ITO-28(1)(5), MUMBAI vs. M/S GANESH ENGENEERING WORKSHOP, MUMBAI

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ITA 600/MUM/2019Status: DisposedITAT Mumbai30 January 2020AY 2009-102 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 disallowance on bogus purchases to 12.5%. This was based on the CIT(A)'s consideration of the assessee's declared Gross Profit and the profit element in the alleged bogus purchases, aligning with judicial precedents.

What were the facts?

The Revenue appealed against an order of the CIT(A) concerning the assessment year 2009-10. The AO had made a 100% addition for alleged bogus purchases, which the CIT(A) restricted to 12.5%.

What were the issues?

Whether the disallowance for bogus purchases should be 100% or a reduced percentage based on profit margins. The applicability of judicial pronouncements in restricting additions for bogus purchases.

Which sections of the Income-tax Act were involved?

Section 143(3),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, SMC Bench, Mumbai

Before: Shri R.C. Sharma

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

This is an appeal filed by the Revenue against the order of the CIT(A) for A.Y. 2009-10, the matter of order passed under Sections 143(3)/147 of the Income Tax Act, 1961 (hereinafter "the Act").

2.

In this appeal the Revenue is aggrieved for restricting the disallowance 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 a trader. On getting information regarding assessee taking bogus purchase bills, the AO reopened assessment and thereafter made 100% addition in respect of such alleged bogus purchases. By the impugned order the CIT(A) restricted the addition to the extent of 12.5% after considering the Gross Profit declared by the assessee and the profit element embedded in the alleged bogus purchases. The CIT(A) also applied the judicial pronouncement laid down by the Hon'ble Gujarat High Court in the case of CIT vs. Smit P. Sheth 356 ITR 451. Detailed finding recorded

M/s. Ganesh Engineering Workshop by the CIT(A) at para 6.1 has not been controverted. Accordingly I do not find any reason to interfere in the order of the CIT(A) restricting the addition to the extent of 12.5% of alleged bogus purchases.

4.

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

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