RU-MET CORPORATION,MUMBAI vs. ITO WD 19(3)(2), MUMBAI

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ITA 6513/MUM/2018Status: DisposedITAT Mumbai26 October 2020AY 2010-113 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found the estimated gross profit of 12.5% to be on the higher side and restricted it to 5%. The legal grounds challenging the validity of re-assessment were not adjudicated as the merit grounds were decided in favour of the assessee.

What were the facts?

The assessee, a metal trader, was found to have obtained accommodation entries worth Rs. 83,38,196/-. The Assessing Officer estimated a 12.5% gross profit on alleged bogus purchases and made an addition of Rs. 10,42,275/-.

What were the issues?

The primary issue was the estimation of gross profit on alleged bogus purchases. The assessee also challenged the validity of the re-assessment proceedings.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

For Respondent: Shri Ajay Pratap Singh (DR)

आदेश/ ORDER

1.

This appeal by the assessee is directed against the order of Commissioner of Income-Tax (Appeals)-6, Mumbai [in short ‘the CIT(A)’] dated 15.10.2018 for the Assessment Year 2010-11.

2.

The brief facts of the case as emanating from the records are: The assessee is engaged in trading of ferrous and non ferrous metals. The assessment for Assessment Year 2010-11 in the case of assessee was re- opened on the basis of information received by DGIT (Investigation) from Maharashtra Sales Tax Department that the assessee has indulged in obtaining accommodation entries to the tune of Rs. 83,38,196/- from hawala operators.

In re-assessment proceeding, the Assessing Officer estimated gross profit on alleged bogus purchase bills @ 12.5% and made addition of Rs. 10,42,275/-.

Aggrieved against the assessment order dated 17.03.2016 passed under section 143(3) r.w.sec. 147 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’), the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee and confirmed the addition made by Assessing Officer. Against the findings of CIT(A), the assessee is in appeal before the Tribunal.

3.

Shri Ajay Pratap Singh representing the department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. DR submitted that the Assessing Officer/CIT(A) have estimated reasonable gross profit on bogus purchases made by the Assessing Officer.

4.

Submissions made by ld. DR heard and orders of the authorities below examined. The assessee is a trader in ferrous and non-ferrous metals. The estimation of gross profit @ 12.5% of the alleged bogus purchase appears to be on higher side. I am of considered view that the ends of justice would be met, if gross profit on bogus purchase is restricted to 5%. In view of my above observation, the ground no. 2.1 and 3.1 of the appeal are partly allowed.

5.

In ground no. 1.1 to 1.4 of the appeal, the assessee has raised legal issues challenging validity of re-assessment. Since, the ground on merit have been adjudicated granting relief to the assessee, the legal grounds are not taken up for adjudication at this stage. In ground No.4 of the appeal, the assessee has raised alternative ground of reducing gross profit offered by the assessee from gross profit estimated by the Assessing Officer. Since, ground no. 2.1 and 3.1 of the appeal are decided in favour of the assessee, the ground no.4 has become infructuous.

6.

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

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