INVENTUM ENGINEERING COMPANY PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER 10(1)(2), MUMBAI

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ITA 1836/MUM/2018Status: DisposedITAT Mumbai22 June 2018AY 2011-124 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the purchases could not be fully substantiated, an addition on a gross basis was not justified. The profit element embedded in the purchases was estimated at 12.5%.

What were the facts?

The assessee's assessment was reopened based on information about bogus purchase bills. The Assessing Officer added the entire amount of alleged bogus purchases, which was confirmed by the CIT(A).

What were the issues?

Whether the entire amount of alleged bogus purchases should be added to the income, or if only the profit element should be considered.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

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

Per Manoj Kumar Aggarwal (Accountant Member)

1.

The captioned appeal by assessee for Assessment Year [AY] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-17 [CIT(A)], Mumbai, Appeal No.CIT(A)-17/IT-103/10159/17- 18 dated 22/01/2018 qua confirmation of certain additions on account of alleged bogus purchases. The assessment for impugned AY was framed ITA.No.1836/Mum/2018 Inventum Engineering Company Pvt.Ltd Assessment Year- 2011-12 by Ld. Income Tax Officer-10(1)(2), Mumbai [AO] u/s 143(3) read with Section 147 of the Income Tax Act,1961 on 29/06/2016 wherein the income of the assessee has been determined at Rs.7,36,730/- after certain additions as against returned income of Rs.5,45,720/- e-filed by the assessee on 29/09/2011 which was processed u/s 143(1). The only issue involved under appeal is estimated addition against certain alleged bogus purchases. 2.1 The reassessment proceedings were initiated upon receipt of certain information from Sales Tax Department, Maharashtra regarding dealers indulging in bogus purchase bills and it was noted that the assessee stood beneficiary of such bogus purchase bills to the tune of Rs.1,91,007/- from three such entities, the details of which has been extracted in para-4.1 of the quantum assessment order. Consequently, statutory notice u/s 148 dated 28/03/2016 was issued to the assessee which was followed by notices u/s 143(2) and 142(1). During impugned AY, the assessee being resident corporate assessee was engaged in the business of manufacturing of engineering goods. 2.2 The assessee defended the purchases made by him and submitted documentary evidences to substantiate the same. However, notices issued u/s 133(6) to all the entities elicited no satisfactory response. The assessee expressed inability to produce the parties for confirmation of accounts. Finally, not convinced with assessee’s submissions, Ld. AO treated these purchase as bogus purchases and added the same to the income of the assessee. 3. Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 22/01/2018 where Ld.

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