ITO 26(2)(4), MUMBAI vs. M/S POPULAR DRUM SUPLIEERS, MUMBAI

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ITA 596/MUM/2019Status: DisposedITAT Mumbai30 January 2020AY 2011-122 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 decision to restrict the addition on account of bogus purchases to 12.5%. This was done after considering the assessee's declared Gross Profit of 7.98% and following judicial pronouncements.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted an addition on account of bogus purchases to 12.5%. The assessee, engaged in the business of reselling drums and scrap, had its assessment reopened by the AO based on information about bogus purchase bills.

What were the issues?

Whether the addition on account of bogus purchases should be restricted, and if so, to what extent, considering the assessee's declared profit margin.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, SMC Bench, Mumbai

Before: Shri R.C. Sharma

For Appellant: Shri Anoop Hiwase
Hearing: 29.01.2020Pronounced: 30.01.2020

This appeal filed by Revenue is directed against the order of the CIT(A)-38, Mumbai dated 30.05.2014 and it relates to A.Y. 2006-07, in the matter of order passed by the AO under Sections 143(3)/147 of Income Tax Act, 1961 (hereinafter "the Act").

2.

In this appeal the Revenue is aggrieved by the order of the CIT(A) restricting the addition on account of bogus purchases to the extent of 12.5%.

3.

I have gone through the orders of the authorities below and found that the assessee is engaged in the business of resale of all types of drums and scrap. The AO got information regarding assessee taking bogus purchase bills. The AO reopened the assessment and thereafter made addition of 25% on alleged bogus purchases. By the impugned order the CIT(A) restricted the addition to the extent of 12.5% after considering that the assessee has already declared Gross Profit at 7.98%. Thereafter he applied the judicial pronouncement as laid down by the Hon'ble Gujarat

Popular Drum Suppliers High Court in the case of CIT vs. Smit P. Sheth 356 ITR 451. The detailed findings recorded by the CIT(A) at paras 7.4.1 to 7.4.7 has not been controverted by the learned D.R. Accordingly I do not find any reason to interfere in the findings recorded by the CIT(A) for restricting the addition on account of bogus purchases to the extent of `12.5%.

4.

In the result, the appeal filed by the Revenue is dismissed.

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