ITO WARD- 32 (1)(4), MUMBAI vs. DEVENDRA P.SHETH, MUMBAI

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ITA 6504/MUM/2018Status: DisposedITAT Mumbai15 January 2020AY 2010-113 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 reduction made by the CIT(A), restricting the addition for bogus purchases to 8% of the value. The Revenue's appeal was dismissed as the assessee did not appeal the CIT(A)'s order.

What were the facts?

The assessee, engaged in iron and steel trading, made purchases from parties listed as hawala dealers. The Assessing Officer (AO) added 12.5% of these purchases to income, assuming a profit element. The Commissioner (Appeals) reduced this addition to 8%.

What were the issues?

Whether the CIT(A) was justified in reducing the disallowance on account of bogus purchases from 12.5% to 8%.

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, “D”, BENCH

Before: SHRI SAKTIJIT DEY, JM & SHRI M.BALAGANESH, AM Shri Devendra P Sheth

For Respondent: Shri Kamal Mangal
Hearing: 13/01/2020Pronounced: 15/01/2020

आदेश / O R D E R

PER M. BALAGANESH (A.M):

1.

This appeal in A.Y.2010-11 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-45, Mumbai in appeal No.CIT(A)-45/ITO-33(1)(4)/ITA-324/2015-16 dated 25/07/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 17/02/2016 by the ld. Income Tax Officer 33(1)(4), Mumbai (hereinafter referred to as ld. AO).

2.

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the disallowance made on account of bogus purchases to 8% of value of purchases as against 12.5% added by the ld. AO in the assessment.

3.

None appeared on behalf of the assessee. We have heard rival submissions and perused the materials available on record. We find that assessee is an individual engaged in the business of trading in Iron and Steel. It is not in dispute that assessee had made purchases of Rs.60,55,355/- from certain parties whose names apparently appeared in the list of hawala dealers prepared by the Maharashtra Sales Tax Department, which information was passed on to Investigation Wing of Income Tax Department which ultimately triggered the reopening of assessment. It is not in dispute that the goods so purchased from the alleged suppliers have been sold by the assessee. Based on this, the ld. AO categorically gave a finding that assessee could have made purchases from grey market and accordingly, brought to tax the profit element embedded in the value of such purchases at 12.5% and completed the assessment. The ld. CIT(A) considering the industry in which the assessee is involved i.e. trading in Iron and Steel, reduced the addition made towards profit element to 8% from 12.5%.

3.1. The ld. DR stated that assessee had not preferred any appeal before this Tribunal against the order of the ld. CIT(A). Accordingly, we deem it fit and appropriate to hold that the profit element in the instant case should be restricted to 8% which had been done by the ld. CIT(A). The grounds raised by the revenue are dismissed.

4.

In the result, appeal of the revenue is dismissed.

Order pronounced in the open court on this 15/01/2020

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