ACIT - 26(1), MUMBAI vs. FARHANA NISAR SIDDIQUI, MUMBAI

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ITA 2831/MUM/2017Status: DisposedITAT Mumbai05 September 2018AY 2011-123 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 upheld the CIT(A)'s decision to estimate the profit on bogus purchases at 12.5% and reduce the ad-hoc expense disallowance to 10% of cash expenses. The Tribunal found these estimations to be fair and justified.

What were the facts?

The revenue appealed against the relief granted by the CIT(A) to the assessee. The additions in dispute were for bogus purchases and a disallowance of expenses. The AO had made additions for bogus purchases and a 30% ad-hoc disallowance on expenses.

What were the issues?

Whether the estimation of profit on bogus purchases and the quantum of ad-hoc disallowance on expenses were justified.

Which sections of the Income-tax Act were involved?

Section 144,Section 147

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM

Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year [AY] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-38 [CIT(A)], Mumbai, Appeal No.CIT(A)-38/ACIT.26(1)/IT.527/2015-16 dated 30/12/2016 qua certain relief provided to the assessee. None has appeared for assessee and no valid adjournment application is on ITA.No.2831/Mum/2017 FarhanaNisar Siddiqui Assessment Year-2011-12 record. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative, Shri Rajeev K. Gubangotra.

2.

The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax-26(1), Mumbai [AO] u/s 144 read with section 147 of the Income Tax Act,1961 on 28/01/2016 wherein the assessee has been saddled with certain additions, out of which following additions are the subject matter of dispute before us:- No. Nature of Addition Amount (Rs.) 1. Disallowance of Bogus Purchases 46,68,492/- 2. Disallowance out of conveyance expenses, 32,37,895/- Telephone Expenses, Staff Welfare & Other Expenses The addition of bogus purchases was made since the assessee failed to substantiate the purchases made from five dealers, the details of which have already been extracted in the quantum assessment order. The disallowance against expenses claimed by the assessee is adhoc disallowance of 30% for want of satisfactory details / documentary evidences.

3.

The Ld. CIT(A), relying upon the decision of Hon’ble Gujarat High Court in CIT Vs. Bholanath Poly Fab Pvt Ltd. 355 ITR 290 estimated the addition against alleged bogus purchases @ 12.5%. The adhoc disallowance as estimated by Ld.AO was reduced to 10% of cash expenses of Rs.37.27 Lacs as claimed by the assessee. Aggrieved, the revenue is in further appeal before us. The Ld. DR has supported the stand taken by Ld. AO.

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