ITO 17 (2)(4), MUMBAI vs. M/S NAFISA ENGINEERING WORKS, MUMBAI

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ITA 7097/MUM/2019Status: DisposedITAT Mumbai05 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 upheld the CIT(A)'s order, stating that only the profit embedded in bogus purchases should be added, not the entire amount. The CIT(A) had correctly estimated this profit at 25%.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted the addition of bogus purchases to 25%. The assessee failed to prove the genuineness of purchases and the dealers from whom goods were allegedly bought.

What were the issues?

Whether the entire amount of bogus purchases should be added to the income, or only the profit element embedded within them.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

Hearing: 05/05/2021Pronounced: 05/05/2021

अपीलाथ) -ारा/ Appellant by : Ms. Smita Verma *ितवाद, -ारा/Respondent by : None सुनवाई क. ितिथ/ Date of hearing : 05/05/2021 घोषणा क. ितिथ/ Date of pronouncement : 05/05/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-58, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 09.08.2019 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 manufacturing of truck & trolly. On the basis of आअसं. 7097/मुं/2019 (िन.व.2009-10) (A.Y.2009-10)

information received from DGIT (Investigation), Mumbai, the assessment in the case of assessee was re-opened. As per the information received, the assessee allegedly obtained bogus purchase bills from following parties:

(i) Asian Steel Rs. 1,71,860/- (ii) Maruti Steel Traders Rs. 53,274/- Total Rs. 2,25,134/- 3. The assessee failed to produce the dealers from whom goods were purchased and the trail of goods. The AO held the abovesaid purchases to be non- genuine and made addition of the entire bogus purchases. The assessee filed appeal against the assessment order dated 04.03.2015 passed under section 147 read with section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) assailing addition of entire bogus purchases. The CIT(A) after examining the facts restricted the addition to 25% of such purchases. Hence, the present appeal by Revenue.

4.

Ms. Smita Verma representing the Department vehemently defending the assessment order submitted that the CIT(A) without properly appreciating the facts has restricted the addition to 25% of the total bogus purchases. The assessee has failed to discharge his onus in proving genuineness of the purchases and the dealers. The ld. DR prayed for reversing the findings of CIT(A) and confirming 100% addition on account of bogus purchases.

5.

Submissions made by ld. DR heard, orders of authorities below examined. Undisputedly the assessee has failed to prove authenticity of the dealers and genuineness of the purchases. However, the sales turnover declared by the assessee has not been disputed by the AO. Without purchases/inputs there

आअसं. 7097/मुं/2019 (िन.व.2009-10) (A.Y.2009-10) cannot be sales/manufacturing. The Hon’ble Bombay High Court in the case of PCIT vs. Paramshakti Distributors Pvt. Ltd. in of 2017 decided on 15.07.2019 has held that entire bogus purchases cannot be added, it is the profit embedded in such purchases that has to be added. The CIT(A) has estimated profit element in bogus purchases at 25% and has restricted the addition to Rs. 56,234/-. I find no infirmity in the impugned order, the same is upheld and the appeal of Revenue is dismissed.

6.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on Wednesday, the 5th day of May, 2021.

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