PRAVEEN KUMAR GUPTA,MUMBAI vs. ITO 20(2)(5), MUMBAI

Ms. Shreekala Pardeshai, representing the Revenue submitted that the Revenue had also filed cross appeal before the Tribunal against the order of CIT(A) for Assessment Year 2011-12 in ITA No. 3699/Mum/2019. The appeal of Revenue was heard by ‘C’ Bench on 02.11.2020. At the time of hearing of appeal by the Revenue, the Department was not aware of the Cross Appeal filed by the assessee against the same order of CIT(A). Therefore, only appeal of the Revenue was heard. The learned Departmental Representative submitted that the Tribunal vide order dated 14.12.2020 has dismissed the appeal of Revenue upholding the findings of CIT(A).

We have heard the submissions made by the learned Departmental Representative and have examined the orders of the authorities below. The assessee is a proprietor of M/s Haryana Steel International and is engaged in trading of iron and steel sheets etc. The assessee filed his return of income for the impugned assessment year on 21.09.2011 declaring total income of ₹3,47,560/-. The return

A perusal of the assessment order shows that the assessee in order to prove genuineness of purchases had produced purchase and sale invoices, ledger accounts, unsigned delivery challans and the affidavit from the proprietor of M/s Mira Enterprises admitting that he had issued bogus purchase bills to some parties, however as per the affidavit, the transactions with the assessee were stated to be

We observe that in Assessment Year 2010-11, addition on account of bogus purchases were made in the hands of the assessee for similar reasons. In Assessment Year 2010-11, the assessee had purportedly made bogus purchase transactions with M/s Miru Enterprises. The Assessing Officer made addition by estimating GP at 12.5% on bogus purchases. In first appellate proceedings, the CIT(A) restricted the addition to 4.60%. The Revenue carried the issue in appeal before the Tribunal in (supra). The Tribunal upheld the findings of CIT(A). For the sake of completeness, the relevant extract of the findings of the co-ordinate Bench are reproduced herein below: - “7. …………………………We are of the considered view that in the backdrop of the aforesaid fact, the estimation of the profit element on the purchase of the steel sheets by the assessee from the open/grey market would fairly be covered by the rate of 4.60% adopted by the CIT(A). We thus find ourselves

The CIT(A) in impugned order has followed the above order of the Tribunal for Assessment Year 2010-11 and restricted the addition to 4.60%. The co-ordinate Bench of the Tribunal while deciding the appeal of Revenue for the impugned Assessment Year (i.e. Assessment Year 2011-12) in (supra) has upheld the findings of the CIT(A). The relevant extract of the order of the Tribunal in Cross Appeal filed by the Department for the same Assessment Year is as under: - “5. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by following the decision of the co-ordinate bench of the Tribunal in assessee’s own case in Assessment Year 2010-11 in ITA No.853/Mum/2017 wherein a GP rate of 4.6% has been applied thereby sustaining the addition of ₹73,62,728/- as against ₹2,00,07,413/- made by the AO. We observe that Ld. CIT(A) has followed the decision of the co- ordinate bench of the Tribunal in the assessee’s own case in Assessment Year 2010-11 and therefore, there is no scope for inference in the order passed by Ld. CIT(A). Consequently, we are inclined to dismiss the appeal of the Revenue by upholding the order of Ld. CIT(A).”

The CIT(A) has restricted the addition by applying GP rate of 4.60% in line with the order of Tribunal in assessee’s own case for immediately preceding Assessment Year. We see no reason to take a different view. Consequently, the ground No. 2 raised in the appeal by assessee assailing the addition by adopting GP rate of 4.6% is dismissed.