SMRAT INFOCOM,MUMBAI vs. ITO 33(3)(4), MUMBAI

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ITA 2836/MUM/2015Status: DisposedITAT Mumbai18 January 2017AY 2010-113 pages
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What did the Tribunal hold?

The Tribunal held that the addition for bogus purchases should be restricted to 7% of the total purchases, considering the assessee's net profit margin and VAT rates, and following jurisdictional High Court judgments. The addition on account of commission was deleted due to the CIT(A)'s failure to provide the assessee with an opportunity to be heard before enhancing the assessment.

What were the facts?

The assessee's appeal concerned additions made for bogus purchases and a related commission. The Assessing Officer (AO) disallowed the entire purchases, citing tainted suppliers, and added a commission. The CIT(A) confirmed these additions.

What were the issues?

Whether the entire amount of bogus purchases should be disallowed, and whether the CIT(A) can enhance an assessment without providing an opportunity to the assessee.

Which sections of the Income-tax Act were involved?

Section 69C,Section 251(2)

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGH

For Appellant: Shri Rashmikant C Modi & Ms
For Respondent: Shri M.C. Omi Ningshen, DR
Hearing: 05.01.2017Pronounced: 18.01.2017

सुनवाई की तायीख / Date of Hearing : 05.01.2017 घोषणा की तायीख /Date of Pronouncement : 18.01.2017 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:

This appeal filed by the assessee on 12.5.2015 is against the order of the CIT (A)-17, Mumbai dated 20.2.2012 for the assessment year 2010-2011.

2.

In this appeal, the only issue raised by the assessee relates to the bogus purchases of Rs. 53.16 lakhs (rounded off) involving the tainted suppliers qua the Sales Tax Department and the addition on account of commission of Rs. 53,166/- being 1% of the said bogus purchases. In the assessment, AO made the addition of entire such purchases u/s 69C of the Act ignoring the judgment of the Hon’ble jurisdictional High Court judgment in the case of CIT vs. Nikunj Eximp Enterprises Pvt Ltd (216 Taxman.com 171) (Bom.) and judgment of the Hon’ble Gujarat High Court in the case of CIT vs. Simit P. Seth (356 ITR 451) (Guj.). On appeal, CIT (A) confirmed the same. Aggrieved with the said order of the AO / CIT (A), assessee is in appeal before us.

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