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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)
The appeal filed by the assessee is directed against the order dated 28- 02-2017 passed by Ld CIT(A)-32, Mumbai and it relates to the assessment year 2009-10. The assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition relating to alleged bogus purchases.
I heard the parties and perused the record. The assessee is a dealer in Iron & Steel. Consequent to the information received from Sales tax department that certain parties (called hawala parties) are indulging in providing only accommodation bills without actually supplying the materials, the revenue examined those details. It was noticed that the assessee herein have purchased goods during the year under consideration from the parties listed as hawala parties aggregating to Rs.1,75,49,847/-. Hence the AO reopened the assessment of the year under consideration.
2 Motilal D. Jain Prop. of Adarsh Metal Corporation 3. Before AO, the assessee only furnished purchase bills, bank statements, ledger account copies etc. However the AO was not satisfied with them and accordingly assessed 12.50% of the value of purchases as income of the assessee. The Ld CIT(A) noticed that the assessee has declared G.P at the rate of 6.68%. Accordingly he took the view that the addition should be restricted to the G.P rate declared by the assessee. Accordingly he directed the AO restrict the addition to 6.68% of the value of purchases. Still aggrieved, the assessee has filed this appeal.
The Ld A.R submitted that the assessee has declared net profit at the rate of 2.15% and hence the addition should have been restricted to that level. On the contrary, the Ld D.R submitted that the assessee should have made profit on the value of purchases and hence the Ld CIT(A) was justified in adopting the G.P rate for making addition.
Having heard rival submissions, I am of the view that there is no merit in the claim of the assessee. The tax authorities have estimated the profit that would have been made by the assessee on the value of alleged bogus purchases. Hence the addition should be made at Gross profit level only and not at net profit level. Accordingly I do not find any infirmity in the order passed by Ld CIT(A) and hence uphold the same.
In the result, the appeal filed by the assessee is dismissed. Order has been pronounced in the Court on 14.9.2017.