ITO WARD 25 (2)(5), MUMBAI vs. KETAN GIRISH DOSHI, MUMBAI

Revenue by Shri Kumar Padmapani Bora (Sr.DR) Assessee by None Date of Hearing 12/12/2019 Date of Pronouncement 12/12/2019 आदेश / O R D E R PER: R.C. SHARMA, A.M. This is the appeal filed by the revenue against the order of the ld. CIT(A)-53, Mumbai dated 12/09/2018 for the A.Y. 2010-11 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).

ITO Vs Shri Ketan Girish Doshi

Precise observation of the ld. CIT(A) was as under:

“5.6 Even if materials have been purchases, they are not purchased from these parties and may be in cash from undisclosed parties. By purchasing from grey market, the appellant would have benefited by the savings of taxes. The appellant was asked why disallowance should not be computed @ 12.5%. No submission was filed. Therefore, in fact and circumstances of the case, in this particular case, it is considered most appropriate to adopt 12.5% profit which can take care of the rotation of capital utilized for such transaction. Hence, in the light of finding of the Hon’ble Gujarat High Court in the case of CIT vs Simit P Sheth, 12.5% profit is found to be appropriate for ascertainment of taxable income related to such transaction. It is noted that while 7 parties from whom purchases of Rs. 14,48,613/- are mentioned in the information received which is the basis of reopening of assessment, the assessing officer has in para 5 mentioned impugned purchases at Rs. 3,15,28,603/- and finally in Para 9 made disallowance on purchases of Rs. 1,48,14,431/-. Nothing is mentioned in the assessment order as to how the figures have changed nor there is mention of any other purchase party. Thus, the contention of appellant is correct that the assessing officer has taken an erroneous figure in computing the disallowance. Hence the disallowance is computed based on impugned purchases of Rs. 14,48,613/-. The disallowance is therefore upheld at Rs. 1,81,080/-. The appellant gets a relief of Rs. 2,63,353/-. Thus, the Grounds of Appeal No. 2 and 3 are partly allowed.”

ITO Vs Shri Ketan Girish Doshi 5. It is clear from the order of the ld. CIT(A) that after considering all the facts and circumstances and after applying the judicial pronouncements have very reasonably restricted the addition to the extent of 12.5% after recording a detailed finding on para 5.6 of his appellate order. Nothing was placed on record by the ld. DR so as to persuade us to deviate from the finding and conclusion of the ld. CIT(A).

Accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) for reducing the addition on account of bogus purchases to Rs. 1,81,080/- in place of addition of Rs. 4,44,433/- so made by the A.O.