ITO 19(3)(1), MUMBAI vs. RAMESH D JAIN (HUF), MUMBAI

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ITA 4529/MUM/2019Status: DisposedITAT Mumbai05 April 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 that the Assessing Officer's estimation of profit at 25% on bogus purchases was on the higher side, considering the nature of the assessee's business. Therefore, the CIT(A)'s decision to restrict the addition to 12.5% was upheld.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted the addition on bogus purchases from 25% to 12.5%. The assessee failed to prove the genuineness of purchases and the dealers, who were declared as hawala operators.

What were the issues?

Whether the addition made by the Assessing Officer on account of bogus purchases was justified, and if the CIT(A) erred in restricting the addition.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

Hearing: 06/01/2021Pronounced: 05/04/2021

आदेश/ ORDER

1.

This Appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals) -6, Mumbai [in short ‘the CIT(A)] dated 26/04/2019 for the assessment year 2009-10.

2.

Shri Sanjay J. Sethi representing the Department submitted that the assessee had indulged in obtaining bogus purchase bills amounting to आअसं. 4529/मुं/2019 (�न.व.2009-10) (A.Y.2009-10)

Rs.45,80,827/- from various hawala dealers. During assessment proceedings notice under section. 133(6) of the Income Tax Act, 1961 (in short ‘the Act’) were issued to the dealers on the addresses provided by the assessee/respondent, the same were returned back unserved by the postal authorities. No confirmations were either filed by the assessee from the said dealers. The assessee failed to prove genuineness of purchases and the dealers. The Assessing Officer made addition of 25% of the bogus purchases. In first appellate proceedings, the CIT(A) restricted the addition to 12.5% of such purchases. The ld. Departmental Representative submitted that the addition made by the Assessing Officer in respect of bogus purchases was fair and should have been sustained by the CIT(A). The ld. Departmental Representative prayed for reversing the findings of CIT(A) and restoring the addition made in assessment proceedings.

3.

The submissions made by ld. Departmental Representative heard, orders of authorities below examined. The assessee is a dealer in ferrous and non- ferrous metals. The assessee has allegedly made bogus purchases aggregating to Rs.45,80,827/- from five dealers declared as hawala operators by the Sales Tax Department, Government of Maharashtra. Undisputedly, the assessee failed to discharge his onus in proving genuineness of purchases and authenticity of the dealers. The Assessing Officer made addition of Rs.11,45,207/- by estimating 25% profit embedded in bogus purchases. The CIT(A) restricted G.P. at 12.5% on bogus purchases. Keeping in view the nature of assessee’s business, estimation of profit on bogus purchases by the Assessing Officer was on higher side. I find no merit in appeal by the Revenue,

आअसं. 4529/मुं/2019 (�न.व.2009-10) (A.Y.2009-10) hence, the impugned order is upheld and the appeal by Revenue is dismissed, sans merit.

4.

In the result, appeal by the Revenue is dismissed.

Order pronounced in the open Court on Monday , the 05th day of April, 2021

Sd./- (VIKAS AWASTHY) �या�यक सद�य/JUDICIAL MEMBER मुंबई/Mumbai, �दनांक/Dated: 05/04/2021 Vm, Sr. PS (O/S)

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