ACIT 13(2)(1), MUMBAI vs. SAY INDIA JEWELLERS P. LTD, MUMBAI

PDF · subscribers
ITA 5667/MUM/2016Status: DisposedITAT Mumbai08 November 2017AY 2007-084 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 held that while the purchases were not entirely genuine, the addition should account for the profit element embedded in such transactions. The CIT(A)'s estimation of 15% of bogus purchases plus a claimed loss was considered fair and reasonable.

What were the facts?

The Revenue appealed against an order that restricted additions for bogus purchases. The assessee, engaged in jewellery manufacturing and trading, was found to have made purchases from parties providing accommodation bills.

What were the issues?

Whether the addition for bogus purchases should be the entire amount or a profit element, and if the CIT(A)'s estimation was justified.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI D.T. GARASIA, JM & SHRI MANOJ KUMAR AGGARWAL, AM

Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by revenue for Assessment Year [AY] 2007- 08 assails the order of the Ld. Commissioner of Income-Tax (Appeals)- 21 [CIT(A)], Mumbai, Appeal No. CIT(A)-21/DCIT-13(2)(1)/I.T-117/2015- 16 dated 27/07/2016. The assessment for impugned AY was framed by Ld. Deputy Commissioner of Income Tax, Circle-13(2)(1), Mumbai [AO] ITA.No.5667/Mum/2016 Say India Jewellers Private Limited Assessment Year-2007-08 u/s 143(3) read with Section 147 of the Income Tax Act,1961 on 17/03/2015. The solitary issue involved in the appeal is addition against certain alleged bogus purchases. 2.1 Facts leading to the same are that the assessee being resident corporate assessee engaged in manufacturing of jewellery and trading in stones etc. was subjected to an assessment u/s 143(3) read with Section 147 for impugned AY on 17/03/2015 at Rs.2,94,12,330/- under normal provisions after addition of certain bogus purchases for Rs.80,69,936/-. The original return was e-filed on 28/10/2007 at Rs.2,13,42,396/- which was assessed u/s 143(3) on 12/11/2009 at Rs.2,58,84,321/-. 2.2 The reassessment proceedings were initiated upon receipt of certain information from investigation wing, Mumbai 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.80,69,936/- from four such parties. The various suppliers, upon statement on oath u/s 132(4) admitted to be indulging in providing accommodation bills without doing any actual business. Consequently, notice u/s 148 dated 25/03/2014 was issued to the assessee which was followed by statutory notices u/s 143(2) and 142(1). 2.3 During assessment proceedings, the assessee, inter-alia, pleaded for addition of profit element embedded in such purchase transactions. However, not convinced, Ld. AO concluded that the assessee failed to discharge the onus casted on him to prove the purchase transactions and therefore, added the same to the income of the assessee.

1.

ITA.No.5667/Mum/2016 Say India Jewellers Private Limited Assessment Year-2007-08 3. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 27/07/2016 where Ld. CIT(A) after appreciating the factual matrix and placing reliance on several judicial pronouncements restricted the additions to 15% of alleged bogus purchases plus loss of Rs.49,737/- as claimed by assessee against these transactions. Aggrieved, the revenue is in further appeal before us.

4.

The Ld. Departmental Representative [DR] relied on the stand of Ld. AO whereas Ld. Counsel for Assessee [AR] asserted that estimation made by Ld. CIT(A) was quite fair and reasonable.

5.

We have carefully heard the rival contentions and perused relevant material on record. We are of the considered opinion that there could be no sale without purchase /consumption of material since the assessee was engaged in manufacturing and trading activity. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee has, to some extent, shown correlation between sales and purchases. The purchases were backed by invoices. At the same time, the assessee could not produce any confirmation from any of the impugned supplier and moreover the supplier, under oath, admitted to have entered into providing accommodation bills without doing any business, which cast a serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which ITA.No.5667/Mum/2016 Say India Jewellers Private Limited Assessment Year-2007-08 Ld. CIT(A) has rightly done. Therefore, finding the same to be quite fair & reasonable, we dismiss revenue’s appeal.

6.

Resultantly, the revenue’s appeal stands dismissed. Order pronounced in the open court on 08th November, 2017.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →