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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI S. RIFAUR RAHMAN, AM & SHRI RAM LAL NEGI, JM
Anupam Stationary Plaza, ACIT – 31(1), 101/102, Accord Room No. 111, C-13, 1st बिधम/ Commercial Complex, floor, BKC, Bandra (E), Opp-Bus Depot, Near Vs. Mumbai – 400 051 Railway Station, Goregaon (E), Mumbai-400 063 स्थायीलेखासं./जीआइआरसं./PAN No. AAAFA5717F (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant Shri C. S. Sharma, DR : by प्रत्यथीकीओरसे/Respondentby : Shri Jas Sanghavi, AR सुनवाईकीतारीख/ : 24.09.2019 Date of Hearing घोषणाकीतारीख / : 30.09.2019 Date of Pronouncement आदेश / O R D E R
Per S. Rifaur Rahman, Accountant Member:
The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) – 42 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 28.06.18 for Assessment Year (in short AY) 2009-10.
Anupam Stationary Plaza 2. The brief facts of the case are that assessee is a firm, engaged in the business of retail of all kinds of stationery items, office utility products, gifts and novelty articles, electronic items, computer and electronic accessories, etc. Assessee has filed its return of income for the year under consideration on 31/08/2009 declaring total income of Rs. 11,72,191/-. The return was processed u/s 143(1) of the Act. Subsequently, the case was reopened by issue of notice u/s 148 of the Act, on the basis of the information received from the DGIT (Investigation), Mumbai [in short "the DGIT (Inv.)"] that the assessee is a beneficiary of the accommodation entries provided by some of the MVAT [Maharashtra Value Added Tax] dealers, who have indulged in issuing bogus sale / purchase bills without giving actual delivery of goods. The MVAT dealers were earlier investigated by the Sales Tax Authority i.e. the Department of Sales Tax, Govt. of Maharashtra and this information was kept on the public domain also by the Department of Sales Tax. The details of such transactions are given in the assessment order as under: Sr. No. Name of the concern Amount (in Rs.) 1 Mihir Enterprises 1,80,692 2 Sniper InfoTech 6,01,358 Anupam Stationary Plaza Total 7,82,050
Thereafter, the AO reassessed the income of the assessee for AY 2009-10 at Rs. 20,42,000/- u/s143 (3) r.w.s. 147 of the Act vide the order dated 21/01/2015, wherein he held that the purchases made from the aforesaid parties were not genuine transactions, and hence made an addition of Rs. 7,82,050/- to the total income of the assessee, besides an addition of Rs. 20,825/- on account of disallowance Bad Debts written off as per provision to sec. 36(1)(vii) and of Rs. 67,338/-, on account of adhoc disallowance @ 20% of Misc. Expenses
Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A), after considering the submission of the assessee, had reduced the disallowance of 20% to 12.5% of the bogus purchases.
Aggrieved with the above order, revenue has preferred the appeal before us.
Anupam Stationary Plaza 6. Considering the rival contentions and material placed on record, we notice that Ld. CIT(A) has rightly restricted the disallowance to the extent of 12.5% and we are inclined to accept the findings of Ld. CIT(A) and further we come across the decision of the Coordinate Bench of this Tribunal in the case of Sunil B. Vorani (HUF) vrs ITO (ITA No. 1337/Mum/2017), wherein it was held as under:-
Be that as it may, after evaluating the entire facts, grounds raised by the assessee, perusal of the records and judgments relied by the parties, we find that Ld. CIT(A) has upheld the findings of AO in estimating the profit @ 25% of the total sales. In our considered view, considering the facts of the present case and while relying upon the following judgments:- 1) ClT vs Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj). (HC),
2. CIT v Simit D, Sheth (2013) 356 ITR 451 (Guj)-(HC) and 3. CIT vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (1C) and taking into consideration the facts of the present case, and also considering the order passed by the Coordinate Bench of SMC in assessee’s own case and to account for the profit element embedded in these purchase transactions to factorize profit earned by assessee Anupam Stationary Plaza against purchase of material in the grey market and undue benefit of VAT against bogus purchases, we are of the considered view that upholding the additions @ 25% of the sales by Ld. CIT(A) is unreasonable. The ends of justice would be met in case the additions are restricted @ 12.5 % of purchase amount of Rs. 2,26,39,391/-. Consequently orders passed by Ld. CIT(A) are set aside and hence we direct the AO to restrict the additions to the extent of 12.5% of the bogus purchases of Rs. 2,26,39,391/-. made from the parties. Accordingly these grounds raised by the assessee are partly allowed.