ITO 20 (3)(2), MUMBAI vs. M/S ROYAL PLASTICS, MUMBAI

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ITA 6264/MUM/2019Status: DisposedITAT Mumbai16 July 2021AY 2009-103 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found no reason to interfere with the CIT(A)'s order, which had marginally reduced the disallowance on bogus purchases. The assessee's failure to discharge its onus regarding the genuineness of purchases was noted.

What were the facts?

The Revenue appealed against the CIT(A)'s order concerning bogus purchases made by the assessee from dealers listed as 'hawala' dealers. The assessee failed to provide evidence for the genuineness of these purchases.

What were the issues?

Whether the disallowance on bogus purchases made by the assessee was correctly determined by the CIT(A) despite the assessee's failure to prove the genuineness of the transactions.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

Hearing: 03/05/2021Pronounced: 16/07/2021

ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-32, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 10.07.2019 for the Assessment Year (AY) 2009-10.

2.

Ms. Smita Verma representing the Department submitted that during the period relevant to Assessment Year (AY) under appeal, the assessee

1.

आअसं. 6264/मुं/2019 (िन.व.2009-10) (A.Y.2009-10) obtained bogus purchase bills from M/s Shree Nakodaji Impex Rs. 8,98,974/- and M/s Entech Enterprises of Rs. 6,06,906/-. The name of both the dealers was mentioned in the list of hawala dealers released by the Sales Tax Department, Government of Maharashtra. During assessment proceedings, neither the assessee could produce the dealers nor any confirmations were filed from them. Even the notices issued under section 133(6) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] by the AO to the said dealers remained unserved. No document was filed by the assessee in the form of lorry receipts, stock register octroi receipts, etc. to prove trail of goods. Since, the AO accepted the sales turnover declared by the assessee, he estimated Gross Profit (GP) on bogus purchases at 12.5%. In first appellate proceedings, the CIT(A) restricted the GP on bogus purchases to 11%. The ld. DR prayed for restoring the estimation of GP as per assessment order.

3.

Ms. Ruchi Rathod appearing on behalf of the assessee vehemently supported the impugned order and prayed for dismissing the appeal of Revenue.

4.

Both sides heard, orders of authorities below examined. The assessee is engaged in manufacturing of plastic files and folders. Undisputedly, the assessee failed to discharge its onus in proving genuineness of the aforesaid dealers and purchases made from them. During the relevant period, the assessee has declared GP of 17.13%, the AO made disallowance of 12.5% on bogus purchases to compensate for the profit earned by the assessee on VAT charges saved. In first appellate proceedings, the CIT(A) has marginally reduced disallowance on bogus purchases to 11%. I find no reason to interfere with the आअसं. 6264/मुं/2019 (िन.व.2009-10) (A.Y.2009-10) impugned order, therefore, the same is upheld and appeal of the Revenue is dismissed, sans merit. Order pronounced in the open court on Friday, the 16th day of July, 2021.

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