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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)-37, Mumbai dated 02/02/2017 for A.Y.2009-10 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act.
In this appeal, assessee is aggrieved for upholding addition of 12.5% of bogus purchases.
Rival contentions have been heard and record perused. On the basis of information received from the Sales Tax Department, the AO found that assessee has made purchases from the bogus suppliers. After making his independent enquiry, he concluded that suppliers were bogus but not the purchases itself on the plea that corresponding sales has been made by M/s. Pratik Enterprises the assessee. He estimated profit at 25% on such purchases and added the same in assessee’s income.
By the impugned order CIT(A) restricted the addition to the extent of 12.5%.
Against the above order of CIT(A), assessee is in further appeal before us.
I have heard rival contentions and carefully gone through the orders of the authorities below. From the record, I found that lower authorities have not disputed the corresponding sales made by the assessee; however, they have restricted the addition to the extent of certain profit element having been embedded in such purchases. The CIT(A) has restricted the addition to the extent of 12.5% by relying on the decision of the Gujarat High Court in the case of Simit P Seth 356 ITR 451. It was contended by learned AR that the decision relied on by CIT(A) was pertaining to the Gujarat jurisdiction wherein the rate of VAT is 10%, however which is 4% in Maharashtra, therefore, it was requested that the estimation of profit should be reduced.
From the record, I found that during the year assessee had shown profit at 6.64%. Keeping in view the nature of assessee’s business which is trading in iron and steel vis-à-vis totality of facts and circumstances of the case, I direct AO to restrict the addition to the extent of 6.5% of such bogus purchases. I direct accordingly.