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Income Tax Appellate Tribunal, ‘G‘ BENCH
Before: SHRI M.BALAGANESH & SHRI RAHUL CHAUDHARYShri Gautam B . Bafna
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-30, Mumbai in appeal No.CIT(A)-30/19(1)(3)/74/2014-15 dated 26/03/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) by the ld. Income Tax Officer 16(3)(4), Mumbai (hereinafter referred to as ld. AO).
The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the addition made towards profit percentage on disputed purchases at 12.5% in the facts and circumstances of the case.
We have heard the rival submissions and perused the materials available on record. The assessee is engaged in the business of trading in metals. It is not in dispute that the assessee during the year under consideration had made certain purchases from 3 parties totaling to Rs 2,09,97,634/- whose names were treated as tainted dealers by the Sales Tax Department, Government of Maharashtra. Accordingly, the ld. AO in the assessment proceedings sought to examine the veracity of the purchases made from these parties. The assessee furnished the name and address of the suppliers from whom purchases were made. The ld. AO issued notice u/s 133(6) of the Act to the address mentioned by the assessee and the said notices were returned unserved. The assessee was thereafter directed to produce the parties by the ld. AO for personal examination. Since the same was not done, the ld. AO proceeded to treat the entire purchases as unproved and made an addition of Rs 2,09,97,634/- in the assessment.
3.1. The ld. CIT(A) observed that the assessee had furnished the complete details of disputed purchases together with corresponding sales made thereon. The payments made to suppliers were by account payee cheques through normal banking channels. The assessee also furnished the stock register before the ld. AO which was found to be not maintained in proper form by the ld. AO. We find that the ld. CIT(A) had held that since the sales made by the assessee out of disputed purchases were not doubted by the ld. AO, only the profit percentage embedded in the value of such purchases could be brought to tax. Such profit percentage was estimated by the ld. CIT(A) at 12.5% in accordance with the decision of Hon’ble Gujarat High Court in the case of Simit P Sheth reported in 38 taxmann.com 385 (Guj HC). Aggrieved, only the assessee is in appeal before us. The ld. DR submitted that the revenue had not preferred any appeal against this order of the ld. CIT(A).
3.2. From the above narration of facts, we find that the assessee though furnished primary details of purchases made from the disputed parties, could not ensure even service of notice u/s 133(6) of the Act issued by the ld. AO to examine the veracity of purchases. Admittedly, the parties were not found in the address mentioned by the assessee and hence the notice u/s 133(6) of the Act could not be served on them. When this was confronted to the assessee, no efforts were taken by the assessee to furnish the fresh address of the suppliers before the ld. AO. Moreover, the assessee could not produce the parties before the ld. AO for examination to prove the genuineness of purchases beyond reasonable doubt. Despite these facts, we find that the ld. CIT(A) had observed that corresponding sales made out of disputed purchases were not doubted by the ld. AO. This categorical finding of fact recorded by the ld. CIT(A) is not controverted by the revenue before us. Hence it would be just and fair to bring to tax only the profit element embedded in the value of such purchases as it could be reasonably concluded that the assessee might have made purchases from the grey market in order to have savings in indirect taxes and incidental profit element thereon. This profit element has been estimated by the ld. CIT(A) at 12.5% which is in consonance with the decision of Hon’ble Gujarat High Court referred to supra and series of decisions rendered by this tribunal in these type of cases. Hence we hold that the order passed by the ld. CIT(A) does not warrant any interference. Accordingly, the grounds raised by the assessee are dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced on 23/08/2022 by way of proper mentioning in the notice board.