SAMARTHMAL SANGHVI,MUMBAI vs. ITO 19(3)(2), MUMBAI

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ITA 6574/MUM/2018Status: DisposedITAT Mumbai11 February 2020AY 2009-103 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found the addition made by the authorities below, based on an estimation of 12.5% GP on bogus purchases, to be just and reasonable. Therefore, the impugned order was upheld.

What were the facts?

The Assessing Officer reopened the assessment based on information about bogus purchase bills obtained by the assessee from hawala operators. The AO estimated a 12.5% GP on these alleged bogus purchases and made an addition. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the estimation of Gross Profit at 12.5% on alleged bogus purchases is justified and warrants no interference.

Which sections of the Income-tax Act were involved?

Section 147

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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

Before: SHRI R.C.SHARMA & SHRI VIKAS AWASTHY

For Appellant: Shri Gautam Salecha
For Respondent: Shri Kumar Padmapani Bora
Hearing: 09/12/2019Pronounced: 11/02/2020

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals) – 7, Mumbai ( in short ‘the CIT(A)’ ) dated 09/10/2018.

2.

Brief facts of the case as emanating from records are: On the basis of information received from DGIT (Inv), Mumbai, the Assessing Officer reopened the assessment under section 147 of the Income Tax Act, 1961 (in short ‘the Act’)on the ground that the assessee has indulged in obtaining bogus purchase bills aggregating to Rs.72,36,259/- from various hawala operators. The Assessing Officer estimated GP @12.5% on the alleged bogus purchases and thus, made addition of Rs.9,04,532/-. Aggrieved against reopening of assessment and the addition made, the assessee filed appeal before CIT(A). The CIT(A) dismissed the appeal of assessee in toto. Hence, the present appeal by the assessee.

3.

Shri Gautam Salecha appearing on behalf of the assessee submitted that the CIT(A) has erred in confirming addition to the extent of GP estimated at 12.5% on alleged bogus purchases. In fact the disallowance should have been restricted to GP estimated i.e. 12.5% minus GP already offered.

4.

On the other hand, Shri Kumar Padmapani Bora, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. The ld. Departmental Representative submitted that the Assessing Officer and CIT(A) made fair estimation of 12.5% of GP on bogus purchases.

5.

We have heard the submissions made by rival sides and have perused the orders of authorities below. The Assessing Officer in reassessment proceedings has held that the assessee has obtained bogus purchase bills to the extent of Rs.72,36,259/- from various parties. The Assessing Officer following the decision of Hon’ble Gujarat High Court in the case of CIT vs. Simit P. Sheth, reported as 356 ITR 451 made disallowance of Rs.12.5% of such bogus purchase i.e. Rs.9,04,532/-. We find that that the addition made by authorities below is just and reasonable and hence, warrants no interference. The impugned order is upheld and the appeal of the assessee is dismissed.

6.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open court on Tuesday , the 11th day of February, 2020.

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