ACIT-21(3), MUMBAI vs. STURBRIDGE CORPORATION, MUMBAI

This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-33, Mumbai in appeal No.CIT(A)-33/Rg.21/275/14-15 dated 18/04/2019 (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 17/10/2014 by the ld. Asst. Commissioner of Income Tax-18(3), Mumbai (hereinafter referred to as ld. AO).

The only effective issue to be decided in this appeal of the Revenue is that whether the ld. CIT(A) was justified in restricting the disallowance to the extent of 30% of Rs.10,16,205/- i.e. Rs.3,04,862/- made on account of bogus purchases in the facts and circumstances of the instant case.

None appeared on behalf of the assessee. We have heard ld. DR and perused the materials available on record. We find that assessee is a partnership firm engaged in the business of development of a residential project known as “ALKA” at Andheri (E), Mumbai. During the year under consideration, the said project was completed and assessee has declared income from the said project. The return of income for the A.Y.2011-12 was electronically filed by the assessee on 19/09/2011 declaring total income of Rs.1,04,96,439/- which was duly processed u/s.143(1) of the Act. The scrutiny assessment was completed originally u/s.143(3) of the Act on 23/12/2013 accepting the return of income. Subsequently, based on the information received from Sales Tax department of Government of Maharashtra that assessee has made certain purchases from certain tainted parties to the tune of Rs.10,16,205/- whose names appear to be tainted dealers in the website of Sales Tax department, Government of Maharashtra. Accordingly, the assessment of the assessee was reopened u/s.147 of the Act after due recording of reasons thereon. The ld. AO in the assessment observed that since assessee has made bogus purchases of Rs.10,16,205/- by making purchases from tainted parties, he proceeded to disallow the entire sum thereon in the assessment. The ld. CIT(A) however, observed that assessee had provided full details of purchases with quantitative details together with cheque payment particulars, particulars of ledger accounts and copy of bills of various suppliers etc., The ld. CIT(A) observed that in these type of transactions, only profit element embedded in the transaction should be brought to tax which was estimated at 30% of the value of purchases by the ld. CIT(A). We find that assessee has not preferred any appeal against this order before us. We find that the percentage determined by the ld. CIT(A) is above the normal percentage of profit being added by this Tribunal on estimation basis in series of cases @12.5%. Since, assessee has not preferred any appeal before us, we do not deem it fit to interfere in the said order of the ld. CIT(A). Accordingly, the appeal of the Revenue is dismissed.

In the result, appeal of the Revenue is dismissed.