INCOME TAX OFFICER-34(3)(2), MUMBAI vs. PINAKI D PANANI, MUMBAI

ITA number 3617/M/2023 four assessment year 2009 – 10 is 01. filed by the income tax officer – 34 (3) (2), Mumbai (the learned AO) against appellate order passed by National faceless appeal Centre (NFAC), Delhi (the learned CIT – A) dated 8/8/2023 wherein the appeal filed by the assessee against assessment order passed under section 143 (3) read with section 147 of the income tax act, 1961 (the act) dated 30/12/2016 passed by the assessing officer, circle – 25 (3), Mumbai was allowed.

“1. Ground no.1. Whether on the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in not considering that the addition was made on the basis of information received from Sales Tax Department, Maharashtra with regard to the bogus purchases made by the assessee from dealers without supply of actual goods.

In this case information was received from the director general 05. of income tax (investigation), Mumbai stating that assessee has purchased goods worth Rs. 1,158,195/– from the enterprises which was found to be bogus supplier as per the enquiry of sales tax department. The assessee was questioned to prove the purchases from the above party. In response to that assessee submitted letter dated 6/6/2016 wherein it has been submitted that assessee has already been reassessed for addition of Rs. 16,948,368/– on account of purchases from suspicious dealers. The matter travelled before the learned CIT – A and further following the order of the income tax settlement commission, profit rate of 5.76% of turnover was estimated. It was further stated that total addition confirmed by the learned CIT – A is Rs. 5,044,947 on account of bogus purchases. Therefore no further adjustment is required to be made to the total income of the assessee. Assessee also explained the nature of its business stating that she is a civil contractor working on various projects of government and; bodies wherein the contracts were awarded on the basis of the tender and each and every bill of contract is certified by the The learned AO after considering the explanation of the 06. assessee rejected it for the reason that assessee has failed to substantiate the claim of purchases made from the aforesaid party with any credible and corroborative evidence. The facts clearly emerges that in the facts and circumstances of the case the assessee had failed to discharge the onus of proving the purchase transaction shown by them with the aforesaid party. Accordingly the learned assessing officer applied provisions of section 69C of the act and made disallowance of percent of the purchases of Rs. 1,158,195 and determined the total income of the assessee at Rs. 17,926,680 by passing an assessment order on 30/12/2016.

Assessee preferred appeal before The learned CIT – A who 07. passed an order on 8/8/2023 holding that when the ITAT has passed an order dated 19/12/2016 net profit rate at the rate of 5.76% taken by the learned CIT – A was upheld holding that this would include all purchases. The jurisdictional ITA T when decided the issue about the estimation of profit the addition in this appeal stands deleted as only the gross profit embedded in the bogus purchases are to be taxed.

Learned assessing officer aggrieved with the above appellate 08. order is in appeal before us. As per ground number 1 it is contested that that addition has been made on account of

The learned authorized representative submitted that in the 010. earlier reassessment proceedings the additions were made on account of bogus purchases only. The learned assessing officer made an addition of ₹ 16,948,368/– in that proceedings. The learned CIT – A computed the net profit at the rate of 5.76% amounting to ₹ 9,873,846 on turnover of ₹ 171,420,934. The learned CIT – A confirmed the addition of the difference on account of net profit as per books of accounts of ₹ 4,828,899/- and estimated net profit at the rate of 5.76% amounting to ₹ 9,873,846. Therefore the addition of ₹ 5,044,947 has already been confirmed on account of bogus purchases. Therefore, the order of the learned AO making the 100 % Percent addition of alleged bogus purchases of ₹ 1,158,195/– is incorrect. He further stated that the addition of gross profit at the rate of 5.76% has also been made on account of order of income tax settlement commission in assessee's own case for assessment year 2010 – 11 to 2012 – 13. Therefore, now the addition has been rightly deleted by the learned CIT – A.

In the result appeal filed by the learned AO is dismissed. 012.

Order pronounced in the open court on 25.04. 2024.