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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-48, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 144 r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).
Before us, the Ld. counsel for the assessee submits that he would not like to press the 2nd and 3rd ground of appeal. Considering the materials available on record and the above submission of the Ld. counsel, we dismiss the 2nd and M/s Saroj Prints Arts 2 ITA No. 1390/M/2019 3rd ground of appeal as not pressed. We proceed to adjudicate the 1st and 4th grounds of appeal which read as under :
1. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming assessment order passed u/s 144 r.w.s. 147 with prejudice mind without considering the submissions made by the appellant firm before Ld. AO.
4. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming 100% addition of purchase as the bogus purchases from M/s Mayur Paper.
3. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2010-11 on 24.09.2010 declaring total income of Rs.1,48,970/-. On receipt of information from the Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchase bills of Rs.2,55,019/- from Mayur Paper, the Assessing Officer (AO) issued notice u/s 148 of the Act for reopening the assessment. It is mentioned by the AO that on 05.11.2015, the assessee furnished tax audit report and audited financials. Later on 24.11.2015, the assessee filed objection to the reopening of assessment which was disposed by the AO on 07.12.2015. In response to the query raised by the AO vide notice u/s 142(1) r.w.s. 144 dated 25.01.2016, the assessee filed on 02.02.2016 copies of invoice and ledger account of the above party. However, as recorded by the AO the assessee failed to file the other details called by him. Considering the facts and circumstances of the case, the AO made an addition of the full amount of Rs.2,55,018/-.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). During the course of hearing before him, the assessee argued that M/s Saroj Prints Arts 3 ITA No. 1390/M/2019 the total purchases from the above party is Rs.1,08,707/- and not Rs.2,55,018/- . The Ld. CIT(A) directed the AO to verify the actual amount of purchases from the above party and accordingly adopt the correct figure.
5. Before us, the Ld. counsel for the assessee submits that considering the nature of the business of the assessee, only the profit embedded in the disputed purchases can be brought to tax by estimation. On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A).
We have heard the rival submissions and perused the relevant materials on record. The Ld. CIT(A) has rightly directed the AO to verify the actual amount of purchases from M/s Mayur Paper and accordingly adopt the correct figure. We find that the nature of business of the assessee is printing press. Having considered the nature of business of the assessee and the facts and circumstances of the case, we direct the AO to verify the actual amount of purchases from M/s Mayur Paper and estimate the profit @ 6% on the disputed purchases to bring to tax the profit embedded in such purchases.
In the result, the appeal is partly allowed for statistical purposes.
Order pronounced in the open Court on 18/03/2021.