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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by assessee against the order of CIT(A)-51, Mumbai dated 13/02/2018 for A.Y.2009-10 in the matter of order passed u/s.143(3) r.w.s.147 of the IT Act. 2. The following grounds have been taken by the assessee:- Ground No.1 The learned CIT (Appeals) erred in confirming the addition made @ 15% amounting to Rs. 1,24,07,221/- by the learned AO on account of bogus Ground No.
2. The learned CIT (Appeals) erred in confirming the reopening u/s 147 even though original assessment was done u/s 143(3).
M/s. Mirage Creations The Appellant craves leave to add, amend, alter, modify or delete the above ground of Appeal.
Rival contentions have been heard and record perused.
Briefly stated, the facts of the case are that the assessee filed its return of income on 21/09/2009 declaring a total income of Rs NIL. A search action u/s 132 of the IT Act was carried out on Sur Gems Group on 18/11/2015. Since the assessee is also an entity of Sur Gems Group, it was also covered in the said search action. This search action on Sur Gems Group was conducted pursuant to search action in the case of Bhanwarilal Jain on 03.10.2013 wherein it was revealed that he was in the business of giving accommodation entries through concerns directly/indirectly controlled by him and the entitles of Sur Gems Group including our assessee were the beneficiaries. The subsequent search action on Sur Gems Group confirmed this fact that the assessee as wet! as other entities of Sur Gams Group have availed of accommodation entries from various concerns of Bhanwarlal Jain. The names of these two concerns also figured in the list of suspicious dealers detected by Maharashtra Sales Tax Authority which was uploaded on 25.03.2014. For the year under consideration, the assesses has availed of accommodation entries for purchases from M/s Meenakshi Exports (Rs 77,13,000/-) and M/s Pushpak Gems (Rs 46,94,221/-) totally aggregating to Rs 1,24,07,221 On the basis of the findings of the search action, the AO completed the assessment vide order dated 30.12.2016 in which he added a sum of Rs M/s. Mirage Creations 18,61,083/- being the undisclosed profit @ 15% on the alleged aggregate bogus purchases of Rs. 1,24,07,221/-.
By the impugned order, CIT(A) after considering various judicial pronouncements cited before us confirming addition to the extent of GP rate of 15% and the CIT(A) has also given further relief with respect to the GP margin shown by the assessee in respect of alleged bogus purchases after having the following observation:- “5.8 There is no dispute that fn respect of the said alleged bogus purchase there are corresponding sales also, This fact is also confirmed by the Tax Audit Report where the Auditors have furnished the quantitative tally of the purchases and sales, Now the issue to be adjudicated i$ what is the reasonable profit percentage to be adopted for computing the profits arising from the alleged bogus purchases. For this purpose the financial statements, returns filed, assessments made if any, etc of the assesses for the preceding three years i.e. AYs 2006-07 to 2008-09 were examined, It is observed that for AYs 2008-07 and 2008-09, there are no allegations against the assessee of having Indulged in bogus purchase transactions. The GP margin shown by the assesses for the said two non-tainted AYs is of 3.61% and 19.69% respectively. Thus, the average GP margin for these two non-tainted years works out to 11.6%. However, this average GP margin of 11,8% is when the assessee does not indulge in bogus purchases through unregistered dealers, in transactions wherein bogus purchases are involved, the GP margins are much higher as the rate of purchases made from the grey market is always much less as compared to purchases from registered suppliers due to the various savings on account of evasion of government dues/taxes. Therefore, as such no infirmity is found in the action of the AO of adopting GP margin of 15% while computing the profits in respect of the bogus purchases. However, against this GP margin of 15% the AO is directed to allow a set off of the GP margin already disclosed by Erse assessee in the books in respect of the alleged bogus purchases from M/s Meenakshi Exports (Rs 77,13,000/-} and M/s Pushpak Gems (Rs. 46,94,221/-) to Rs 1,24,07,221. Accordingly, ground nos. 2 to 4 of the appeal are partly allowed.”