ROHIT VALLABHADAS SHAH,MUMBAI vs. INCOME TAX OFFICE-32(1)(7), MUMBAI

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ITA 4202/MUM/2023Status: DisposedITAT Mumbai03 May 2024AY 2010-11Bench: SHRI NARENDRA KUMAR BILLAIYA, HON'BLE (Accountant Member), SHRI SUNIL KUMAR SINGH, HON'BLE (Judicial Member)5 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer was justified in making a 100% addition of the bogus purchase amount, citing the Gujarat High Court decision in N.K. Industries Ltd. which was upheld by the Supreme Court. The assessee could not establish the identity of parties or genuineness of transactions.

What were the facts?

The Assessing Officer made an addition of Rs. 63,70,738/- on account of bogus purchases after finding that the assessee failed to produce delivery challans or acknowledge receipt of goods. The assessee argued that only the profit margin should have been added, not the full purchase amount.

What were the issues?

Whether the entire amount of bogus purchases should be added to the income, or only the profit margin. Whether notices issued by the AO were valid.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 250

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SUNIL KUMAR SINGH, HONBLEShri Anil Thakrar

For Appellant: Shri Anil Thakrar
For Respondent: Smt Mahita Nair
Pronounced: 03.05.2024

O R D E R PER NARENDRA KUMAR BILLAIYA (AM)

1.

This appeal by the assessee is preferred against the order dated 27.09.2023 National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] pertaining to A.Y.2010-11.

(A.Y: 2010-11) Rohit Vallabhdas Shah 2. The grievance read as under: -

”1) The Ld. CIT-(A) is erred in confirming the addition of Rs.63,70,738/- fully as bogus purchased @ 100% of such purchases. 2) The Ld. CIT-(A) is erred in considering the purchases as bogus in spite of the fact that, the sales made by the appellant was not doubted. 3) The Ld. CIT(A) at the time of passing the order U/s. .250 of the IT Act, Overlooked the ground no 3, Objecting the act of the Ld. A.O for not issuing valid service of notices U/s. 143(2)/142(1) of the act and did not comment anything on this particular ground, which is legal in the nature. 4) The appellant request to delete the addition confirmed by the CIT (A). 5) The appellant craves to add, alter or omit any or all of the above grounds of appeal before or at the time of hearing of the appeal.”

3. At the very outset, counsel stated that the issues raised vide Ground No. 3 are not pressed, therefore, the same are dismissed as not pressed.

4. Coming to the merits of the appeal, we find the underlying facts of the impugned addition of ₹.63,70,738/- are that, as per the information received from Sales Tax Department, the Assessing Officer came to know that the assessee has made bogus purchases from parties who are providing accommodation bills. On further probe, the Assessing Officer found that the assessee has failed to produce delivery challans, no supporting documents for acknowledgment of receipt of goods. The Assessing Officer was of the opinion that the assessee has furnished

Page No. 2

(A.Y: 2010-11) Rohit Vallabhdas Shah bogus bills / accommodation bills from the supplier nor the assessee has produced the party for verification. The Assessing Officer concluded by treating the purchases as non-genuine and made the addition of ₹.63,70,738/-.

5.

Assessee carried the matter before the Ld. CIT(A) but without any success.

6.

Before us the counsel for the assessee vehemently stated that the Assessing Officer has grossly erred in making the entire addition on account of bogus purchases. It is the say of the counsel that only the profit margin should have been added. Counsel pointed out that the profit margin of the assessee is around 1.35% for the year under consideration.

7.

Per contra, the Ld. DR supported the findings of the Ld. CIT(A).

8.

We have given a thoughtful consideration to the orders of the authorities below. It is true that the assessee could not establish the identity of the parties and genuineness of the said transactions. It is also true that the assessee never denied that it has procured the accommodation bills to give color of genuine purchases. All that we

Page No. 3

(A.Y: 2010-11) Rohit Vallabhdas Shah have to see is whether the Assessing Officer is justified in making 100% addition of the bogus purchase amount or he should have added only the profit margin earned by the assessee. The Hon’ble Gujarat High Court in the case of N.K. Industries Ltd., [(2016) 72 Taxmann.com 289] has held that once it comes to a categorical finding that the amount represents alleged bogus purchases from bogus suppliers it is not incumbent to restrict the disallowance and thereby directed to make addition of 100% of the alleged bogus purchases. The SLP preferred by the assessee against this decision of the Hon’ble High Court has been dismissed by the Hon’ble Supreme Court in SLP (C) CC No. 769 of 2017 dated 2017 dated 16.01.2017. We find that the First Appellate Authority has followed this decision of the Hon’ble Gujarat High Court. As no distinguishing decision has been brought to our notice in favour of assessee, we do not find any reason to interfere with the findings of the Ld. CIT(A).

9.

In the result, appeal filed by the assessee is dismissed.

Order pronounced in the open court on 03rd May, 2024.

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