ASST CIT 25(3), MUMBAI vs. P.B. CONSTRUCTION COMPNAY, MUMBAI

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ITA 3165/MUM/2017Status: DisposedITAT Mumbai13 November 2017AY 2010-114 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 upheld the CIT(A)'s order, stating that a reasonable percentage of addition (5% to 12.5%) is justifiable on bogus purchases to tax the savings made by the assessee. The AO did not dispute the sales corresponding to these purchases.

What were the facts?

The Assessing Officer treated purchases worth Rs. 95,48,660/- as bogus as the assessee failed to prove their genuineness and the suppliers could not be served. The CIT(A) restricted the addition to 12.5% of these purchases.

What were the issues?

Whether the entire amount of bogus purchases should be disallowed, or only a reasonable profit margin on such purchases should be taxed.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 133(6),Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

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

For Respondent: Shri T A Khan, Shri A N Shah
Hearing: 6.9.2017Pronounced: 13.11.2017

सुनवाई की तारीख /Date of Hearing : 6.9.2017 घोषणा की तारीख /Date of Pronouncement : 13.11.2017 आदेश / O R D E R PER RAJESH KUMAR, A. M: This is an appeal filed by the revenue challenging the order dated 20.2.2017 passed by the Commissioner of Income Tax(A)-37, Mumbai for the assessment year 2010-11. 2. The only ground raised by the revenue is against the partly allowing the appeal of the assessee by the ld. CIT(A) directing the AO to make addition at the rate of 12.5% of the bogus purchases as against the 100% of the 2 I . T . A . N o . 3 1 6 5 / M u m / 2 0 1 7 disallowance of the said purchase by the AO to the tune of R.95,48,660/- by treating the said purchases as non-genuine. Thereafter the case of the assessee was selected and statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. The AO while going through the list of the purchases observed that many of them were the same parties as blacklisted by the Sales Tax Department, Government of Maharashtra and even took action on all the hawala sales dealers by cancelling their TIN Numbers. The AO also issued notices to the parties u/s 133(6) of the Act to verify the genuineness of purchases but the same were returned unserved and thereafter vide letter dated 23.1.2013, the assessee was asked to produce the suppliers with relevant documentary evidences to prove the genuineness of the purchases. However, the assessee failed to do so and finally, the AO treated the said purchases as bogus purchases from four parties as bogus purchases aggregating to Rs.95,48,660/- and added the same to the total income of the assessee by framing the assessment order u/s 143(3) of the Act assessing the total income at Rs.2,54,88,760/- vide order dated 25.3.2013.

3. In the appellate proceedings, the ld.CIT(A) after considering the submissions and contentions of the assessee, partly allowed the appeal of assessee restricting the addition to the tune of 12.5% of the alleged purchases by following the decision rendered by the Hon’ble Gujarat High

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