ACIT -CC -4(4) CR-4, MUMBAI vs. NIRU IMPEX, MUMBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal upheld the order of the CIT(A) because it followed a coordinate bench's decision in the assessee's own case for earlier assessment years. This decision allowed for assessing profits at 10% on bogus purchases.
What were the facts?
The Assessing Officer (AO) added the entire purchases made from certain parties as bogus. The CIT(A) restricted this disallowance to 10% of the bogus purchases. The Revenue appealed against this restriction.
What were the issues?
Whether the CIT(A) was justified in restricting the disallowance of bogus purchases to 10% instead of 100% as made by the AO.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The above titled two appeals have been preferred by the Revenue against the order dated 28.03.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2008-09 & 2009-10.
The only issue raised by the Revenue is against the order of Ld. CIT(A) restricting the disallowance at 10% of the bogus purchases instead of 100% disallowance made by the AO.
The facts in brief are that the assessment was framed under section 143(3) of the Act vide order dated 30.12.2010
2 & 3850/M/2018 M/s. Niru Impex assessing the total income at Rs.7,29,70,710/- as against the returned income of Rs.7,26,17,710/-. Thereafter, the case of the assessee was reopened under section 147 of the Act by issuing notice under section 148 of the Act on 30.03.2015. The reasons recorded for reopening assessment was that the assessee was one of the beneficiary of the accommodation entries racket run and operated by Shri Rajendra Jain, Shri Sanjay Choudhary Dharmi Chand Jain Group. Accordingly, the AO issued questionnaire on the assessee calling upon to furnish the details of purchases including the purchases made from Nazar Impex Pvt. Ltd. and Manyank Impex from whom the purchases to the tune of Rs.2,71,74,576/- were made during the year. The assessee filed the necessary details in order to prove the genuineness. However, the reply of the assessee did not find favour with the AO and the entire purchases were added to the income of the assessee as being bogus in framing assessment under section 143(3) read with section 147 of the Act dated 30.03.2016.
In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition equal to 10% of the bogus purchases by following the co-ordinate bench of the Tribunal in assessee’s own case in A.Y. 2006-07 & 2007- 08 wherein the co-ordinate bench of the Tribunal has directed the AO to compute the income by applying 10% GP on the bogus purchases over and above the normal profits.
After hearing both the parties and perusing the material on record, we observe that in this case the Ld. CIT(A) has passed the order after following the co-ordinate bench of the Tribunal
3 & 3850/M/2018 M/s. Niru Impex decision in assessee’s own case in A.Y. 2006-07 & 2007-08 in ITA No.6651 & 6652/M/2012 wherein the co-ordinate bench of the Tribunal has directed the AO to assess the profits on bogus purchases @ 10% over and above the normal GP declared by the assessee. Therefore, we do not find any infirmity or anomaly in the order of Ld. CIT(A) as the Ld. CIT(A) has followed the decision of the co-ordinate bench of the Tribunal in earlier years in assessee’s own case. Accordingly, we are inclined to uphold the order of Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed.
ITA No.3850/M/2018 7. The issue involved in the present appeal is identical to the one as stated above in for A.Y. 2008-09. Therefore, our finding in ITA No.3849/M/2018 for A.Y. 2008-09 would, mutatis mutandis, apply to this appeal as well. Accordingly the appeal of the Revenue is dismissed.
In the result, both the appeals of the Revenue are dismissed.
Order pronounced in the open court on 08.08.2019.
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