DCIT- 5(2)(1), MUMBAI vs. IORA DIAMONDS PVT. LTD., MUMBAI

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ITA 5620/MUM/2018Status: DisposedITAT Mumbai14 February 2020AY 2011-123 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 found the CIT(A)'s order of restricting the addition to 8% of bogus purchases to be reasonable. No infirmity was found in the CIT(A)'s impugned order.

What were the facts?

The assessee, engaged in diamond trading, had its assessment reopened due to alleged bogus purchase bills. The Assessing Officer estimated a 12.5% GP on these purchases, while the CIT(A) reduced it to 8%. The Revenue appealed against this reduction.

What were the issues?

Whether the CIT(A) was justified in reducing the estimated Gross Profit on alleged bogus purchases from 12.5% to 8%.

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 & SHRI MANOJ KUMAR AGGARWAL

For Appellant: Shri Amit Pratap Singh
For Respondent: Shri Shubham Patel
Hearing: 13/02/2020Pronounced: 14/02/2020

This appeal by the Revenue is directed against the order of Commissioner of Income Tax(Appeals)-10 Mumbai (in short ‘the CIT(A) ) dated 29/06/2018 for the assessment year 2011-12.

2.

The brief facts of the case as emanating from the records are : The assessee is engaged in trading, polishing and cutting of diamonds. On the basis of information received from Investigation Wing of the Department, assessment for assessment year 2010-11 was reopened on the ground that the assessee has indulged in obtaining bogus purchase bills amounting to Rs.15,72,654/- from M/s. Aadi Impex. The Assessing Officer estimated GP @ 12.5%on such bogus purchases and thus, made addition of Rs.1,96,582/-. Aggrieved against the assessment order dated 29/11/2016 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) restricted the addition on account of bogus purchases at 8% of such purchases i.e. Rs.1,25,812/-. Against this finding of the CIT(A), the Revenue is in appeal before the Tribunal .

3.

Shri Shubham Patel Appearing on behalf of the assessee vehemently defended the impugned order and prayed for dismissing the appeal of the Revenue.

4.

Per contra Shri Amit Pratap Singh representing the Department submitted that order of Assessing Officer in estimating GP at 12.5% is fair and reasonable. The ld. Departmental Representative prayed for reversing the findings of CIT(A) and restoring the addition made in assessment order.

5.

Both sides heard. Orders of authorities below perused. The solitary issue in this appeal by the Revenue is against estimation of GP on bogus purchases at reduced rate. The Assessing Officer estimated GP @ 12.5% on the alleged bogus purchases, the first appellate authority restricted the addition to 8% of the bogus purchases. After examining the facts, we find the order of CIT(A) reasonable. We see no infirmity in the impugned order, hence, the same is upheld.

6.

In the result, appeal of the revenue is dismissed being devoid of any merit.

Order pronounced in the open court on Friday the 14th day of February, 2020.

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