SHRI CHANDANMAL H BHANSALI,MUMBAI vs. INCOME TAX OFFICER-19(1)(3), MUMBAI

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ITA 5281/MUM/2019Status: DisposedITAT Mumbai16 March 2021AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal, while acknowledging the assessee's failure to provide sufficient linkage, reduced the profit estimation on disputed purchases from 12.5% to 6%. The CIT(A)'s order was set aside.

What were the facts?

The assessee, dealing in metals, had his assessment reopened based on information about bogus purchase bills. The Assessing Officer estimated profit at 12.5% on disputed purchases as the assessee failed to link purchases with sales or produce books of accounts.

What were the issues?

Whether the estimation of profit on bogus purchases by the AO was justified and at what rate, given the assessee's inability to link purchases with sales.

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 & SHRI N.K. PRADHAN

Hearing: 09/03/2021Pronounced: 16/03/2021

ORDER PER N.K. PRADHAN, A.M. The captioned appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-4, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).

Though the case was fixed for hearing on 09.03.2021 neither the assessee nor his Authorized Representative (AR) appeared before the Tribunal on above dates. As there is non-compliance by the assessee, we are proceeding

Shri Chandanmal H Bhansali to dispose-off this appeal after examining the materials available on record and after hearing the Ld. Departmental Representative (DR).

2.

Briefly stated that the facts of the case are that the assessee filed his return of income for the AY 2009-10 on 22.09.2009 declaring total income of Rs.4,55,506/-. The assessee deals in ferrous & non-ferrous metals. On receipt of information from the Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchase bills of Rs.80,66,926/- from nine parties, Assessing Officer (AO) issued notice u/s.148 for reopening the assessment. In response to it, the assessee filed a reply before the AO dated 26.03.2014 stating that the original return filed on 22.09.2009 be treated as return filed in response to notice u/s 148. The AO has recorded that the assessee was asked to produce books of accounts, bills and vouchers for verification. The assessee could file some details before the AO. However, the assessee could not link the purchases with correspondence sales. Further, it is noted by him that the assessee failed to produce the books of accounts before him for the verification. In view of the above facts, the AO estimated the profit @12.5% on the disputed purchases of Rs.80,66,926/-, which comes to Rs.10,08,366/-.

3.

In appeal, the Ld.CIT(A) agreed with the estimation @12.5% made by the AO.

4.

Before us, the Ld.DR submits that the order passed by the Ld.CIT(A) be affirmed as it is reasonable, considering the facts and circumstances of the case.

Shri Chandanmal H Bhansali We have heard the Ld. DR and perused the relevant materials available on record. As mentioned earlier, the AO has recorded that the assessee could file few details before him; however, the assessee failed to link the purchases with corresponding sales. The nature of the business of the assessee is dealing in ferrous & non-ferrous metals. Considering the facts and circumstances of the case, we set aside the order of the Ld.CIT(A) and direct the AO to estimate the profit @6% on the disputed purchases of Rs.80,66,926/-

5.

In the result, the appeal is partly allowed.

Order pronounced in the open Court on 16/03/2021.

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