PRAGNA C. MEHTA,MUMBAI vs. ACIT 32(2), MUMBAI

PDF · subscribers
ITA 438/MUM/2016Status: DisposedITAT Mumbai28 March 2018AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the purchases were not fully genuine, there must be some consumption of material given the assessee's business. Therefore, the addition should be restricted to account for the profit element, not the entire amount.

What were the facts?

The assessee claimed purchases from certain parties, but these parties were later declared as 'Hawala' parties by the Sales Tax Department. The AO could not verify the genuineness of these purchases as the parties could not be produced and notices sent to them were unserved.

What were the issues?

Whether the entire amount of non-genuine purchases can be added to the income, or if an estimated profit element should be considered. The validity of re-opening the assessment was not pressed by the assessee.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J” MUMBAI

Before: SHRI JOGINDER SINGH & SHRI N.K. PRADHAN

For Respondent: Ms. Arju Garodia, DR
Hearing: 13/03/2018Pronounced: 28/03/2018

ORDER

PER N.K. PRADHAN, AM

1.

This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-44, Mumbai [in short CIT(A)] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).

2.

The Ld. counsel of the assessee submits that the appellant would not like to press the 2nd ground of appeal regarding validity of re- opening u/s 148 of the Act. He submits the same and signs as not pressed in the relevant portion of the grounds of appeal. Accordingly, the 2nd ground of appeal is dismissed as not pressed.

3.

The 1st ground of appeal

reads as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred by confirming the addition made by AO by making an addition u/s 69C by taking fair profit @ 31.88% of non-genuine purchases from parties declared by sales tax department as Hawala parties amounting to Rs.56,92,486/- and make addition thereby of Rs.18,14,765/-.

4. Briefly stated, the facts of the case are that the assessee filed her return of income for the assessment year (AY) 2009-10 declaring total income of Rs.33,53,140/-. On the basis of inquiries conducted by the Sales Tax Department, the AO received information from the Director General of Income Tax (Inv.) that the assessee had obtained bills of bogus purchases from Sachi Mercantile Pvt. Ltd., Anshu Mercantile Pvt. Ltd., Surachi Multitrade Pvt. Ltd. and Dhiren Mercantile Pvt. Ltd. amounting to Rs.56,92,486/-. During the course of assessment proceedings, the AR of the assessee filed a letter dated 30.12.2014 and submitted (i) ledger account of the four parties, (ii) copies of bills of purchases, (iii) banks statements for the account payee cheques issued to the four parties and (iv) corresponding sales invoices made against the purchases. The AO, in order to verify the genuineness of transaction, issued notice u/s 133(6) on 16.12.2014 to the four parties. However, the said notices were received back in the office of the AO as unserved. Then he asked the assessee vide order sheet noting dated 27.12.2014 to produce the said parties. The assessee failed to produce the parties before the AO to prove the genuineness of transaction.

More judgments on Section 69C

All 8,217 judgments and leading authorities on Section 69C →

Recent GST High Court judgments

Search GST case law →