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Income Tax Appellate Tribunal, VIRTUAL
Before: SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2009-10 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-34, Mumbai in appeal No.CIT(A)-34/ACIT-22(1)/IT-11043/2015-16 dated 11/01/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 30/03/2015 by the ld. Asst. Commissioner of Income Tax, Circle-22(1), Mumbai (hereinafter referred to as ld. AO).
The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the addition @ 12.5% on the value of bogus purchases as against 27.19% made by the ld. AO in the facts and circumstances of the instant case.
None appeared on behalf of the assessee. We have heard ld. DR and perused the materials available on record. We find that assessee is a partnership firm engaged in the business of export / import of engineering goods, trading in pipe and pipe footings and high seas transactions. During the year under consideration, the assessee had disclosed profit from business at Rs.3,40,46,220/- and filed return of income thereon disclosing the same on 30/09/2009 for the A.Y.2009-10. The assessment was completed u/s.143(3) of the Act on 14/10/2011 accepting the returned income. Later based on the information received from Sales Tax department of Government of Maharashtra, the assessment of the assessee was sought to be reopened on the ground that assessee had made purchases from Manish Industrial Corporation to the tune of Rs.26,70,528/- whose name appeared to be a tainted dealer in the website of Sales Tax department of Government of Maharashtra. The ld. AO observed in para 5.4 of his order that assessee had submitted the returns of income with audit report, month wise sales and purchases, invoices and delivery challan, ledger account of the aforesaid supplier etc. We find that the ld. AO had taken these various evidences on record and had accepted to the fact that the sales made out of the disputed purchase has been duly reflected in the books of accounts of the assessee and held that the same is not to be doubted. Accordingly, the ld. AO resorted to bring to tax only the profit element embedded in such disputed purchases. The ld. AO estimated the profit percentage thereon at 27.91% and made disallowance of Rs. 7,28,564/- on account of bogus purchases and completed the re-assessment. We find that the ld. CIT(A) by placing reliance on the decision of the Hon’ble Gujarat High Court in the case of Smit P Sheth reported in 356 ITR 461, restricted the profit percentage to 12.5% on disputed purchases as against 27.19% added by the ld. AO.
3.1. We find that the ld. DR had filed a detailed written submission on 15/11/2020 by email reiterating the observations of the ld. AO. It is not in dispute that assessee had made purchases from a party listed to be a tainted dealer in the website of Sales Tax department of Government of Maharashtra. It is not in dispute that the corresponding sales made by the assessee out of the said disputed purchases have been accepted by the ld. AO. Without making purchases, there cannot be any sales. Hence it could be safely concluded that assessee could have made purchases in the grey market in order to have saving in some indirect taxes and incidental profit element thereon. This profit element had been reasonably estimated to be at 12.5% by the ld. CIT(A). We also find that this Tribunal in series of decisions for the similar line of business activity carried on by the assessee, had estimated the profit percentage to be at 12.5%. We do not deem it fit to interfere in the said estimation of profit percentage, which, in our considered opinion, is just and reasonable. Moreover against the order of ld. CIT(A), the assessee is not in appeal before us as informed by the ld. DR. In these circumstances, we do not deem it fit to interfere in the order passed by the ld. CIT(A).
In the result, appeal of the revenue is dismissed.
Order pronounced on 16/12/2020 by way of proper mentioning in the notice board.