ITO 17(2)(5), MUMBAI vs. M/S N Y J V INNOVATIVES, MUMBAI

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ITA 606/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%. The CIT(A) had reasonably considered the assessee's gross profit rate and the lack of action by the AO against alleged accommodation entry providers.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted an addition for bogus purchases to 12.5%. The Assessing Officer had initially made an addition of 15.6% on alleged bogus purchases, considering the profit element.

What were the issues?

Whether the CIT(A) was justified in restricting the addition for bogus purchases to 12.5% when the AO had made an addition of 15.6%.

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, 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)- 58, Mumbai for A.Y. 2009-10, in the matter of order passed under Sections 143(3)/147 of the Income Tax Act, 1961 (hereinafter "the Act").

2.

The grievance of the Revenue relates to restriction of addition in respect of bogus purchases to the extent of 12.5%.

3.

I have gone through the orders of the authorities below and found that the AO has reopened the assessment by observing that the assessee has taken purchase bills without delivery of goods which amounts to bogus purchases. After considering the profit element, the AO made addition to the extent of 15.6% on alleged bogus purchases. By the impugned order the CIT(A) restricted the addition to the extent of 12.5% after observing as under: -

“10. All aspects in record is duly considered. The gross profit rate of assessee is 28.49%. The disputed transaction is reselling of sanitary ware and fittings. The Assessing Officer disallowed 25.6% (2 year M/s. NYJV Innovatives average) of the alleged amount of accommodation entries. On facts and circumstances of the case, and considering the strength of evidence brought to record (I note that Assessing Officer has not issued any notice to the alleged accommodation entry providers) decision is to taken in a balanced manner. I, after considering all aspects, hold that disallowance be kept at 12.5% of transactions covered by accommodation entries. The Assessing Officer is directed to modify assessment accordingly.”

4.

It is clear that after considering the findings recorded by the AO and the documents submitted by the assessee, the CIT(A) has very reasonably restricted the addition to the extent of 12.5%. Nothing was brought before me by the learned D.R. so as to controvert the detailed finding recorded by the CIT(A) at para 6 to 10 of the appellate order.

5.

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

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