CHHAGANLAL SOLANKI,MUMBAI vs. ITO - 19(1)(3) (CURRENTLY ITO WD. 22(1)(3)), MUMBAI

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ITA 6104/MUM/2016Status: DisposedITAT Mumbai26 April 2017AY 2009-103 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to restrict the estimation of profit to 6.5% on the non-genuine purchases. This was based on the lower VAT rate and the admitted average GP of 4% in the assessee's case.

What were the facts?

The assessee's appeal concerned the addition made by the Assessing Officer on account of "bogus purchases" amounting to Rs. 1.56 Crores. The Assessing Officer applied a Gross Profit (GP) rate of 12.5% to estimate the profit on these purchases.

What were the issues?

The primary issue was the correctness of the GP rate applied to estimate profit on bogus purchases. The Tribunal also considered the applicability of VAT rates and admitted GP rates.

Which sections of the Income-tax Act were involved?

Section 2(22)(e),Section 14A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAOShri Chhaganlal Solanki,

For Appellant: Shri Gautam Salecha
Hearing: 11.04.2017Pronounced: 26.04.2017

अऩीराथी की ओय से / Appellant by : Shri Gautam Salecha प्रत्मथी की ओय से/ Respondent by : Mrs. Beena Santosh, DR सुनवाई की तायीख / Date of Hearing : 11.04.2017 घोषणा की तायीख /Date of Pronouncement : 26.04.2017 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

1.

This appeal filed by the assessee on 13.10.2016 is against the order of the CIT (A)-30, Mumbai dated 11.07.2016.

2.

In this appeal, assessee raised four grounds in toto. The core issue in the appeal relates to the correctness of the applicability of GP rate of 12.5% in respect of the „bogus purchases‟ amounting to Rs. 1.56 Crs (rounded of). Other issues raised in grounds no.2 to 4 are not pressed. Accordingly, the said grounds are dismissed as not pressed. 3. Before us, Ld Counsel for the assessee submitted that the Assessing Officer made addition of Rs. 19,56,011/- being 12.5% of the non-genuine purchases of Rs. 1.56 Crs. On appeal, CIT (A) confirmed the same relying on the Bombay High Court Judgment in the case of Nikunj Eximp Enterpries P Ltd (372 ITR 619) (Bom) and Gujrath High Court Judgment in the case of CIT vs. Simit P Sheth [2013] (356 ITR 451) (Guj.). Aggrieved, assessee is in appeal before the Tribunal. 4. After hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the relevant material placed before the Tribunal, I find, para

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