INCOME TAX OFFICER 19(2)(5), MUMBAI vs. PURARAM G. MODI, MUMBAI

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ITA 6939/MUM/2018Status: DisposedITAT Mumbai10 January 2020AY 2009-105 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 to 12.5%. While the assessee could not produce the suppliers, the AO failed to link the purchases with corresponding sales, which were not doubted.

What were the facts?

The Revenue appealed against the CIT(A)'s decision to sustain a 12.5% disallowance on account of bogus purchases. The assessee was engaged in trading metals, and information was received from the sales tax department about bogus purchases, leading to the reopening of assessment.

What were the issues?

Whether the disallowance on account of bogus purchases should be sustained, and if so, to what extent, considering the AO's failure to link purchases with sales.

Which sections of the Income-tax Act were involved?

None explicitly mentioned in the provided text

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, “C” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHIR S RIFAUR RAHMAN

आदेश / O R D E R PER SHRI S RIFAUR RAHMAN- AM:

1.

This is an appeal preferred by the revenue wherein the revenue is aggrieved that the Ld. CIT(A) has erred in sustaining 12.5% disallowance on account of bogus purchases for the A.Y 2009-10.

. Shri Puraram G. Modi., Mumbai. - 2 - 2. Brief facts of the case are that the assessee is an individual engaged in trading of ferrous and non-ferrous metals under the proprietary concern by name M/s. Enercon Pipes & Fittings industries. Information was received from the sales tax Department that assessee has indulged in bogus purchases. The assessment was accordingly reopened.

3. The AO in this case has made 25% addition on account of bogus purchase resulting in following disallowance:- A.Y 2009-10 : Rs. 50,01,852/-

4.

Upon assessee’s appeals Ld. CIT(A) restricted the same to 12.5%.

5.

Against the above order the revenue is in appeal before us. We have heard both the counsel and perused the record.

6.

We have heard both the counsels and perused the records. Upon careful consideration we find that assessee has provided the documentary evidence for . Shri Puraram G. Modi., Mumbai. - 3 - the purchase. But, the assessee could not bring the suppliers before the tax authorities and were notices served by the A.O were returned un-served. On careful reading of the order of CIT(A) it is clear that A.O failed to link the purchases with corresponding sales. Since, the revenue accepted the sales, there has to be corresponding purchases to meet the sales. The tax authorities has early brought on record that assessee has recorded the purchases from non- existing suppliers, however sales were not doubted. Therefore A.O disallowed 25% of the bogus purchases, where as Ld. CIT(A) has restricted to 12.5% by relying on the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Simit P. Sneth, 356 ITR 451 (supra), the Hon’ble Gujarat High Court estimated the profit embedded in the purchases and it is restricted to 12.5% and that meets the end of justice. Therefore, we are inclined to accept the findings of the Ld. CIT(A). Accordingly, the grounds raised by the revenue are dismissed.

. Shri Puraram G. Modi., Mumbai.

- 4 - 7. In the result, appeal of the revenue is dismissed. This Order pronounced in Open Court on 10/01/2020 Sd/- Sd/- (SAKTIJIT DEY) ( S. RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 10/01/2020 KRK, PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / The CIT(A) 4. आयकर आयु�त(अपील) / Concerned CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Mumbai 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Mumbai

. Shri Puraram G. Modi., Mumbai.

Initial Date 1. Draft dictated on 26.11.2019 PS 2. Draft placed before author 27.11.2019 PS

3.

Draft proposed & placed 27.11.2019 PS before the second member 4. Draft discussed/approved by 27.11.2019 PS Second Member. 5. Approved Draft comes to the 27.11.2019 PS Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed

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