RAKESH INDER BACHANI,MUMBAI vs. ITO WD 30(3)(1), MUMBAI

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ITA 4929/MUM/2016Status: DisposedITAT Mumbai10 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, stating that since the assessee failed to produce the parties and no alternative address was provided, and given the Sales Tax Department's declaration, the addition of only the profit embedded in such transactions was justified. Therefore, no interference was required.

What were the facts?

The Assessing Officer (AO) made an addition of 6% of alleged bogus purchases amounting to Rs. 6,24,625/- because the assessee could not produce seven parties from whom purchases were made, and these parties were declared as hawala dealers by the Sales Tax Department. The CIT(A) confirmed this addition.

What were the issues?

Whether the AO was justified in making an addition for bogus purchases when the assessee failed to produce the parties, and if so, what percentage of the purchases should be added.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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

Before: SHRI D.T. GARASIA & SHRI MANOJ KUMAR AGGARWAL

For Appellant: Shri Haresh P. Shah, A.R
Hearing: 10.04.2017Pronounced: 10.04.2017

Per D.T. Garasia, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 06.05.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

2.

The short facts of the case are as under: During the year under consideration, assessee booked the turnover as per trading, profit & loss account is Rs.5,42,76,915/-. The net profit was shown at Rs.9,66,722/- after debiting various expenses and from the information received by the Assessing Officer (hereinafter referred to as the AO) that assessee has made purchases from M/s. Atlas Enterprise of Rs.58,240/- , M/s. Jigan Enterprises of Rs.2,93,956/-, M/s. Arihant Corporation of Rs.8,45,419/-, M/s. Shree Amaaya Enterprises of Rs.19,48,669/-, M/s. SP.P. Corporation of Rs.21,17,180/-, M/s. L.P. Traders of Rs.22,11,934/- and M/s. Dev Enterprises

2 Mr. Rakesh Inder Bachani of Rs.29,30,023/- in totaling Rs.1,04,05,421/- whose name appears in the list of bogus purchases. AO asked assessee to produce these parties for verification. But assessee could not produce these parties. The parties were declared by Sales Tax Department, Government of Maharashtra as bogus hawala dealers. Therefore, AO has made the addition of 6% of the total bogus purchases which comes to Rs.6,24,625/-.

3.

The matter brought to Ld. CIT(A) and the Ld. CIT(A) confirmed the same.

4.

We have heard the rival contentions of both the parties. We find that there was no compliance from the 7 parties in response to notice issued by AO under section 133(6) of the Act. Assessee failed to produce the parties. No alternative address as filed in respect of said parties. The enquiry and investigation conducted by the Sales Tax Department declared them as hawala dealers. Therefore, Ld. CIT(A) has relied upon the decision of Vijay Proteins Ltd. vs. CIT (2015) 58 taxmann.com 44 (Guj.) and CIT vs. Simit P. Sheth (2013) 356 ITR 451 (Guj.) and held that only profit embedded can be added in such transaction of purchase and sales. Therefore, Ld. CIT(A) is justified in his action and our interference is not required.

5.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open court on 10.04.2017.

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