RAVIKUMAR J SHAH,MUMBAI vs. ITO 19(3)(1), MUMBAI

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ITA 1043/MUM/2020Status: DisposedITAT Mumbai17 September 2021AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found merit in the assessee's argument that notices were not served. Considering the nature of trade and profit margins, the Tribunal directed the AO to apply a profit rate of 4% on the bogus purchases instead of making a 100% addition.

What were the facts?

The assessee's case was reopened based on information regarding bogus purchases. The Assessing Officer (AO) made an addition of 100% of these purchases as the assessee did not respond to notices. The CIT(A) confirmed this addition.

What were the issues?

Whether the addition of 100% of bogus purchases is justified when the assessee claims non-service of notices and the Tribunal can estimate a reasonable profit rate.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 148,Section 144,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR

For Appellant: Ms. Pooja Chhawachharia, A.R
For Respondent: Shri Bharat Andhale, D.R
Hearing: 08.09.2021Pronounced: 17.09.2021

Per Rajesh Kumar, Accountant Member:

1.

The present appeal has been preferred by the assessee against the order dated 12.09.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

2.

The only issue raised by the assessee is against the order of Ld. CIT(A) confirming the addition of Rs.94,04,277/- as made by the AO equal to 100% of the bogus purchases.

3.

The facts in brief are that the assessee filed the return of income on 14.07.2009 declaring total income of Rs.3,52,591/- which was processed under section 143(1) of the Act. The case

2 Shri Ravikumar J. Shah of the assessee was thereafter reopened by the AO after receipt of information from DGIT (Inv.), Mumbai that assessee is beneficiary of hawala purchase entries to the extent of Rs.94,04,277/- and accordingly the notice under section 148 of the Act was issued on 28.02.2014. The AO called for various details and information from the assessee from time to time during the course of assessment proceedings which were not responded by the assessee. Finally, the AO framed the assessment ex-parte by treating the purchases as non genuine thereby making an addition of Rs.94,04,277/-, being 100% of the purchases, to the income of the assessee by framing assessment under section 144 read with section 147 of the Act dated 05.03.2015. In the appellate proceedings, the Ld. CIT(A) confirmed the order of AO.

5.

After hearing the Ld. D.R. and counsel of the assessee and perusing the material on record, we observe that Ld. CIT(A) has confirmed the order of AO by rejecting the evidences filed by the assessee in the form of bills, vouchers, bank statements, corresponding sales and stock register showing the movement of stock. The Ld. CIT(A) instead harped on the finding of the AO that assessee has not responded to various notices issued by the AO and thus dismissed the appeal. The ld AR argued before us that the assessee could not appear before the AO because the notices were not served upon the assessee. We find merit in the arguments of the ld AR that in view of the nature of trade of trading in ferrous and non ferrous metals and GP rate during the year of 3.76%, a reasonable view may be taken. Having considered all the facts and arguments of both the parties and precedents of the coordinate benches in the similar cases , we

3 Shri Ravikumar J. Shah are of the considered view that the it would reasonable if a profit rate of 4% is applied on the bogus purchases. Accordingly we set aside the order of ld CIT(A) and direct the AO to apply a rate of 4%.

7.

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

Order pronounced in the open court on 17.09.2021.

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