NARESH KUMAR SINGHAL & SONS,FARIDABAD vs. ITO, WARD-2(1), FARIDABAD

PDF · subscribers
ITA 5586/DEL/2018Status: DisposedITAT Delhi21 February 2020AY 2008-093 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that even if purchases are bogus, the entire amount cannot be added as income. A GP rate of 5% was deemed fit on alleged unaccounted purchases over the declared GP rate.

What were the facts?

The Assessing Officer received information about bogus purchases made by the assessee. The assessee failed to appear, leading to an assessment under section 144/147 by estimating income on unverified purchases. The CIT(A) upheld the addition.

What were the issues?

The primary issues were the validity of reassessment proceedings under Section 147 and the quantum of addition on account of unverified purchases.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘S.M.C’, NEW DELHI

Before: MS. SUSHMA CHOWLA

For Appellant: CA यथ क ओर से /
Hearing: 16.01.2020

आदेश / ORDER The present appeal filed by assessee is against order of CIT(A), Faridabad dated 01.03.2018 relating to assessment year 2008-09 against the order passed under section 144/147 of the Income-tax Act, 1961 (in short ‘the Act’).

2.

The assessee has raised two issues against the re-opening of assessment u/s 147 of the Act and addition made on account of unverified purchases.

3.

The Ld.AR for the assessee has not pressed Ground Nos. 1 & 4 hence, the same are dismissed as not pressed.

4.

The issues raised in Ground Nos. 2, 3 & 5 are against the re- assessment proceedings initiated u/s 147/148 of the Act.

5.

Ground No.6 raised by the assessee on merits is against the addition made by the assessee. The assessee has also raised additional grounds of appeal on the re-assessment proceedings. However, during the course of hearing, the Ld.AR for the assessee pointed out that the issue on merits be decided and issues raised against the re-assessment proceedings would become academic.

1.

6. Briefly in the facts of the case the Assessing Officer had received certain information with regard to bogus purchases made by the assessee during the year through M/s. Maa Durga Trading Company. The assessee failed to appear before the Assessing Officer and assessment was completed u/s 144/147 of the Act by estimating the income on non- genuineness purchases of Rs.83,47,509/- @ 30% i.e. Rs.25,04,252/-. The CIT(A) upheld the addition made in the hands of the assessee.

7. On the perusal of record and after hearing both the authorized representatives, the first issue on merits is the rate to be applied on the alleged bogus purchases. It is an established principle that even where the purchases are bogus, the entire amount of purchase cannot be added as income of the person concerned. The assessee during the year under consideration had declared GP rate of 2.33% as against 1.04% declared during the preceding year. In the totality of the above said facts and circumstances of the case, it is deemed fit that the G.P. rate of 5% be adopted on the alleged unaccounted purchases over and above the G.P. rate declared by the assessee. Accordingly, Ground No.6 raised by the assessee on merits is partly allowed.

8.

The other issues raised on the invoking of jurisdiction u/s 147 of the Act become academic and the same are dismissed.

9.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 21st February, 2020.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →