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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
आयकर अपीलीय अिधकरण “SMC” �यायपीठ मुंबई म�। आयकर अपीलीय अिधकरण �यायपीठ मुंबई म�। आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण �यायपीठ मुंबई म�। �यायपीठ मुंबई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI �ी महावीर �सह, उपा�य� के सम� । BEFORE SRI MAHAVIR SINGH, VICE PRESIDENT Aayakr ApIla saM Aayakr ApIla saM./ Aayakr ApIla saM Aayakr ApIla saM (inaQa-arNa baYa- / Assessment Year 2010-11) Shri Mitesh Chimanlal Savla The Income Tax Officer,Ward- 15/16, Divya Mahal, 2nd Floor 21(2)(3) Room No.105, Piramal Gyan Mandir Road Vs. Chambers, Lalbaug, Parel Dadar(W) Mumbai-400 012 Mumbai-400 028 (ApIlaaqaI ApIlaaqaI ApIlaaqaI- / Appellant) ApIlaaqaI (p`%yaq p`%yaq p`%yaqaaIaaIaaIaaI- / Respondent) p`%yaq .. �थायी लेखा सं./PAN No. AMWPS2822A अपीलाथ� क� ओर से / Appellant by : Shri Satyaprakash Singh, AR ��यथ� क� ओर से / Respondent by : Shri Vaibhav Jain, DR 27.10.2021 सुनवाई क� तारीख / Date of hearing: घोषणा क� तारीख / Date of pronouncement : 27.10.2021 AadoSa AadoSa / O R D E R AadoSa AadoSa महावीर �सह, उपा�य� के �ारा / PER MAHAVIR SINGH, VP:
This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-33, Mumbai [in short CIT(A)], in appeal No. CIT(A)-33,Mumbai/11589/2016-17 vide dated 15.02.2016. The Assessment was framed by the Income Tax Officer, Ward-21(2)(3) Mumbai (in short ITO/ AO) for the A.Y. 2010-11 vide order dated 15.02.2016 under section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee, as regards to the order of Ld.CIT(A) confirming the action of the AO in disallowing the bogus purchases by applying profit rate of 25% at Rs.
Mr. Mitesh Chimanlal Savla AY 10-11 27,26,020/-. For this, assessee has raised following ground NO.2.
On facts and circumstances of the case and in law, the Hon’ble CIT[A] has erred in confirming the disallowance of Rs. 27,26,020/- in respect of so-called bogus purchases.
I have heard rival contentions and gone through facts and circumstances of the case. The brief facts are that the AO received information from the DGIT (Investigation), Mumbai that the assessee is engaged in taking accommodation entries from the hawala operators, who are providing bogus bills to various parties. As per the information, the assessee has obtained bogus purchases to the extent of Rs. 95,40,750/- and the details are as under:-
Sr.No. Name of the party Amount(Rs.) 1 Pioneer Trading Corporation 50,440 2 Real Traders 5,54,674 3 G.M.International 11,39,805 4 Rumggt Enterprises 8,30,966 5 N.K.Trading Co. 18,93,273 6 J.K.Agency 50,71,557 95,40,715
The AO considering the facts and circumstances restricted the profit rate @25% of the bogus purchases, because sales effected are not in dispute. Thereby, the AO disallowed the quantum of profit element amounting to Rs. 27,26,020/-. Aggrieved assesee preferred appeal before CIT(A). The Ld.CIT(A) confirmed the action. Aggrieved now assessee is in appeal before us.
I have heard rival contentions and gone through facts and circumstances of the case. I noted that first of all the bogus
Mr. Mitesh Chimanlal Savla AY 10-11 purchases are to the extent of Rs. 95,40,715/- and after applying profit rate of 25% there cannot be addition of Rs. 27,26,020/-, because the computation made by AO is wrong. Even the Ld.CIT(A) has not gone into the details despite the fact that assessee filed complete details in respect of purchase and sales bills, stock register, details of bank statement i.e a payment made trough account pay cheque to the parties, sales and purchases bills, but could not produce the party for examination etc. The assessee also cited the case law of Hon’ble Gujarat High Court in the case of CIT vs. Simit P.Sheth (2013) (Gujarat), 38 taxmann.com 385, wherein Hon’ble Gujarat High Court has considered profit element @ 12.5% of the bogus purchase. Hence, respectfully following the Hon’ble Gujarat High Court, I also restrict the profit rate @ 12.5% of the bogus purchases and direct the AO accordingly. The total bogus purchases is to be considered as Rs. 95,40,715/ and on this, the AO will applied profit rate @12.5% and make disallowances accordingly.
In the Result, the appeal of assessee is partly allowed.
Order pronounced in the open court on 27.10.2021.