INCOME TAX OFFICER, MUMBAI vs. SURESHKUMAR HANSRAJ SHAH, MUMBAI

This appeal is filed by Income Tax Officer, Ward 19(3)(1), Mumbai for A.Y. 2009-10, against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 8th November, 2023, wherein the

The assessee is aggrieved with the same preferred the appeal before the learned CIT (A), who after elaborate discussion following judicial precedents, held that the rate determined by the learned Assessing Officer at the rate of 25% is excessive. He upheld the addition at the rate of 12.5% on bogus purchases of ₹42,32,703/-, thereby confirming the addition of ₹5,29,088/-. He also confirmed the reopening of the assessment. Therefore, the learned Assessing Officer is in appeal and assessee filed cross objection.

The learned Departmental Representative vehemently supported the order of the learned Assessing Officer and submitted that the addition should be upheld at the rate of

We have carefully considered the rival contentions and perused the orders of the lower authorities. Undoubtedly, the assessee could not prove the genuineness of the purchases which are found in the information received from the DGIT Investigation. However, the purchase of ₹42,32,703, were shown by the assessee by a chart showing that the purchases from these parties have also gone into sales of the equal quantity. The assessee has also got his account tax audited where the quantitative details are available. In such circumstances, it is settled principle that only profit which is less than the profit shown on untained purchases should be compared and difference is required to be added to the total income of the assessee. Hon'ble Bombay High Court in M/s Mohd. Haji and Company (supra), has also upheld the same principle. In the present case, the assessee has also shown one to one co-relation between the quantity of the alleged bogus purchases and consequent sales accounted there from. In view of this, we direct the learned Assessing Officer to work out the addition only to the extent of the difference in gross profit earned in such tainted purchases with gross profit earned in untainted purchases. The assessee is directed to furnish the requisite information before the learned Assessing Officer

In the result, the appeal filed by the learned Assessing Officer is dismissed and cross objection of the assessee to the above extent is allowed.