M/S ESCORT FORGING & STEEL INDUSTRIES,MUMBAI vs. ITO 27 (1)94), MUMBAI

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ITA 353/MUM/2020Status: DisposedITAT Mumbai01 July 2021AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue back to the AO to re-compute the disallowance on bogus purchases. This was to ensure the AO follows the ratio laid down by the Hon'ble Jurisdictional High Court in the case of PCIT v/s M/s. Mohd. Haji Adam & Co. regarding the estimation of additions on bogus purchases.

What were the facts?

The assessee, engaged in trading of Iron & Steel, had purchases from certain dealers that were deemed bogus by the Assessing Officer (AO) as the dealers could not be served notices and the assessee failed to prove the genuineness of the transactions. The AO made an addition based on an estimated profit margin on these bogus purchases.

What were the issues?

Whether the AO and CIT(A) correctly estimated the addition on bogus purchases without following the jurisdictional High Court's precedent. The onus on the assessee to prove the genuineness of purchases from unidentified dealers.

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

Hearing: 23/06/2021Pronounced: 01/07/2021

M/s Escort Forging & Steel Industries 37/2, Maitri Park, Sion Trombay Road, Chembur, Mumbai-400071. PAN: AABFE7047C ...... अपीलाथ' /Appellant बनाम Vs. ITO, 27(1)(4), 3rd Floor, Tower No.6, Vashi Station Complex, Vashi-400703. ..... (ितवाद*/Respondent अपीलाथ' +ारा/ Appellant by : None (ितवाद* +ारा/Respondent by : Sh. Sanjay J. Sethi सुनवाई क, ितिथ/ Date of hearing : 23/06/2021 घोषणा क, ितिथ/ Date of pronouncement : 01/07/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by assessee is directed against the order of Commissioner of Income Tax (Appeals)-24, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 24.05.2018 for the Assessment Year (AY) 2011-12.

2.

The brief facts of the case as emanating from records are: The assessee is engaged in trading of Iron & Steel. The assessment for AY 2011-12 in the आअसं. 353/मुं/2020 (िन.व.2011-12) (A.Y.2011-12)

case of assessee was re-opened on the ground that the assessee has obtained bogus purchase bills amounting to Rs. 71,18,607/- from following dealers: Sr. No. Name of the party Amount 1 Sairam Trading Corporation 22,48,973/- 2 Shree Navdurga Steel Traders 48,69,634/- Total 71,18,607/-

During assessment proceedings, the Assessing Officer issued notice under section 133(6) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] to the dealers. The same were returned back unserved by the postal authorities with remarks “Left”. The assessee could neither produce the dealers nor any confirmations from them. Hence, the assessee could not prove authenticity of the dealers from whom alleged disputed purchases were made. Further, the assessee could not prove trail of goods. The AO held the purchases made from suspicious dealers as bogus and made addition of Rs. 8,89,826/- by estimating margin on bogus purchase at 12.5%. Against the addition made, the assessee filed appeal before the CIT(A). The CIT(A) upheld the assessment order and dismissed the appeal of assessee. Now the assessee is in second appeal before the Tribunal.

3.

Submissions made by ld. Departmental Representative (DR) heard, orders of the authorities below examined. Undisputedly, the assessee could not discharge its onus in proving genuineness of the dealers and the purchases made from them. The assessee has raised objection that the AO and CIT(A) has failed to follow the ratio laid down by Hon’ble Jurisdictional High Court in the case of PCIT v/s M/s. Mohd. Haji Adam & Co. In Income Tax Appeal No. 1004 of आअसं. 353/मुं/2020 (िन.व.2011-12) (A.Y.2011-12)

2016 decided on 11.02.2019 while estimating addition on bogus purchases. Taking into consideration entirety of facts, I deem it appropriate to restore this issue back to the file of AO to re-compute disallowance in respect of bogus purchases following the decision rendered by Hon’ble Jurisdictional High Court in the case of PCIT v/s M/s. Mohd. Haji Adam & Co. (supra).

4.

In the result, the appeal of assessee is allowed for statistical purpose.

Order pronounced in the open court on Thursday, the 01st day of July, 2021.

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