ITO, WARD- 1(1), THANE vs. FIVE NINE FOOTWEAR, MUMBAI

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ITA 6742/MUM/2018Status: DisposedITAT Mumbai11 December 2019AY 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 held that since the assessee's sales were not disputed, only the profit element on the alleged bogus purchases could be added, not the entire amount. The CIT(A)'s order was found to be reasonable.

What were the facts?

The Revenue alleged that the assessee made bogus purchases from a hawala dealer. The Assessing Officer made additions for these purchases, which were then restricted by the CIT(A).

What were the issues?

Whether the entire amount of alleged bogus purchases can be added to the assessee's income, or only the profit element thereof, when the sales are not disputed.

Which sections of the Income-tax Act were involved?

Section 69,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI R.C.SHARMA & SHRI VIKAS AWASTHY

For Appellant: Shri Kumar Padmapani Bora
For Respondent: Shri Vishwas V. Mehendale
Hearing: 11/12/2019Pronounced: 11/12/2019

These two appeals by the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-1 (in short ‘the CIT(A)’), Thane dated 27/09/2018 common for assessment years 2010-11 and 2011-12. Since the issue raised in both the appeals is identical and is arising from same set of facts, therefore, these appeals are taken up together for adjudication and are disposed of vide this common order.

(A.Y. 2010-11) ITA NO.6743/MUM/2018(A.Y. 2011-12)

2.

Shri Kumar Padmapani Bora representing the Revenue submitted that the assessee is engaged in the business of manufacturing and trading of foot wears. Information was received from the Sale Tax Department, Government of Maharashtra that assessee is beneficiary of accommodation entries provided by hawala dealers. Assessment for assessment years 2010-11 and 2011-12 were reopened. The Assessing Officer observed that assessee has made bogus purchases from M/s.Shakti Trading Co. to the tune of Rs.5,19,985/- in assessment year 2010-11 and Rs.77,022/- in assessment year 2011-12. Consequently, the Assessing Officer made addition of the aforesaid amounts in the respective assessment years. In the First Appellate proceedings the CIT(A) restricted the addition to Rs.4,89,235/- in assessment year 2010-11 and Rs.22,886/- in assessment year 2011-12. The ld.Departmental Representative contended that the CIT(A) has failed to take note of the fact that the assessee has failed to substantiate genuineness of the purchases made from M/s. Shakti Trading Co.. The ld.Departmental Representative prayed for reversing the findings of CIT(A) and restoring the additions made by Assessing Officer.

3.

On the other hand, Shri Vishwas V. Mehendale appearing on behalf of the assessee vehemently defended the impugned order and prayed for confirming the same. The ld. Authorized representative of the assessee submitted that order of CIT(A) is reasonable. The sales made by the assessee have not been disputed by the Department, therefore, the entire alleged bogus purchases cannot be added back.

4.

Both sides heard and orders of authorities below were perused. It is an undisputed fact that sales made by the assessee have not been disputed by the Revenue. Thus, the entire alleged bogus purchases cannot be added. It is the suppressed profit element on bogus purchases that can only be added as (A.Y. 2010-11) ITA NO.6743/MUM/2018(A.Y. 2011-12)

income of the assessee. After examining the impugned order we find that the same is reasonable and justified, hence, no interference is warranted.

5.

In the result, impugned order is upheld and appeals of the Revenue for assessment years 2010-11 and 2011-12 are dismissed being devoid of any merit.

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