ITO 32(2)(3), MUMBAI vs. M/S MAHADEV STEEL HOUSE, PALGHAR

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ITA 4756/MUM/2019Status: DisposedITAT Mumbai01 February 2021AY 2010-113 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 CIT(A) reduced the addition to 12.5% GP rate, citing acceptance of this rate in the assessee's own case for a prior year. The Tribunal upheld the CIT(A)'s order, finding it well-reasoned.

What were the facts?

The Revenue initiated reassessment proceedings against the assessee for alleged bogus purchases based on information from the sales tax department. The assessee failed to provide sufficient evidence, leading the AO to treat purchases as not genuine and add a 22% GP rate to income.

What were the issues?

Whether the CIT(A) was justified in reducing the GP rate on bogus purchases based on a prior year's acceptance, and whether the AO's addition was excessive.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 133(6),Section 144

AI-generated summary — verify with the full judgment below

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

Before: SHRI RAJESH KUMAR & SHRI PAVAN KUMAR GADALE

For Appellant: Shri K. Agarwal, A.R
For Respondent: Smt. Smita Verma, D.R
Hearing: 27.01.2021Pronounced: 01.02.2021

Per Rajesh Kumar, Accountant Member:

1.

The above titled appeals have been preferred by the Revenue against the order dated 09.04.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2010-11 & 2011-12.

(A.Y. 2010-11) 2. The Revenue has challenged the order of Ld. CIT(A) wherein the Ld. CIT(A) has partly sustained the addition @ 12.5% of the bogus purchases as against the 22% made by the AO on account of bogus purchases.

2 & 4757/M/2019 M/s. Mahadev Steel House 3. The brief facts of the case are that on the basis of information received from sales tax department to the effect that assessee has taken hawala bogus purchase entries to the tune of Rs. 1,78,088/-, the re-assessment proceedings were initiated under section 147 of the Act by issuing notice under section 148 of the Act dated 19.03.2015 by the AO. Accordingly the assessee was called upon to prove the genuineness of the purchases by furnishing the evidences in support of the bogus purchases. The assessee did not file any details before the AO except the balance sheet and profit and loss account. The AO also issue notices under section 133(6) of the Act to all the suppliers however the same were returned unserved. Finally the AO after rejecting the contentions of the assessee treated the purchases as not genuine and applied a GP rate of 22% on the bogus purchases and added the same to the income of the assessee in the assessment framed under section 144 r.w.s. 147 of the Act.

4.

Aggrieved, the assessee went in appeal before the Ld. CIT(A) against the ex-parte assessment. In the appellate proceedings, the Ld. CIT(A) directed the AO to apply a GP rate of 12.50% on the bogus purchases by observing that in assessee’s own case a rate 12.50% has been accepted by the AO himself under similar facts.

5.

After hearing both the parties and perusing the material on record, we observe that the Ld. CIT(A) has recorded a findings that in the earlier assessment year AY 2012-13 the revenue has accepted 12.50% and directed the AO to apply similar percentage to assess the bogus purchases. In view of these facts

3 & 4757/M/2019 M/s. Mahadev Steel House and circumstances, we are of the opinion that the order of ld CIT(A) is quite reasoned and does not require our interference. Accordingly, the appeal of the Revenue is dismissed.

ITA No.4757/M/2019 A.Y. 2011-12 6. The issue involved in the present appeal is identical to the one as stated above in A.Y. 2010-11. Therefore, our finding in ITA No.4756/M/2019 A.Y. 2010-11, would, mutatis mutandis, apply to this appeal as well. Accordingly the appeal of the Revenue is dismissed.

7.

In the result, both the appeals of the Revenue are dismissed.

Order pronounced in the open court on 01.02.2021.

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