ITO 20(3)(3), MUMBAI vs. M/S SHARADBHAI J. SHAH, MUMBAI

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ITA 5162/MUM/2019Status: DisposedITAT Mumbai08 March 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 upheld the CIT(A)'s order, finding it well-reasoned and fair. The CIT(A) had correctly estimated the profit element at 14% on purchases from one supplier, while deleting additions for the other after the assessee provided new address and trail of goods, and the AO failed to issue a notice.

What were the facts?

The Revenue appealed against the CIT(A)'s order which deleted additions for purchases from one supplier and restricted additions to 14% for another. The Assessing Officer had made additions for the entire bogus purchases based on information from the Sales Tax Department.

What were the issues?

Whether the CIT(A) erred in deleting additions for one supplier and restricting additions for another, and whether the AO properly discharged his duty in verifying the purchases.

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: VIKAS AWASTHY & SHRI N.K.PRADHAN

For Appellant: Shri Shyam Saboo
Hearing: 04/03/2021Pronounced: 08/03/2021

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-32, Mumbai ( in short ‘the CIT(A)’) dated 27/05/2019 for the assessment year 2009-10.

2.

The brief facts of the case as emanating from the records are: The assessee is a wholesale trader of tin plates and black plate. The assessment in the case of assessee for assessment year 2009-10 was reopened on the basis of information

2 आअसं. 5162/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10) received by the DGIT (Inv), Mumbai from the Sale Tax Department, Government of Maharashtra that the assessee has obtained bogus purchase bills aggregating to Rs.12,91,013/- from two hawala operators namely:

(i) M/s. Mairu Enterprises Rs. 3,06,639/- (ii) M/s. Rahul Traders Rs. 9,84,374/- Since, the assessee failed to substantiate genuineness of the purchases and the suppliers, the Assessing Officer made addition of the entire bogus purchases. Aggrieved by the assessment order dated 28/03/2014, the assessee filed appeal before the CIT(A). The CIT(A) after considering the submissions of the assessee and documents on record deleted the entire addition qua purchases from M/s. Mairu Engterprises and restricted the addition to 14% on purchases from M/s. Rahul Traders. Against the findings of CIT(A) the Revenue is in appeal before the Tribunal.

3.

Shri Sanjay J. Sethi, representing the Department vehemently supporting the assessment order submitted that Assessing Officer had made addition of the entire bogus purchases as the assessee failed to discharge his onus in proving genuineness of the purchases from declared hawala operators. The CIT(A) has erred in deleting entire addition in respect of bogus purchases from M/s. Mairu Enterprises and restricting addition @ 14% from M/s. Rahul Traders.

4.

We have heard the submissions made by ld. Departmental Representative and have examined the orders of authorities below. The assessee furnished new address of one of the suspicious dealer i.e. M/s. Mairu Enterprises and also furnished documents to substantiate trail of goods. However, the Assessing Officer failed to issue notice to the said supplier under section 133(6) of the Act. As regards the other supplier, the assessee fairly admitted that no document can be furnished to discharge onus to prove genuineness. Since, the Assessing Officer had accepted the turnover declared by the assessee, the the CIT(A) estimated the profit element embedded in bogus purchase transactions by estimating profit @ 14% on bogus

3 आअसं. 5162/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10) purchases from M/s.Rahul Traders. We find that the order of CIT(A) is well reasoned and fair. We concur with the same. The appeal of the Revenue is without any merit. Hence, the same is dismissed and the impugned order is upheld.

5.

In the result, appeal by the Revenue is dismissed.

Order pronounced in the open court on Monday, the 8th day of March, 2021.

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