DCIT,CC-3(2),CR-3, MUMBAI vs. CMS COMPUTERS LTD., MUMBAI

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ITA 4231/MUM/2017Status: DisposedITAT Mumbai03 April 2019AY 2009-104 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 held that while the full disallowance of purchases was not justified, a reasonable estimate was adequate to account for potential grey market purchases and embedded profit. The reduction of disallowance to 12.5% by the CIT(A) was deemed appropriate.

What were the facts?

The assessee was subjected to reassessment proceedings due to alleged bogus purchases of Rs. 78.38 Lacs from six entities. Despite providing invoices and bank statements, the assessee failed to substantiate the delivery of material or provide updated supplier addresses.

What were the issues?

Whether the disallowance of purchases was justified when delivery could not be substantiated and suppliers could not be produced, and if not, what would be a reasonable estimate.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 142(1),Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: HON’BLE SHRI MAHAVIR SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

O R D E R

Per Manoj Kumar Aggarwal (Accountant Member ) 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2009-10 contest the order of Ld. Commissioner of Income- Tax (Appeals)-51, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-51/IT-62/2015-16 dated 22/03/2017 qua certain relief provided to the assessee on account of alleged bogus purchases. None has appeared for assessee and no valid adjournment application is on record. Left with no option, we proceed to dispose-off the same on the basis of material on record and after hearing Ld. Departmental 2 M/s. CMS Computers Ltd. Assessment Year :2009-10 Representative [DR] who justified the impugned additions as made by Ld. AO. 2.1 Facts on record reveal that the assessee being resident corporate entity stated to be engaged in the business of trading in biometrics attendance and access control systems etc. was subjected to reassessment proceedings u/s 143(3) read with Section 147 on 30/03/2015 by Ld. Assistant Commissioner of Income Tax – 3(2), Mumbai [AO] wherein the assessee was saddled with additions of Rs.78.38 Lacs on account of alleged bogus purchases. The original return filed on 30/09/2009 was assessed in scrutiny assessment u/s 143(3) on 27/12/2011. 2.2 The reassessment proceedings got triggered pursuant to receipt of certain information from DGIT (Investigation) & Sales Tax Department, Maharashtra that the assessee stood beneficiary of accommodation purchase bills aggregating to Rs.78.48 Lacs from 6 entities, the details of which have already been extracted at para 2 of the quantum assessment order. Accordingly, statutory notices u/s 148 / 143(2) & 142(1) were issued against the assessee wherein the assessee was directed to substantiate the purchase transactions. 2.3 Notices issued u/s 133(6) against all the suppliers, to confirm the transactions, did not elicit satisfactory response and the field inquiries revealed that none of the party existed at the given address. The assessee defended the same on the strength of copies of invoices, bank statements, quantitative stock statements etc. but failed to substantiate the delivery of material with documentary evidences like delivery challans, octroi receipts etc. The assessee also failed to provide latest

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