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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI SHAMIM YAHYA, HONBLE & SHRI PAVAN KUMAR GADALE, HONBLE
O R D E R PER PAVAN KUMAR GADALE .JM.
The Assessee has filed the appeal against order of the Learned Commissioner of Income Tax (Appeals)- 20, Mumbai [hereinafter in short “Ld.CIT(A)”] passed u/s. 143(3) and section 250 of the income Tax Act, 1961 (for short “Act”)
Assessee has raised following grounds in its appeal: -
2 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) Anmol Knit Wears Ltd., “G#1 On the facts and circumstances of case and in law, the Assessing Officer has erred in making an addition of Rs.28,41,127/- u/s 69C of the Income Tax Act and the reasons assigned for doing so were wholly irrelevant and not in accordance with the facts and circumstances of the case and not in accordance with provisions of Income Tax Act, 1961 and rules made thereunder. G#2 On the facts and circumstances of the case and in law, the AO has erred in initiating the penalty proceedings u/s. 271(1)(c) of the Income tax Act, which were wholly wrong, irrelevant, and not in accordance with the facts and circumstances of the case as no income is concealed.”
The Brief facts are that, the assessee company is engaged in the business of manufacturing and trading of textile fabrics. The assessee has filed the return of income electronically for A.Y.2010-11 on 14.10.2010 declaring a total loss of ₹.31,62,120/-. The return of income was processed u/s.143(1) of the Act, subsequently the case was selected for scrutiny and notice u/s. 143(2) and 142(1) along with questionnaire was issued. In compliance Ld. AR of the assessee appeared from time to time and submitted the details and the case was discussed. The Assessing Officer on perusal of the financial statements found that the assessee has made purchases of ₹.10.32.06.798/- and the Assessing Officer has called for the information in respect of purchase parties. The Assessee has filed the submissions on 26.01.2012 but the Assessing Officer to cross verify and check the genuineness of the purchases has issued notice u/s.133(6) of the Act on the fifteen parties and most of the notices were return unserved. Further, Assessing
3 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) Anmol Knit Wears Ltd., Officer required the Assessee to submit the details in respect of genuineness of the transactions. The Assessing Officer has considered the information in respect of parties who have furnished details afterwards. Finally, the Assessing Officer on a perusal of the facts/ details found that in respect of the purchases from the three parties aggregating to ₹.28,41,127/- there is no compliance and made addition u/s. 69C of the Act. The A.O. also made disallowance u/s. 14A of the Act of Rs.1670/- and assessed total loss of ₹.3,19,323/- and passed the order u/s. 143(3) of the Act dated 05.03.2013.
Aggrieved by the order, the assessee has filed the appeal before the Ld.CIT(A). The Ld.CIT(A) in the appellate proceedings considered the grounds of appeal, findings of the Assessing Officer and the written submissions of the assessee and has finally confirmed the action of the Assessing Officer and dismissed the assessee’s appeal. Aggrieved by the order of Ld.CIT(A), the assessee has filed an appeal before the Honble Tribunal.
5. At the time of hearing, none appeared on behalf of the assessee. The Ld.DR emphasized that the assessee has not proved the genuineness of the purchases in respect of 3 parties and Ld.CIT(A) has 4 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) Anmol Knit Wears Ltd., coorectly confirmed the addition and supported the orders of the lower authorities.
We have heard Ld. DR and perused the material available on record. The sole disputed issue is in respect of addition of bogus purchases made by the A.O. and confirmed by the Ld.CIT(A). We find on perusal of the Assessment Order, the Assessing Officer has made addition u/s. 69C of the Act of total purchases in respect of three parties where there is no compliance to the notices u/s. 133(6) of the Act. Whereas the assessee has made bogus purchases from the dealers and in turn it provides savings to the assessee in nonpayment of state taxes. We considered the facts and circumstances and the decisions of the Honble Tribunal in the identical cases and the judicial precedence were estimating the profit element embedded @ 12.5% of doubtful/ bogus purchases and was accepted. We find that the assessing officer has not doubted the sales but made 100% addition of purchases. We rely on the ratio of decision of Hon'ble Jurisdictional High Court in the case of CIT v. Nikunj Eximp (216 Taxman.com 171). Accordingly, we restrict the addition to the extent of 12.5% of the bogus purchases and modify the Ld.CIT(A) order sustaining the addition @ 12.5% of purchases and partly allow the grounds of appeal of the assessee.
5 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) Anmol Knit Wears Ltd., 7. In the result, the appeal filed by the assessee’ is partly allowed.
Order pronounced on as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.