PANKAJ K. SHAH,MUMBAI vs. ITO 19 (2)(5), MUMBAI
What did the Tribunal hold?
The Tribunal held that while the assessee had primary purchase documents and made payments through banking channels, the failure to produce suppliers to confirm transactions meant the onus was not discharged. However, considering the low-margin nature of the business and the existing gross profit, the addition was reduced on an estimated basis.
What were the facts?
The assessee, engaged in metal trading, was assessed for AY 2010-11 with an addition for alleged bogus purchases. The assessee provided purchase documents and cheque payments but failed to substantiate material delivery.
What were the issues?
Whether the addition on account of alleged bogus purchases was justified, and if so, what should be the quantum of estimation.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: HON’BLE SHRI C.N. PRASAD, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
1 Pankaj K. Shah Assessment Year :2010-11 आयकर अपीलीय अिधकरण “एक-सद" मामला ” "ायपीठ मुंबई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI माननीय "ी सी. एन. "साद,"ाियक सद" एवं माननीय "ी मनोज कुमार अ"वाल ,लेखा सद" के सम"। BEFORE HON’BLE SHRI C.N. PRASAD, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा"रण वष" / Assessment Year: 2010-11) Pankaj K. Shah Income Tax Officer-19(2)(5) बनाम/ Room No.210, 2nd Floor Shop No.5 Hararwala Building Islampura Street Matru Mandir Vs. Mumbai-400 004. Mumbai-400 007. "थायीलेखासं./जीआइआरसं./PAN/GIR No. AXFPS-9623-K (अपीलाथ"/Appellant) (""थ" / Respondent) : Assessee by : Shri Neelkanth Khandelwal-Ld.AR Revenue by : Shri R. Bhoopathi – Ld. DR सुनवाई की तारीख/ : 04/12/2019 Date of Hearing घोषणा की तारीख / : 04/12/2019 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-30, Mumbai, [in short referred to as ‘CIT(A)’] Appeal No. CIT(A)-30/19(2)(5)/306/2016-17 dated 05/10/2018. It is evident from grounds of appeal that the sole issue that arises for our consideration is addition on account of alleged bogus purchases.
2 Pankaj K. Shah Assessment Year :2010-11 2. The learned AR has restricted the arguments to submit that a fair estimation may be made on account of alleged bogus purchases. Reliance has been placed on the decision of this Tribunal rendered in Shri Chetan Shashikant Shah V/s ITO (ITA No. 4294/Mum/2018 dated 12/06/2019). The Ld. DR submitted that estimation made was quite reasonable. We have carefully considered the rival submissions, perused relevant material on record and deliberated on various judicial pronouncements being relied upon by both the representatives. 3.1 Facts on record would reveal that the assessee being resident individual stated to be engaged in trading of metals, was assessed for year under consideration u/s. 143(3) r.w.s. 147 on 01/03/2016 wherein the income of the assessee was determined at Rs.34.19 Lacs, after sole addition of alleged bogus purchases for Rs.29.21 Lacs as against returned income of Rs.4.98 Lacs e-filed by the assessee on 24/09/2010 which was processed u/s 143(1). 3.2 Pursuant to receipt of certain information from DGIT (investigation), Mumbai / Sales Tax Department, it was alleged that the assessee obtained bogus purchases bills amounting to Rs.233.70 Lacs from 15 entities, the details of which have already been extracted at para-2 of the quantum assessment order. Accordingly, the case was reopened as per due process of law vide issuance of notice u/s 148 on 16/09/2014 which was followed by statutory notices u/s 143(2) & 142(1) wherein the assessee was directed to substantiate the purchase transactions. 3.3 Although the assessee defended the purchases by submitting ledger extracts and details of cheques payment but failed to substantiate the delivery of material. Consequently, Ld. AO estimated addition @
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