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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM Smt. Ranjanben K Dodia,
आदेश / O R D E R PER R.C.SHARMA (A.M): These are the cross appeals filed by the assessee and revenue against the order of CIT(A) for the assessment year 2011-12. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that during the course of scrutiny assessment, AO observed that assessee has made the purchase of Rs.37,11,186/- from CO 168/Mum/2016 Smr. Ranjanben K Dadia bogus suppliers. AO asked the assessee to produce these parties with all purchase bills, sales bills, purchase register, sales register, stock register etc., The assessee filed the details as asked by the AO. The AO observed that u/s.133(6) were issued to the bogus purchase parties for verification, but the same was returned unserved. By observing that assessee has not been able to produce any documentary evidence to prove that the purchase from the above mentioned parties have actually been made by the assessee, the AO added entire amount in assessee’s income.
By the impugned order CIT(A) upheld the addition of 12.5% of such bogus purchases by considering additional G.P. embedded in such purchases.
5. Against the above order of CIT(A) both assessee and revenue are in further appeal before us.
It was contended by learned AR that assessee has been able to reconcile the details of purchases and sales, therefore, no additions to be made on account of purchases. Our attention was also invited to the gross profit rate declared by the assessee during the year under consideration as well as in the earlier years so as to contend that higher GP rate was disclosed by the assessee during the year under consideration, warranting no extra addition by assuming extra profit on such purchases.
CO 168/Mum/2016 Smr. Ranjanben K Dadia 7. I have considered rival contentions and carefully gone through the orders of the authorities below. From the record I found that assessee has filed the following details in connection with above parties to establish genuineness of above purchases.
Copy of the purchase invoice cum delivery challans 2. Bank statements showing that all parties have been effected payments with A/ c payee cheques which are duly reflected in bank statement.
The ledger copy in our books duly certified a) GP ratio for last 3 years. 2008 - 2009 G.P. 3.30% 2009 - 2010 - G.P. 2.59% 2010 - 2011 G.P. 3·15% 4. I also found that the assesses is manufacturer of lift parts made of mild steel and sales to Otis Elevator India Ltd. after manufacturing of above item. The same have been evidence by sales bills. The sales could not have been affected without purchases of raw material.
It is clear from the GP chart that GP shown by the assessee during the year under consideration is better than GP of immediate preceding year. Keeping in view the totality in facts and circumstances of the case, vis-à-vis adverse observation of lower authorities, I direct the AO to uphold the addition of 5% of such bogus purchases to fulfil shortage of revenue if any. I direct accordingly.