What did the Tribunal hold?

The Tribunal concurred with the CIT(A)'s order, finding it well-reasoned and balanced. The assessee's declared GP rate of 4.63% was also considered. The Tribunal dismissed the Revenue's appeal.

The Revenue appealed against the CIT(A)'s order which reduced an addition made on account of bogus purchases. The assessee, a scrap reseller, had procured bogus purchase bills, and the Assessing Officer estimated the profit at 12.5%. The CIT(A) restricted this to 5%.

What were the issues?

Whether the CIT(A) was justified in restricting the addition on account of bogus purchases to 5% when the Assessing Officer had estimated it at 12.5%.

ITO vs Mr. R.K.Singh & Sons | ITAT Mumbai 2021

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

Before: VIKAS AWASTHY & SHRI N.K.PRADHAN

Hearing: 02/03/2021Pronounced: 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.

Shri Sanjay J. Sethi, representing the Department submitted that the assessee is a reseller of scrap. During the period relevant to assessment year under appeal, the assessee obtained bogus purchase bills aggregating to Rs.1,15,46,063/- from various (seven) hawala operators. The assessment of the assessee for assessment

2 आअसं. 5161/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10) year 2009-10 was reopened. In reassessment proceedings the assessee failed to prove genuineness of the purchases and the dealers from whom bogus bills were procured. The Assessing Officer made addition of Rs.14,43,258/- by estimating G.P @ 12.5% on bogus purchases. The assessee carried the issue in appeal before CIT(A). The First Appellate Authority granted relief to the assessee by estimating G.P @ 5% and thus, restricted the addition to Rs.5,77,303/-. Against the findings of CIT(A) the Revenue is in appeal before the Tribunal. The ld. Departmental Representative contended that though the tax effect involved in the appeal is less than the monetary limit specified vide CBDT Circular No. 17/2019, dated 08-08-2019 but the case of assessee falls under exception specified in para 10(e) of Circular No. 03 of 2018 dated 11/07/2018 and amended on 20/08/2018.

Ms.Radha Halbe, appearing on behalf of the assessee vehemently defended the impugned order and prayed for dismissing the appeal of Revenue. The ld.Authorized Representative of the assessee submitted that the sales declared by assessee has been accepted by the Revenue. The assessee had declared G.P of 4.63% in financial year 2008-09 i.e. the period relevant to assessment year 2009-10. The same has not been disputed by the Revenue. The G.P estimated by the Assessing Officer at 12.5% was very much on the higher side. The CIT(A) after considering the G.P rate declared by the assessee, restricted the addition to 5% and the same has been accepted by the assessee.

We have heard the submissions made by rival sides and have perused the orders of authorities below. Undisputedly, the assessee has failed to substantiate the purchases made from suspicious dealers. The sales turnover declared by the assessee was accepted by the Revenue. The Assessing Officer estimated G.P on alleged bogus purchases at 12.5%. In first appellate proceedings, the CIT(A) restricted the addition to 5%. The assessee has declared G.P of 4.63% for the period relevant to the assessment year in appeal. We find the order of CIT(A) well reasoned

3 आअसं. 5161/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10) and balanced, hence, we concur with the same. The appeal of the Revenue is without any merit, hence, the same is dismissed.

In the result, appeal by the Revenue is dismissed.

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

ITO-20(3)(2), MUMBAI vs. MR. R.K.SINGH & SONS, MUMBAI

What did the Tribunal hold?

What were the facts?

What were the issues?

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