INCOME TAX OFFICER 21(2)(2), MUMBAI vs. MAHAVIR ENGINEERING COMPANY, MUMBAI

Aforesaid appeals by revenue for Assessment years [AY in short] 2009-10 and 2011-12 contest common order of ld. Commissioner of Income Tax (Appeals)-48, Mumbai [in short CIT(A) ] which has restricted the addition on account of suspicious purchases to the extent of 15% as against full addition made by Ld. AO.

Though none appeared for assessee, however, material on record was sufficient for disposal of the appeals. The Ld. DR pleaded for restoration of assessment framed by Ld. AO. 3.1 The material facts that the assessee being resident firm stated to be engaged in trading of electrical motors and pumps has been assessed, in similar manner, for both the years u/s 143(3) r.w.s. 147. The assessment was so framed pursuant to receipt of certain information from Sales Tax Department that the assessee procured accommodation purchase bills from suspicious dealers. The assessee made purchase of Rs.2.99 Lacs from 2 parties in AY 2009-10 as detailed in the assessment order. The quantum of purchase in AY 2011-12 is Rs.2.60 Lacs. 3.2 Though the assessee filed certain documentary evidences in support of purchases, however, notices issued u/s 133(6) did not elicit any satisfactory response. Consequently, these purchases were disallowed and added back to assessee’s income in both the years. 4. Upon further appeal, Ld. CIT(A) noted that the assessee was a trader and therefore, it would be logical to conclude that the material was purchased from other parties in the grey market. Accordingly, it would be a fit case to make estimated additions to account for profit element embedded in these transactions. The estimation was done at 15% for both the years which has given rise to revenue’s appeals before us. 6. Going by the factual matrix and after due consideration of factual matrix, we find that the issue has been clinched in right perspective by Ld. CIT(A). Since the assessee was a trader, it was a fit case to estimate the profit element embedded in these transactions. Concurring with findings of Ld. CIT(A) in the impugned order, we dismiss both the appeals.