ITO WARD 15 (3)(1), MUMBAI vs. M/S TITAN ANTONY AVIATION INDIA PVT LTD., MUMBAI

ITA 4929/MUM/2019Status: DisposedITAT Mumbai25 February 2021AY 2011-125 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 Commissioner (Appeals)'s decision to restrict the disallowance to the profit element of the purchases, finding that the goods had entered the assessee's stock. The entire purchases could not be disallowed if the source was not conclusively proved.

What were the facts?

The Assessing Officer added back purchases worth Rs. 4,87,675/- treating them as non-genuine. The Commissioner (Appeals) reduced this addition to the profit element embedded in the purchases, estimated at 12.5%.

What were the issues?

Whether the entire non-genuine purchases should be disallowed or only the profit element embedded therein, when goods have entered the assessee's stock.

Which sections of the Income-tax Act were involved?

Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY

For Appellant: Smt. Smita Verma (DR)

Pronounced: 25/02/2021

O R D E R This is an appeal by the assessee against order dated 30-04-2019 of learned Commissioner of Income-tax (Appeals)-24, Mumbai for the assessment year 2011- 12. 2. The grievance of the revenue is against partial relief granted by learned Commissioner (Appeals) in the matter of addition made on account of non genuine purchases. 3. Briefly the facts are, the assessee, a resident company, is engaged in the business of fabrication of air refuellers, oil tankers, bowsers, etc. For the assessment year under dispute, assessee filed its return of income on 29-09-2011 declaring total income of Rs.13,30,660. The return of income filed by the assessee was initially processed under section 143(1) of the Act. Subsequently, the Assessing Officer received information from the Sales-tax department through the Investigation Wing that the assessee is a beneficiary of accommodation entry provided by way of bogus purchase bills worth Rs.4,87,675/-. In course of assessment proceedings, the Assessing Officer called upon the assessee to prove the purchases of Rs.4,87,675/- from M/s Rexonn Impex. In response to the query raised, the assessee furnished certain documentary evidences to prove the purchases. However, the Assessing Officer was not convinced. Thus, the Assessing Officer ultimately treated the purchases of Rs.4,87,675/-as non genuine and added back to the income of the assessee. Assessee contested the aforesaid addition before learned Commissioner (Appeals). After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) reduced the addition to the profit element embedded in the alleged non genuine purchases by estimating at 12.5%.

When the appeal was called for hearing, no one was present on behalf of the assessee. Considering the nature of dispute I proceed to dispose of the appeal ex parte qua the assessee after hearing the learned Departmental Representative and on the basis of material on record.

I have heard the learned Departmental Representative and perused the material available on record. On a reading of paragraph 5.4 of the assessment order, it appears that in course of assessment proceedings, the assessee had submitted purchase invoices, delivery challan, goods received note, transporters copy, purchase orders, etc. Further, the assessee had furnished copies of register showing entry of material from M/s Rexonn Impex. Details of payment made through cheque were also furnished. The Assessing Officer has not made any adverse observation with regard to the documentary evidences filed by the assessee. The Assessing Officer has also not disputed the sales effected by the assessee. Thus, all these facts and evidences indicate that the goods / materials in dispute have entered the stock of the assessee, though, the source of such purchases could not be proved conclusively. That being the case, the entire purchases could not have been disallowed; but only the profit element embedded in such purchases can be considered for addition to take care of the leakage of revenue, if any, on account of suppression of true profit. In view of the aforesaid, I do not find any infirmity in the decision of learned Commissioner (Appeals) in restricting the disallowance to 12.5% of the non genuine purchases. I may further add, the decision of the Hon’ble Supreme Court in case of CIT vs N.K. Proteins Ltd by judgement dated 16-01-2017, relied upon by learned Departmental Representative, being factually distinguishable, is not applicable to the case at hand. Grounds are dismissed.

In the result, appeal is dismissed.

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