ITO-32(3)(1), MUMBAI, MUMBAI vs. SHRI RAHUL M. PATEL, MUMBAI, MUMBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal upheld the CIT(A)'s order, stating that only the profit element embedded in such transactions can be taxed, not the entire amount. The assessee failed to prove the authenticity of purchases, but sales turnover was not disputed.
What were the facts?
The Revenue appealed against the CIT(A)'s order which restricted an addition for bogus purchases to 10.5%. The assessee was alleged to have obtained bogus purchase bills amounting to Rs. 90,750/-.
What were the issues?
Whether the entire amount of alleged bogus purchases should be added to income, or only the profit element embedded therein, when sales turnover is not disputed.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHYShri Rahul M. Patel,
ITO-32(3)(1), Room No. 734, 7th Floor, Kautilya Bhavan, BKC, ...... अपीलाथ' /Appellant Bandra (E), Mumbai-400051. बनाम Vs. Shri Rahul M. Patel, 1st Floor, Mehta Apartments, Tulsi Baug, Borivali (W), Mumbai-400103. PAN: AACPP6284H ..... (ितवाद*/Respondent अपीलाथ' +ारा/ Appellant by : Ms. Smita Verma (ितवाद* +ारा/Respondent by : None सुनवाई क, ितिथ/ Date of hearing : 06/04/2021 घोषणा क, ितिथ/ Date of pronouncement : 02/07/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-46, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 21.05.2019 for the Assessment Year (AY) 2009-10.
आअसं. 5771/मुं/2019 (िन.व.2009-10) (A.Y.2009-10)
The brief facts of the case as emanating from records are: The assessee is engaged in manufacturing of kitchenware and steel products. On the basis of information received from the Sales Tax Department, Government of Maharashtra, the assessment for AY 2009-10 in the case of assessee was re- opened. As per information received, the assessee had obtained bogus purchases bills amounting to Rs. 90,750/- from three dealers, declared as hawala operators by the Sales Tax Department, Government of Maharashtra. The Assessing Officer (AO) made addition of the entire alleged bogus purchases. The assessee carried the issue in appeal before the CIT(A). The CIT(A) after considering the Gross Profit (GP) declared by the assessee, escapement of Value Added Tax (VAT) and average industry margin restricted the addition to 10.5% on alleged bogus purchases. Now, the Revenue is in appeal against the relief granted by the CIT(A).
Ms. Smita Verma representing the Department vehemently defended the assessment order. The Departmental Representative (DR) submitted that the assessee has failed to produce the dealers or confirmations from them. The assessee has not furnished any document such as delivery challans, lorry receipts, stock register etc. to prove trail of goods. The ld. DR prayed for restoring the addition as per the assessment order.
Submissions made by ld. DR heard, orders of the authorities below examined. Undisputedly, the assessee failed to discharge his onus in proving authenticity of the dealers and the purchase made from them. At the same time, it is observed that the AO has not disputed the sales turnover declared by the assessee. Without purchases, there cannot be sales, therefore, it is only
आअसं. 5771/मुं/2019 (िन.व.2009-10) (A.Y.2009-10) the profit element embedded in such like transactions that can be brought to tax. (Re: PCIT vs. Paramshakti Distributors Pvt. Ltd. in Income Tax Appeal No. 413 of 2017 decided on 15.07.2019). The CIT(A) after taking into consideration entire facts has restricted the addition on bogus purchases to 10.5%. I see no infirmity in the 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 02nd day of July, 2021.
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