ANAND FABRICATORS P.LTD,MUMBAI vs. ITO 9(1)(3), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A)- 16, Mumbai dated 14/10/2016 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.

Nobody appeared on behalf of assessee nor any adjournment petition was filed. The Bench therefore, decided to dispose the appeal after hearing learned DR and considering the material placed on record.

I have gone through the orders of the authorities below and found that the assessee company filed its return of income for A.Y. 2009-10 on M/s.Anand Fabricators Pvt.Ltd., 25/09/2009 declaring total income of Rs.22,34,310/-.Thereafter, on the basis of information received from Sales Tax (VAT) Department, State of Maharashtra the case was re-opened u/s.147 of the IT Act and an order u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 was passed on 28/03/2015 assessing the total income of the assessee at Rs.35,09,120/- by disallowing Rs.12,07,795/- as bogus purchases, Rs.18,104/- u/s.14A and Rs.48,906/- as 10% of various expenses.

The learned AO in this case has held that the parties from whom the purchases were made by the assessee were found to be bogus and that is the reason for which it was not produced during the assessment proceedings.

By the impugned order CIT(A) reduced the addition to the extent of 12.5% after observing as under:- Not having doubted the consumption / sales, the motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress true profits. Considering the facts of the case as well as the various case laws cited (supra), I estimate the suppressed profit to the extent of 12.5% of the purchases made from the bogus entities, as the suppressed profit element embedded in such purchases. This estimation is in addition to the GP shown by the appellant. Accordingly, this ground of appeal is partly allowed.