Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
O R D E R भहावीय स िंह, उऩाध्मक्ष के द्वाया / PER MAHAVIR SINGH, VP: This appeal of the Revenue is arising out of order of the Commissioner of Income Tax (Appeals)]-25, Mumbai [in short CIT(A)], in appeal No. CIT(A) -25/IT/84/2015-16/491, vide dated 22.01.2020. The Assessment was framed by the Income Tax Officer, Ward 27(2)(5), Mumbai (in short ITO/ AO) for the A.Y. 2009-10 vide order dated 18.03.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
When this appeal was called for hearing, none was present from assessee. As seen the nature of additions and the ground raised, the matter is heard.
2 M/s Globond India; AY 09 -10 3. The only issue in this appeal of Revenue is against the order of CIT(A) restricting the addition by applying the profit rate at 12.5% of bogus purchases. For this, Revenue has raised the following two grounds: - “1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.3,48,290/- as against addition of Rs.15,03,624/- made by the Assessing Officer on account of bogus purchases, without appreciating the fact that the assessee had failed to discharge the onus to establish the genuineness of the transactions and also failed to furnish corroborative evidences in support of the claim.
2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in estimating the profit from Hawala purchases by disallowing only Rs. 3,48,290/- being 12.5% of the bogus purchases as even the basic onus of producing delivery challans, transport bills etc. were not fulfilled by the assessee.”
I have heard the learned Sr. Departmental Representative and gone through the facts and circumstances of the case. I noted that the assessee has made bogus purchases from following these two parties:-
Sr. No. Name of Supplier Amount 01 M R Corporation 7,49,631 02 Balaji Trading 20,36,686 5. The Assessing Officer added the combined peak as unexplained expenditure by observing in Para 3.7 as under:-
3 M/s Globond India; AY 09 -10 “3.7 The amount shown as paid to the bogus parties comes back to the assessee as no purchases are made from them. The cash so received back is available for financing subsequent purchases from undisclosed parties in cash. It is apparent from the facts that the assessee has employed the above mentioned modus operandi. Therefore, the combined peak of the credit standing in the names of the bogus parties is to be added as unexplained expenditure u/s. 69C of the I. T. Act. The peak of the above hawala purchase parties are amounting to Rs.15,03,624/-. Therefore, the amount of Rs.15,03,624/- is treated as unexplained expenditure and added to the total income u/s 69C of the I.T. Act. Penalty proceedings u/s 271(1)(c) are hereby initiated for concealment of income.”
Aggrieved, assessee preferred the appeal before CIT(A) but restricted the profit rate at 12.5% by observing in para 5.5 as under:-
5.5 In view of the above discussed factual matrix and precedents, I am of the view that estimation of 12.5% as profit embedded in impugned purchases shown from the alleged hawala party and adding the same to the total income returned, would meet the ends of justice. Therefore, I direct the AO to estimate profit @ 12.5% of the alleged bogus purchases, which works out to Rs.3,48,290/ (@12.5% of Rs.27,86,317/-) and restrict the addition to Rs.3,48,290/-. The appellant gets a relief for the balance amount of Rs.11,55,334/-. In passing, it may be pertinent to mention that Assessing Officer has made the addition u/s.69C. Section 69C only applies to purchases made outside the books of accounts. The intention of the Assessing 4 M/s Globond India; AY 09 -10 Officer was to disallow bogus purchases. Such disallowance will be under section 37(1) of the Act. However, the mere quoting of a wrong section does not vitiate the addition as the same is seen to be in consonance with the provisions of the Act. The error is, therefore, covered u/s.292B and after considering the same the disallowance is sustained Aggrieved, Revenue is in appeal before Tribunal.
I noted that the purchases might have been bogus but assessee made purchases from grey market, for this CIT(A) has restricted the profit rate at the rate of 12.5% of bogus purchases. I find no infirmity in the order of CIT(A) and hence, I confirm the order of CIT(A). The appeal of Revenue is dismissed.
In the result, the appeal of Revenue is dismissed.
Order pronounced in the open court on 29.09.2021. (भहावीय स िंह /MAHAVIR SINGH) (उऩाध्मक्ष / VICE PRESIDENT) भ िंफई, ददनािंक/ Mumbai, Dated: 29.09.2021 सुदीप सरकार, व.निजी सचिव / Sudip Sarkar, Sr.PS