CONTINUITY PRINTERS,NAVNIDHI INDL ESTATE, SEWREE vs. ACIT 20(1), PIRAMAL CHAMBERS, LALBAUG

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ITA 1784/MUM/2024Status: DisposedITAT Mumbai16 July 2024AY 2011-12Bench: the Id. CIT(A).Ld.CIT(A) passed the appeal order andrejected the appeal of the assessee. Being aggrieved on the appeal order, the assessee filed an appeal before us.4. The Id. AR vehemently argued and prayed for restrict the addition @12.5% of the bogus purchase determined by the Id. AO. The Id. AR furter argued that the transactions with the purchasers are through banking channel, the invoice and road challans are duly filed before the revenue authority as proof of genuineness of the trans4 pages

AI SummaryAllowed

Facts

The assessment was completed under section 148 based on information regarding bogus purchases amounting to Rs. 22,20,594/-. The Assessing Officer (AO) made an addition of this amount to the assessee's income under section 69C. The Ld. CIT(A) rejected the assessee's appeal, which led the assessee to file an appeal before the Income Tax Appellate Tribunal (ITAT).

Held

The Tribunal, following binding precedents and a Bombay High Court decision, held that an addition restricted to 12.5% of bogus purchases is fair and reasonable, especially since sales were executed based on these purchases and not rejected by the AO. The Tribunal directed the AO to restrict the addition to 12.5% of Rs. 22,20,594/-, amounting to Rs. 277,574/-.

Key Issues

Whether the entire amount of bogus purchases should be added to the assessee's income under Section 69C or if the addition should be restricted to a percentage based on judicial precedents and factual circumstances.

Sections Cited

Section 148, Section 69C, Section 250, Section 143(3) r.w.s. 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “K(SMC

For Appellant: Shri Ashok Bansal a/w Shri Ajay Daga

For Respondent: Shri Dhiraj Kumar, Sr. DR

Hearing: 15/07/2024

ORDER PER ANIKESH BANERJEE (JM):

Instant appeal of the Revenue was filed against the order of the Ld. Commissioner of Income Tax, Appeal ADDL/JCIT (A)-6 Kolkata [in short, ‘Ld.CIT(A)’], date of order 12/02/2024 for A.Y. 2011-12 order passed under section 250 of the Income-tax Act, 1961(in short, the Act). Impugned order was emanated from the order of the ld.Asst. Commissioner of Income Tax-20(1), Mumbai (in short ld. AO), order passed under section 143(3)r.w.s. 147, date of order- not specified.

Continuity Printers 2. The Revenue has taken the following grounds: -

Brief facts of the case are that the assessment was completed under section 148on the basis ofinformation received from the DGIT(Inv) related to bogus purchase from the different parties which amount to Rs.22,20,594/-. The ld.AO made the addition of disputed purchases with the total income of the assessee U/s 69C of the Act. The aggrieved assessee filed an appeal before the ld. CIT(A).Ld.CIT(A) passed the appeal order andrejected the appeal of the assessee. Being aggrieved on the appeal order, the assessee filed an appeal before us.

The ld. AR vehemently argued and prayed for restrict the addition @12.5% of the bogus purchase determined by the ld. AO. The ld. AR furter argued that the transactions with the purchasers are through banking channel, the invoice and road challans are duly filed before the revenue authority as proof of genuineness of the transaction. But the ld. AO only relied on the information of the MaharastraVAT department and added back the entire disputed purchase amount u/s 69C of the Act. The ld. AR has drawn our attention on the relevant paragraph of assessment order which is reproduced below: - …………………..B……………….. 5. The ld. DR vehemently argued and placed that 12.5% of the disputed purchase amount to Rs.22,20,594/- is unjustified and prayed for upheld the addition. The ld. DR relied on the appeal order. The relevant paragraphs are reproduced as below: - …………………..A……………… Continuity Printers We heard the rival contentions and considered the documents available on 6. record. The issue related to addition of @12.5% of the disputed purchases is already decided by this bench in other cases. Considering the binding precedence, we set aside the appeal order. On the other hand, the sales were also executed depending on the purchases of materials. In the transaction, the purchases and sales are interlinked during this impugned financial year. We respectfully relied on the order of Hon’ble Bombay High Court in case of PCIT vs S.V. Jiwani (2022) 145 taxmann.com 230 (Bom) wherein involving similar set of facts and circumstances of the case, the Hon’ble jurisdictional High Court has upheld the decision of the Hon’ble ITAT, Mumbai Bench that addition to the extent of @12.5% of the bogus purchases is fair and reasonable. The Ld. Assessing Officer had not rejected the sale of assesseebut only the purchase. Hence, the addition amount of Rs. 22,20,594/- is quashed. We direct the ld. AO to restrict the addition @12.5% on bogus purchase amount to Rs. 22,20,594/- which works out to Rs. 277,574/-. The addition is restricted amount to Rs. 2777,574/-. The appeal of the assessee is considered on merit&Ground no-4 is allowed. So, the other groundsremain only for academic purpose.