SHARAD CHIMANLAL SHAH,MUMBAI vs. INCOME TAX OFFICER 17 (3) (3), MUMBAI, MUMBAI

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ITA 5806/MUM/2019Status: DisposedITAT Mumbai02 March 2022AY 2011-123 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the disallowances made by the authorities below, stating that purchases from grey areas enrich the assessee at the expense of the exchequer. The 12.5% disallowance on bogus purchases was deemed to serve the interest of justice.

What were the facts?

The assessee, a reseller of industrial goods, was found to have made bogus purchases based on information from the sales tax authority. The assessee could not produce suppliers or stock records, leading to an estimation of disallowances by the AO.

What were the issues?

Whether the disallowance of 12.5% of alleged bogus purchases is justified when the assessee failed to produce suppliers and stock records.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Shamim Yahya

For Appellant: Shri T. Sankar, Sr.AR
For Respondent: Shri T. Sankar, Sr.AR
Hearing: 30.12.2021

O R D E R Per Shri Shamim Yahya (AM) :-

These appeals by the assessee are directed against the order of learned Commissioner of Income Tax (Appeals) for the respective assessment years as above. The common issue raised is that ld.CIT(A) erred in confirming the addition of Rs. 2,91,742/- for AY 2011-12 and Rs. 6,15,610/- for AY 2010-11 both being @12.5% of alleged bogus purchases.

2.

Since, the facts are common and connected. The facts and orders of the authorities below for AY 2010-11 are referred herein.

3.

Brief facts of the case are that assessee is a reseller in industrial goods and items. The assessment was reopened upon information from sales tax authority regarding bogus purchases amounting to Rs. 49,24,880/- from ‘19’ parties. The assesse

2 Sharad Chimanlal Shah furnished copy of ledger account and copy of bills to the AO. It was submitted that assessee is not maintaining regular stock books and showed his inability to produce the parities. The AO estimated disallowances @12.5% of G.P.

4.

Upon assessees appeal, ld.CIT(A) confirmed the addition.

5.

Against the above order, assessee is in appeal before the ITAT.

6.

I have heard the Ld. DR and perused the records. Despite notice, none appeared on behalf of the assessee. I note that facts of the case indicate that information from sales tax department was obtained that assessee was obtaining bogus purchase bills. Assessee did not produce delivery challans and stock records. Assessee has also showed its inability to produce the suppliers. These facts clearly indicate that assessee has made the purchases from grey areas. Making purchases from grey market enriches the assessee at the expenses of the ex-chequer. In these circumstances 12.5% disallowances of the bogus purchases, serves the interest of justice. Hence, I do not find any infirmity in the order of authorities below.

7.

Since, facts are similar, the above order applies mutatis mutandis for AY 2011-12 also.

8.

In the result, these appeals by the assessee stand dismissed.

Pronounced in the open court on 02.03.2022

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