ITO WARD 2(4), MUMBAI vs. M/S SUNRISE INDUSTRIES, MUMBAI

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ITA 5503/MUM/2019Status: DisposedITAT Mumbai10 June 2021AY 2011-123 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 upheld the CIT(A)'s decision to restrict the addition to 20% of the alleged bogus purchases, considering that sales turnover was accepted and only the profit element should be taxed.

What were the facts?

The Assessing Officer made an addition of Rs. 3,02,787/- on account of bogus purchases. The assessee could not provide evidence before the AO, but later submitted documents to the CIT(A).

What were the issues?

Whether the entire amount of alleged bogus purchases should be added back, or only the profit element embedded in such purchases.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

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

Hearing: 30/03/2021Pronounced: 10/06/2021

ITO Ward-2(4), 2nd Floor, Mohan Plaza Building, Wayle Nagar, Khadakpada, ...... अपीलाथ) /Appellant Kalyan (West)-421301. बनाम Vs. M/s Sunrise Industries Plot No. D/10, Murbad, Thane-421401. PAN: ABEFS8084M ..... *ितवाद,/Respondent अपीलाथ) -ारा/ Appellant by : Sh. Sushil Kumar Mishra *ितवाद, -ारा/Respondent by : Sh. Deepak Raje सुनवाई क. ितिथ/ Date of hearing : 30/03/2021 घोषणा क. ितिथ/ Date of pronouncement : 10/06/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-3, Thane [hereinafter referred to as ‘the CIT(A)’] dated 06.06.2019 for the Assessment Year (AY) 2011-12.

आअसं. 5503/मुं/2019 (िन.व.2011-12) (A.Y.2011-12)

2.

Shri Deepak Raje appearing on behalf of the assessee submitted that the assessment in the case of assessee was re-opened and addition of Rs. 3,02,787/- was made on account of bogus purchases from two dealers i.e.

(i) Skand Industries Rs. 2,49,315/- (ii) Samir Trading Corporation Rs. 53,472/-

3.

The ld. AR submitted that the assessee could not appear before the Assessing Officer (AO) and furnish evidence to prove genuineness of the sales, therefore, the AO made addition of the entire alleged bogus purchases. In First Appellate Proceedings, the assessee furnished relevant documents to prove genuineness of the purchases. The CIT(A) sought remand report from the AO on the evidences filed by the assessee. After considering the submissions of the assessee and the remand report, the CIT(A) restricted the addition to 20% of the alleged bogus purchases, the assessee has accepted the same.

4.

Shri Sushil Kumar Mishra representing the Department strongly supported the assessment order. The ld. DR submitted that the assessee failed to appear before the AO despite service of notices, no documentary evidence was filed by the assessee to discharge its onus in proving genuineness of the purchases and the dealers. The AO rightly disallowed entire bogus purchases. The ld. DR in support of his submission placed reliance on the decision of Hon’ble Supreme Court of India in the case of N.K. Proteins Ltd. v/s DCIT.

5.

Both sides heard, orders of authorities below examined. Undisputedly, the AO has accepted the sales turnover declared by the assessee. Without purchases there cannot be sales, therefore, entire alleged bogus purchases

आअसं. 5503/मुं/2019 (िन.व.2011-12) (A.Y.2011-12) cannot be added. It is only the profit element embedded in such transactions that has to be brought to tax. In First Appellate Proceedings, the assessee has furnished documents to substantiate genuineness of the purchases allegedly made from suspicious dealers. The CIT(A) upheld the findings of AO to the extent that the purchases are non-genuine, however, the CIT(A) restricted the addition by estimating Gross Profit @ 20% on the bogus purchases. I find no error in the impugned order, hence, the same is upheld and appeal of the Revenue is dismissed. Order pronounced in the open court on Thursday, the 10th day of June, 2021. Sd/- (VIKAS AWASTHY) �याियक सद�य / JUDICIAL MEMBER मुंबई/Mumbai, 3दनांक/Dated: 10/06/2021 SK, PS *ितिल�प अ4े�षत *ितिल�प अ4े�षतCopy of the Order forwarded to : *ितिल�प अ4े�षत *ितिल�प अ4े�षत 1. अपीलाथ)/The Appellant , 2. *ितवाद,/ The Respondent. 3. आयकर आयु5(अ)/ The CIT(A)- 4. आयकर आयु5 CIT 5. �वभागीय *ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड9 फाइल/Guard file. BY ORDER, //True Copy//

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