ACIT CIR-6(3(2), MUMBAI vs. KALPATARU ISPAT PVT. LTD., MUMBAI

PDF · subscribers
ITA 2901/MUM/2019Status: DisposedITAT Mumbai14 December 2020AY 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 Tribunal upheld the CIT(A)'s order, stating that only the profit element embedded in bogus purchases should be brought to tax, as the Revenue had accepted the assessee's sales. Without corresponding purchases, sales cannot exist.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted the addition for bogus purchases to 12.5% of the total amount. The assessee, a wholesale trader of Iron & Steel, was found to have obtained bogus purchase bills from hawala dealers.

What were the issues?

Whether the entire amount of bogus purchases should be added back to the assessee's income, or only the profit element embedded therein.

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

आदेश/ ORDER

1.

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-12, Mumbai [in short ‘the CIT(A)’] dated 07/01/2019 for the assessment year 2010-11.

2.

The brief facts of the case as emanating from records are: The assessee is a wholesale trader of Iron & Steel. On the basis of information received from Sales Tax Department, Government of Maharashtra by DGIT(Investigation), Mumbai the 2 (A.Y.2011-12) assessment for assessment year 2010-11 in the case of assessee was reopened. As per information received, the assessee allegedly obtained bogus purchase bills amounting to Rs.3,20,675/- , from M/s. Padmalaxmi Steel and Alloys Pvt. Ltd. (Rs. 3,12,650/-) and P.K.Trading Co.(Rs.8,025/-). Both the aforesaid parties were declared Hawala Dealers engaged in providing accommodation entries. The Assessing Officer in reassessment proceedings made addition of the entire alleged bogus purchases. Aggrieved by the assessment order dated 29/02/2016, passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A). The CIT(A) after examining the facts, restricted the addition to Rs.40,084/- i.e. 12.5% of the bogus purchases . Against the findings of CIT(A), the Revenue is in appeal.

3.

Shri Ajay Pratap Singh, representing the Department submitted that though the tax effect involved in the appeal is less than the monetary limit specified vide CBDT Circular No. 17/2019, dated 08-08-2019 but the case of assessee falls under exception specified in para 10(e) of Circular No. 03 of 2018 dated 11/07/2018 and amended on 20/08/2018.

The ld.Departmental Representative submitted that the assessee had obtained accommodations entries from declared hawala dealers. During assessment proceedings, the assessee failed to prove genuineness of the purchases, therefore, the Assessing Officer made addition of the entire such bogus purchases. The ld.Departmental Representative prayed for reversing the finding of CIT(A) and restoring the finding of Assessing Officer.

4.

Both sides heard, orders of authorities below examined. The assessee is stated to have obtained bogus purchase bills amounting to Rs.3,20,675/- from two hawala dealers during the period relevant to assessment year under appeal. The Assessing Officer made addition of the entire bogus purchases. The CIT(A) restricted the disallowance to 12.5% of such bogus purchases. Undisputedly, the Revenue has accepted the sales declared by the assessee. Without corresponding purchases

3 (A.Y.2011-12) there cannot be sales, therefore, in such like bogus transactions it is only the profit element embedded in bogus purchases that has to be brought to tax.[ Re.PCIT vs. Paramsakhti Distributors Pvt. Ltd., Income Tax Appeal No.413 of 2017 decided on 15/07/2019 by Hon'ble Bombay High Court] I find no infirmity in the impugned order, hence, the same is upheld and appeal by the Revenue is dismissed.

5.

No appeal/cross objections filed by the assessee against the order of CIT(A) has been brought to the notice of Bench. In case any appeal/cross objections by the assessee against impugned order of CIT(A) is noticed, then this order may be recalled and the cross appeals may be listed together for disposal by a common order.

6.

In the result, appeal by the Revenue is dismissed.

Order pronounced on Monday the 14th day of December, 2020.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →