DCIT CIRCLE-15(3)(2), MUMBAI vs. M/S SONAK ENGINEERING PVT LTD., NAVI MUMBAI

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ITA 7287/MUM/2019Status: DisposedITAT Mumbai03 May 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 CIT(A) estimated additions at 12.5% on these purchases, considering the assessee had primary purchase documents and made payments through banking channels. The Tribunal concurred with the CIT(A)'s finding that it was a fit case to estimate the profit element.

What were the facts?

The assessee, engaged in manufacturing engineering goods, was found to have made alleged bogus purchases of Rs. 15.85 Lacs. The Assessing Officer treated these purchases as bogus and added them to the assessee's income.

What were the issues?

Whether the purchases were indeed bogus and if additions should be made to the assessee's income, and to what extent.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

For Respondent: Shri Gurbinder Singh-Ld. DR

आयकर अपीलीय अधिकरण “एच” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI माननीय श्री महावीर स िंह, उपाध्यक्ष एवुं माननीय श्री मनोज कुमार अग्रवाल ,लेखा दस्य के मक्ष। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM (Hearing Through Video Conferencing Mode) आयकरअपील िं./ (धििाारण वर्ा / Assessment Year: 2011-12) DCIT-15(3)(2) M/s Sonak Engineering Pvt. Ltd. R.No.451, 4th Floor बिाम/ R-371, TTC Industrial Area Aaykar Bhawan, M.K.Road Thane Belapur Rabale Vs. Mumbai – 400 020 Navi Mumbai – 400 701 स्थायीलेखा िं./ जीआइआर िं./ PAN/GIR No. AAGCS-0120-A (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : Assessee by : None Revenue by : Shri Gurbinder Singh-Ld. DR ुनवाई की तारीख/ : 22/04/2021 Date of Hearing घोषणा की तारीख / : 03/05/2021 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

1.

Aforesaid appeal by revenue for Assessment year [AY in short] 2011-12 contest the order of Ld. Commissioner of Income Tax (Appeals)-24, Mumbai [in short CIT(A) ] which has provided certain relief to the assessee on account of alleged bogus purchases.

2.

Though none appeared for assessee, however, material on record was sufficient for disposal of the appeal. The Ld. DR pleaded for restoration of assessment framed by Ld. AO.

3.1 The material facts are that the assessee being resident corporate assessee stated to be engaged in manufacturing of engineering goods was assessed for the year under consideration u/s 143(3) r.w.s. 147 on 30/01/2016. The original return filed by the assessee was processed u/s 143(1). However, pursuant to receipt of certain information from DGIT (Inv.) / Sales Tax Department, Mumbai, it transpired that the assessee made alleged bogus purchases of Rs.15.85 Lacs from three entities as detailed in the assessment order. Accordingly, the case was reopened as per due process of law and the assessee was required to file requisite details to substantiate the purchases. 3.2 In support of purchases, the assessee furnished ledger accounts, invoices, details of goods manufactured and sold along with excise record. It was submitted that the goods were sold to reputed companies. However, Ld. AO opined that the assessee failed to establish delivery of goods and also failed to file the confirmation of the suppliers. In the alternative, the assessee offered 10% estimated additions against these purchases. However, not convinced, the aforesaid purchases were treated as bogus purchases and added to the income of the assessee.

4.

Upon further appeal, Ld. CIT(A), after considering factual matrix and relying upon the decision of Hon’ble Gujarat High Court in the case of CIT V/s Simit P.Sheth (356 ITR 451), estimated additions of 12.5% against these purchases. Aggrieved, the revenue is in further appeal before us.

5.

Going by the factual matrix as enumerated in the orders of lower authorities, we find that the issue has rightly been clinched in proper perspective by Ld. CIT(A). The Sales Turnover was not in doubt and the assessee was in possession of primary purchase documents. The payment to the supplier was through banking channels. There could be no sale without actual purchase of material keeping in view the assessee’s nature of business. The facts of the case made it a fit case to estimate the profit element embedded in these transactions. Therefore, concurring with findings of Ld. CIT(A) in the impugned order, we dismiss the appeal.

6.

The appeal stands dismissed.

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