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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: HON’BLE SHRI MAHAVIR SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Bench: -
Aforesaid appeal by revenue for Assessment Year [AY] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-58,
Shri Pitambarlal Dhanania Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-58/ Mumbai/10458/2017-18 dated 18/06/2018 on following grounds of appeal: -
1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in reducing the disallowance at 6.25% as against 12.5% adopted by the A.O. in respect of bogus accommodation entries/bogus purchases.”
None has appeared for assessee and therefore, the matter is proceeded with ex-parte qua the assessee. 2.1 Facts on record would reveal that the assessee being resident individual engaged in trading of pipe fittings under proprietorship concern namely M/s Amit Tube Corp, was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 14/11/2014 wherein the income of the assessee was determined at Rs.16.37 Lacs after addition of alleged bogus purchases for Rs.9.39 Lacs as against returned income of Rs.6.98 Lacs filed by the assessee on 26/09/2009 which was processed u/s.143(1). 2.2 Pursuant to receipt of certain information from investigation wing / Sales tax Department, Govt. of Maharashtra, it transpired that the assessee stood beneficiary of alleged bogus purchases to the tune of Rs.75.14 Lacs from 6 entities, the details of which have already been extracted at para-2 of the quantum assessment order. Accordingly, as per due process of law, re-assessment proceedings were initiated against the assessee u/s 147 by issuance of notice u/s 148 on 29/01/2014 followed by statutory notices u/s 143(2) & 142(1), wherein the assessee was directed to substantiate the purchase transactions.
Shri Pitambarlal Dhanania 2.3 The assessee defended the purchases by submitting ledger extracts as supported by the fact that the payments were through banking channels. However, relying upon investigations carried out by the Sales Tax Department and finding that the assessee failed to prove the delivery of material, learned AO estimated the additions against stated purchases @12.5% and added the same to the income of the assessee. The learned CIT(A), considering the fact that the gross profit rate declared by the assessee was 12.18%, restricted the additions to 6.25% of alleged bogus purchases. Aggrieved, the revenue is in further appeal before us. It appears that the assessee has not appealed any further.
We have heard and considered the arguments made by Ld. DR.
We are of the considered opinion there could be no sale without actual purchase of material keeping in view the assessee’s nature of business. The assessee was in possession of primary purchase documents and the payments to the supplier was through banking channels. The sales turnover reflected by the assessee has not been disturbed / disputed by Ld. AO. However, at the same time, the assessee miserably failed to substantiate the delivery of material. Under such circumstances, the additions which could be sustained, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done considering the fact that the assessee
Shri Pitambarlal Dhanania had already declared a Gross Profit Rate of 12.18%. Therefore, finding no infirmity in the estimation made by Ld. CIT(A), we dismiss the appeal. 5. In the result, the appeal stands dismissed. Order pronounced in the open court on 12th September, 2019. Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member