

The assessee was asked to furnish all the details relating to the impugned purchases. On receiving no plausible reply, the AO made the addition of Rs. 84,03,781/-.

5.

The assessee agitated the material before the CIT(A) and vehemently contended that though the purchases have been treated as bogus but the corresponding sales has been accepted by the AO. After considering the facts and submissions, the CIT(A) was of the opinion that only the profit element embedded in such alleged bogus purchases should be added and accordingly restricted the addition to 12.5% thereby confirmed the addition of Rs. 10,50,472/-.

6.

Before us, the ld. DR strongly supported the findings of the AO. The Counsel drew our attention to the decision of the Co-ordinate Bench in the case of the assessee in and pointed out that on identical set of facts, the Co-ordinate Bench has confirmed the addition @ Gemsons Precision Engineering Pvt. Ltd 12.5% on account of alleged bogus purchases. The Counsel further stated that even in AY 2010-11 the CIT(A) has restricted the addition to 12.5% of the total purchases and the revenue is not in appeal in AY 2010-11.

7.

We have carefully perused the order of the authorities below. It is true that in AY 2010-11, the FAA has restricted the disallowance to 12.5% of the alleged bogus purchases. The Co-ordinate Bench in AY 2011-12 in has also taken similar view.

8.

After considering the issue of the assessee, we do not find any reason to interfere with the findings of the CIT(A).

9.

In the result, appeal of the Revenue is accordingly dismissed.

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