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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA & SHRI PAVAN KUMAR GADALE
आदेश / O R D E R PER PAVAN KUMAR GADALE - JM:
The assessee has filed an appeal against the order of CIT(A)-36, Mumbai passed u/s 143(3) r.w.s 147 and 250 of the Act for the A.Y 2010-11. The assessee has raised the following grounds of appeal:
M/s. Mehta Trading Corporation, Mumbai. - 2 - 1. CIT(A) -36, Mumbai erred in confirming the addition of Rs. 2,39,090/- being 12.5% of alleged bogus purchases of Rs. 19,12,716/- made by the appellant.
The appellant Submits that (i) it has actually bought the materials (ii) made the payment towards materials bought through banking channel (iii) material bought has been sold and accounted in the books of the appellant which has been accepted by the A.O. therefore, under the facts and circumstances of the case, the appellant prays that the addition made by the A.O and confirmed by the CIT(A) shall be deleted.
In the alternative and without prejudice to the above, the CIT(A) erred in confirming the addition Rs. 2,39,090/- being 12.5% of alleged bogus purchases made by the appellant without appreciating the facts that the appellant itself has declared gross profit @ 7.58% on the alleged bogus purchases.
The appellant prays that the credit of gross profit @ 7.58% declared by it shall be given against the addition @ 12.5% alleged bogus purchases made by the AO and confirmed by the CIT(A).
2.The brief facts of the case are that, the assessee is a partnership firm engaged in the business of trading in M/s. Mehta Trading Corporation, Mumbai. - 3 - ferrous and non-ferrous metals and scrap. The assessee has filed the return of income on 14.09.2010 with a total income of Rs.1,39,42,130/-.Subsequently filed revised return of income on 30.09.2010 with total income of Rs. 1,41,12,100/- and the assessment was completed accepting the revised return of income. Whereas, the A.O has reason to believe that the income has escaped assessment because, the assessee has obtained the bogus purchases bills from the parties as per the information in the website of Sales Tax Department Govt of Maharashtra. The DGIT(Inv) Wing, Mumbai had forwarded the list of beneficiaries information who obtained the bogus purchases bills. Hence, the A.O has issued notice u/s 148 of the Act. The Ld. AR of the assessee filed a letter dated 16.03.2015 to treat the revised return of income as compliance. Subsequently, Notice u/s 143(2) and 142(1) of the Act were issued. The A.O found that the assessee has obtained the bogus purchase bills from Shri Durga Steels of Rs. 19,12,716/-.The Ld. AR appeared from time to time and filed the details of bank statements, ledger copy of party and other information. The A.O was not satisfied with the details M/s. Mehta Trading Corporation, Mumbai. - 4 - filed and to verify genuineness of purchases issued notice u/s 133(6) of the Act. But the notice issued was returned un-served by the postal authorities and also the assessee has failed to produce the parties. Hence, the A.O has estimated the income on bogus purchases of Rs. 2,39,090/- and determined total income of Rs. 1,43,51,190/- and passed order u/s 143(3) r.w.s 147 dated 15.03.2011. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas, the CIT(A) dealt on the grounds of appeal, assessee submissions and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal with the Tribunal.
3.At the time of hearing, the Ld. AR submitted that the CIT(A) erred in confirming the addition of the A.O estimating the income @12.50% of the bogus purchases, irrespective of the fact that the assessee has actually brought the material and the payments have been made through the banking channel. The Gross Profit ratio (GP) declared by the assessee is 7.58% and the same ratio should be applied to the bogus purchases. Further, in the assessee’s own case M/s. Mehta Trading Corporation, Mumbai. - 5 - for the A.Y 2011-12, the Hon’ble ITAT has considered the Coordinate Bench decisions and Hon’ble Bombay High Court decision of Pr.CIT Vs. Md. Haji Adam & Co. in ITANo.1004 of 2016 and the remanded the matter to the file of Assessing Officer. Further the LdAR prayed for allowing the assessee appeal. Contra, the Ld. DR supported the CIT(A) order.
4.We heard the rival submissions and perused the material on record. The Ld. AR submitted that the CIT(A) has erred in confirming the action of the A.O irrespective of the fact and submissions that, the assessee has maintained GP ratio of 7.58% in the financial year and the same has to be applied for the bogus purchases. The Ld. AR emphasized that for the Assessment year 2011-12, the Hon’ble ITAT has relied on the decision of Pr.CIT Vs. Md. Haji Adam & Co(Supra) and restored the matter to the file of the Assessing Officer with directions. We fallow the judicial precedence and Jurisdictional Bombay High Court decision of Pr.CIT Vs. Md. Haji Adam & Co. Accordingly, we set aside the order of the CIT(A) and restore the disputed to the file of the A.O to verify and M/s. Mehta Trading Corporation, Mumbai. - 6 - examine the facts and apply the Ratio of the decisions. Further A.O. shall grant adequate opportunity of hearing to the assessee and allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29.09.2020 Sd/- Sd/- (PAVAN KUMAR GADALE ) (SHAMIM YAHYA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 29/09/2020 KRK, PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / The CIT(A) 4. आयकर आयु�त(अपील) / Concerned CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Mumbai 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Mumbai M/s. Mehta Trading Corporation, Mumbai. - 7 -
Initial Date 1. Draft dictated on 17.09.2020 PS 2. Draft placed before author 28.09.2020 PS
Draft proposed & placed PS before the second member 4. Draft discussed/approved by PS Second Member. 5. Approved Draft comes to the PS Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed 2. Other Member… on which the