ITO- 13(2)(3), MUMBAI, MUMBAI vs. M/S. SHREE GIRIRAJ FERROMET PVT. LTD., MUMBAI

Aforesaid appeal by Revenue for AY 2010-11 contest the order of Ld. Commissioner of Income Tax (Appeals)-21 Mumbai [CIT(A)] dated 28/06/2019 which has granted partial relief to the assessee on account of alleged bogus purchases.

At the time of hearing, none appeared for assessee. However, the material on record was sufficient for disposal of the appeal. The Ld. DR pleaded for restoration of assessment as framed by Ld. AO u/s 143(3) r.w.s. 147 on 22/12/2017. The assessee being resident corporate assessee is stated to be engaged in trading of iron & steel. 3. The material facts are that during the course of assessment proceedings, pursuant to receipt of certain information from Sales Tax Department, Maharashtra, it transpired that the assessee made suspicious purchases of Rs.62.66 Lacs from an entity namely M/s Shree Ram Steel. The assessee failed to produce the supplier for confirmation of transaction. The assessee, in support of purchase transactions, furnished copy of purchase invoices and ledger extracts. The assessee also submitted that the goods purchased from the said supplier were rejected and returned back in subsequent year. However, finding that the assessee could not discharg the primary onus of substantiating the purchases, Ld. AO estimated on addition of 12.5% against these purchases. 4. The Ld. CIT(A) observed that the issue of bogus purchases was recurring in nature and in AY 2009-10, the addition was estimated @4% during appellate proceedings. The appellate order was subsequently confirmed by Tribunal. Therefore, considering the Gross Profit Rate of 3.90% and considering the fact that VAT rate on iron & steel was 4%, the estimation of 12.5% was on the higher side. The same was, accordingly, reduced to 7%. Aggrieved, the revenue is in further appeal before us. 5. Going by the factual matrix, we find no infirmity in the estimation made by Ld. CIT(A) since the same was in line with estimation made in earlier year. The appellate order for AY 2009-10 was confirmed by Tribunal. The assessee reflected GP rate of 3.90% during the year. Considering all these facts, the estimation of 7% was quite fair & reasonable. By confirming the same, we dismiss the appeal. 6. The appeal stands dismissed.