ITO 22 (2)(2), MUMBAI vs. MAHENDRA L SHAH (HUF), MUMBAI

PDF · subscribers
ITA 5701/MUM/2019Status: DisposedITAT Mumbai10 June 2021AY 2011-20124 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 concurred with the CIT(A)'s finding that the profit estimation by the Assessing Officer was on the higher side. Following the Bombay High Court's decision, only the profit element embedded in such transactions can be taxed.

What were the facts?

The assessee, a trader of ladies readymade garments, was found to have obtained bogus purchase bills from hawala operators. The Assessing Officer estimated 25% profit on these purchases and made an addition. The CIT(A) reduced the profit estimation to 12.5%.

What were the issues?

Whether the profit estimation on bogus purchases made by the Assessing Officer was justified, and if the CIT(A) was correct in reducing it.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 133(3)

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

Hearing: 31/03/2021Pronounced: 10/06/2021

अपीलाथ� �वारा/ Appellant by : Shri Sushil Kumar Mishra ��तवाद� �वारा/Respondent by : None सुनवाई क� �त�थ/ Date of hearing : 31/03/2021 घोषणा क� �त�थ/ Date of pronouncement : 10/06/2021 आदेश/ ORDER This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals) -34, Mumbai [in short ‘the CIT(A)’] dated 20/05/2019 for the assessment year 2011-12.

2.

The brief facts of the case as emanating from records are: The assessee is a trader of ladies readymade garments. On the basis of information received from the Sales Tax Department, Government of Maharashtra, the assessment

आअसं. 5701/मुं/2019 (�न.व 2011-12) (A.Y 2011-12) in the case of assessee for assessment year 2011-12 was reopened. As per information received, the assessee had obtained bogus purchase bills aggregating to Rs.27,72,009/- from six dealers declared as hawala operators. During assessment proceedings, the assessee failed to discharge his onus in proving genuineness of purchases and the dealers. The notices issued under section 133(3) of the Income Tax Act, 1961 ( in short ‘the Act’) by the Assessing Officer to the suppliers on the addresses furnished by the assessee were received back unserved from postal authorities. No documentary evidence in the form of lorry receipt, inward register, stock register, etc. was furnished by the assessee to prove trail of goods. The Assessing Officer estimated 25% G.P on the bogus purchases and made addition of Rs.6,93,002/-. Aggrieved by the assessment order dated 30/12/2015 passed under section 143(3) r.w.s. 147 of the Act, the assessee filed appeal before the CIT(A) challenging reopening of assessment under section 148 of the Act, as well as, addition on merits. The First Appellate Authority upheld the validity of reopening proceedings. On merits of the addition, the CIT(A) granted part relief to the assessee by restricting G.P at 12.50%. Now, the Revenue is in appeal before the Tribunal against the relief granted by CIT(A).

3.

Shri Sushil Kumar Mishra representing the Department vehemently defended the assessment order. The ld. Departmental Representative submitted that the Assessing Officer was quite fair and reasonable in restricting addition @ 25% on the bogus purchases. The CIT(A) has erred in further reducing addition to 12.5%.

आअसं. 5701/मुं/2019 (�न.व 2011-12) (A.Y 2011-12)

4.

Submissions made by ld. Departmental Representative heard, orders of authorities below examined. Undisputedly, the assessee failed to prove genuineness of purchases from alleged hawala operators. The Hon'ble Bombay High Court in the case of PCIT vs. Paramshakti Distributors Pvt. Ltd. in Income Tax Appeal No.413 of 2017 decided on 15/07/2019 held that only profit element embedded in such transactions can be taxed. The Assessing Officer estimated 25% G.P on alleged bogus purchases as against G.P of 5.45% declared by the assessee during the period relevant to the assessment year under appeal. Estimation of GP by the Assessing Officer on alleged bogus purchases is very much on the higher side. I concur with the findings of CIT(A), hence, the impugned order warrants no interference. The appeal of Revenue is dismissed, sans merit.

Order pronounced in the open Court on Thursday, the 10th day of June, 2021

Sd/- (VIKAS AWASTHY) �या�यक सद�य/JUDICIAL MEMBER मुंबई/ Mumbai, �दनांक/Dated 10/06/2021 Vm, Sr. PS (O/S)

आअसं. 5701/मुं/2019 (�न.व 2011-12) (A.Y 2011-12)

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →