ITO 28 (1)(2), MUMBAI vs. SHRI. BECHAR HARJI RAVARIA, MUMBAI

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ITA 601/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 addition to 12.5%, considering that sales cannot exist without corresponding purchases and relying on judicial pronouncements.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted the disallowance on bogus purchases to 12.5%. The AO had initially added 100% of alleged bogus purchases to the assessee's income.

What were the issues?

The primary issue was the extent of disallowance on account of alleged bogus purchases. The Tribunal had to decide whether to uphold the AO's 100% addition or the CIT(A)'s 12.5% restriction.

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. SharmaShri Bechar Harji Ravaria

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)- 26, Mumbai, in the matter of order passed by the AO under Section 143(3)/147 of the Income Tax Act, 1961 (hereinafter "the Act").

2.

The only grievance of the Revenue is against the order of the CIT(A) 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 selling copier machine, toner, printer and lamination material. On getting information that assessee is engaged in taking bogus bills for purchases, the AO reopened assessment and thereafter added 100% of alleged bogus purchases in assessee’s income. By the impugned order the CIT(A) restricted the addition to the extent of 12.5%, after controverting the findings recorded by the AO. The CIT(A) observed that there cannot be sales without corresponding purchases. Thereafter, considering the judicial pronouncement in the case of CIT vs. Smit P.

Shri Bechar Harji Ravaria Sheth 356 ITR 451 (Guj) and applying the principle laid down therein to the facts of the present case, restricted the addition to the extent of 12.5%. Nothing was placed before me by the learned D.R. so as to persuade me to deviate from the findings recorded by the CIT(A) in paras 6.1 and 6.2 of the appellate order.

4.

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

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