M/S SHANKARLAL B BHANSALI (HUF),MUMBAI vs. ITO WARD 19(3)(3), MUMBAI

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ITA 4459/MUM/2019Status: DisposedITAT Mumbai08 June 2022AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reassessment was validly initiated. It also decided that only the profit element embedded in the disputed purchases should be added, reducing the addition from 12.5% to 5% of the purchase value.

What were the facts?

The assessee, engaged in trading metals, made purchases from three parties identified as 'tainted dealers' by the Sales Tax department. This information triggered reassessment proceedings.

What were the issues?

The key issues were the validity of the reassessment proceedings and the addition made on account of bogus purchases.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC‘ BENCH

Before: SHRI M.BALAGANESH & SHRI PAVAN KUMAR GADALE

For Respondent: Shri S.G. Mehta
Hearing: 31/05/2022Pronounced: 08/06/2022

आदेश / O R D E R PER M. BALAGANESH (A.M):

1.

This appeal in A.Y.2009-10 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-6, Mumbai in appeal No.CIT(A)-6/IT-200/417/2017-18 dated 10/05/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 20/03/2015 by the ld. I.T.O. 19(3)(3), Mumbai (hereinafter referred to as ld. AO).

M/s. Shankarlal B Bhansali (HUF)

2.

The only issue to be decided in this appeal is challenging the addition made on account of bogus purchases apart from challenging the validity of re-assessment.

3.

None appeared on behalf of the assessee. We have heard ld. DR and perused the materials available on record. No arguments were advanced by the assessee either through the authorised representative or by way of written submissions both for the legal issue of validity of re-assessment as well as the addition made on account of bogus purchases. We find that the assessee is engaged in the business of trading in ferrous and non- ferrous metals. It is not in dispute that assessee bought certain goods totalling to Rs.1,32,36,356/- from three parties whose names have been mentioned as tainted dealers in the website of Sales Tax department, Government of Maharashtra, which information was ultimately passed on through the DGIT-Investigation to the ld. AO, which ultimately triggered the reopening proceedings. Hence, we hold that reopening has been validly done in the instant case.

3.1. The ld. AO sought to examine the veracity of the purchases made from three parties by the assessee. The assessee in response filed a copy of ledger accounts of the suppliers together with copy of invoices, copy of bank statements evidencing payments made to those suppliers by account payee cheques, quantitative details in respect of entire purchases made from the disputed parties and the corresponding sales made by the assessee. Accordingly, the ld. AO proceeded to tax only the profit element embedded in the value of such disputed purchases @12.5% and made an addition of Rs.16,54,545/- in the assessment. This action of the ld. AO was upheld by the ld. CIT(A). This Tribunal has been consistently holding the profit element in respect of iron and steel industry @5% as M/s. Shankarlal B Bhansali (HUF) embedded in the value of purchases. Accordingly, we hold that profit element of 5% addition on the value of disputed purchases would meet the ends of justice in the peculiar facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are partly allowed.

4.

In the result, appeal of the assessee is partly allowed.

Order pronounced on 08/ 06 /2022 by way of proper mentioning in the notice board.

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