ITO 33(1)(5), MUMBAI vs. SMT.HEENA AJAY PAREKH, MUMBAI

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ITA 6471/MUM/2018Status: DisposedITAT Mumbai06 December 2019AY 2009-103 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 order of the CIT(A) which confirmed the addition at 5.3% of the alleged bogus purchases, considering the gross profit rate declared by the assessee. The Revenue's appeal was dismissed.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 18,35,824/- on account of alleged bogus purchases by the assessee, who is in the business of trading iron and steel. The CIT(A) upheld the addition to the extent of 5.3% of the bogus purchases.

What were the issues?

Whether the addition made by the AO on account of bogus purchases was correctly reduced by the CIT(A) based on the assessee's declared gross profit rate.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”, BENCH

Before: SHRI R.C.SHARMA

For Appellant: Shri Ajay Parikh
For Respondent: Shri Kumar Padmapani Bora (Sr.DR), Shri Ajay Parikh
Hearing: 04/12/2019Pronounced: 06/12/2019

आदेश / O R D E R PER: R.C. SHARMA, A.M. This appeal by the revenue is directed against the order dated 27/07/2018 of ld. CIT(A)-45, Mumbai for the A.Y. 2009-10 in the matter of order passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).

2.

Rival contentions have been heard and record perused. In this appeal, the revenue is aggrieved by the action of the ld. CIT(A) for upholding the addition on account of purchases to the extent of 5.3%.

1.

The facts in brief are that the assessee is engaged in the business of 2 ÏTA No. 6471/Mum/2018 Heena A Parekh Vs ITO trading of iron and steel. The A.O. got information regarding assessee being involved in purchase of goods without actual delivery of goods, accordingly, the assessment was reopened by issuing notice U/s 148 of the Act and thereafter the A.O. made addition of Rs. 18,35,824/- in respect of bogus purchases which is equivalent to 12.5% of alleged bogus purchases. By the impugned order, the ld. CIT(A) confirmed the addition to the extent of 5.3% after having the following observation:

“5.4 In the present case, the A.O. has noted in the assessment order in para 3 that the assessee has declared a gross profit of 7.2% in the P&L account and added 12.5% of the bogus purchases to the income declared. Respectfully following the order of the Hon’ble ITAT, Mumbai in the case of M/s Royal Enterprises, the assessing officer is directed to apply the differential percentage of 5.3% (12.5%-7.2%) on the bogus purchases of Rs. 1,46,86,682/-. In other words Rs. 7,78,394/- is confirmed out of the addition of “Rs. 18,35,824/-. Assessee gets part relief. The grounds of appeals are partly allowed.”

3. Against the above order of the ld. CIT(A), the revenue is in further appeal before the ITAT.

4. I have gone through the documents placed on record and found that the addition made by the A.O. was directed to be upheld at 5.3% by the ld. CIT(A) after considering the GP rate declared by the assessee at 7.2%. I found that the ld. CIT(A) has considered various judicial pronouncements and accordingly whatever G.P. has been declared by the assessee was directed to be reduced from the addition so made by 3 ÏTA No. 6471/Mum/2018 Heena A Parekh Vs ITO the A.O. Nothing was brought to our notice by the ld DR so as to persuade me to deviate from the finding of the ld. CIT(A) for upholding the addition of Rs. 5.3% of alleged bogus purchases. Accordingly, I uphold the order of the ld. CIT(A).

5.

In the result, appeal of the revenue is dismissed.

Order pronounced in the open court on 6th December, 2019.

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