INCOME TAX OFFICER, 20(3)(2), MUMBAI vs. M/S. R. PRATAP & SONS, MUMBAI

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ITA 5649/MUM/2019Status: DisposedITAT Mumbai28 May 2021AY 2009-103 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 found no infirmity in the order of the CIT(A) which had restricted the addition to 5% of the bogus purchases, considering the assessee's declared GP. The appeal filed by the Revenue was dismissed.

What were the facts?

The Assessing Officer (AO) observed that the assessee obtained bogus purchase bills amounting to Rs. 1,43,76,924/- from hawala operators. The AO estimated Gross Profit (GP) at 12.5% on these bogus purchases and made an addition. The CIT(A) restricted the disallowance to 5% of the bogus purchases.

What were the issues?

Whether the disallowance on account of bogus purchases should be restricted to 5% as held by the CIT(A) or should be at the rate estimated by the AO.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

Hearing: 30/03/2021Pronounced: 28/05/2021

आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-32, Mumbai dated [hereinafter referred to as ‘the CIT(A)’] ' dated 19.06.2019 for the Assessment Year (AY) 2009-10.

2.

The brief facts of the case as emanating from the records are: The assessee is engaged in trading of Steel plates, channels etc. In re-assessment proceedings, the AO observed that the assessee has obtained bogus purchase bills amounting

1.

आअसं. 5649/मुं/2019 (िन.व.2009-10) (A.Y.2009-10) to Rs. 1,43,76,924/- from three hawala operators during the period relevant to AY under appeal. The assessee failed to discharge its onus in proving genuineness of the transactions and authenticity of the dealers. The AO estimated Gross Profit (GP) on bogus purchases @ 12.5% and made addition of Rs. 17,97,115/-.

Aggrieved by the assessment order dated 13.03.2015 passed under section 143(3) read with section 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], the assessee filed appeal before the CIT(A). The CIT(A) after examining the facts concluded that the assessee must have made purchases from the grey market and thereafter obtained bogus purchase bills from hawala operators. The CIT(A) restricted the disallowance to 5% of the total bogus purchases. Against the findings of CIT(A), the Revenue is in appeal before the Tribunal.

3.

Shri Sushil Kuamr Mishra representing the Department vehemently defended the assessment order and prayed for reversing the findings of CIT(A). The ld. DR submitted that the AO has been very considerate in estimating GP on bogus purchase at 12.5% despite the fact, the assessee failed to prove genuineness of the purchases and the dealers.

4.

Submissions made by ld. DR heard and orders of authorities below examined. Undisputedly, the assessee failed to discharge its onus in proving genuineness of the purchases and the dealers. The AO made addition by estimating GP @ 12.5% on bogus purchases. The assessee has declared GP of 6.71% during the relevant period, the CIT(A) has restricted the addition on bogus purchases to 5%, over and above the GP declared by the assessee.

आअसं. 5649/मुं/2019 (िन.व.2009-10) (A.Y.2009-10)

5.

I find no infirmity in the impugned order, the same is upheld and the appeal of Revenue is dismissed, being devoid of any merit.

Order pronounced in the open court on Friday, the 28th day of May, 2021.

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