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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M): These are the appeals filed by the assessee against the order of CIT(A) for the assessment year 2009-10 and 2011-12, in the matter of addition made on account of bogus purchases. 2. Rival contentions have been heard and record perused. 3. In the course of assessment made u/s.143(3) r.w.s. 147 of the IT Act, AO made an addition on account of purchases made by the assessee on the plea that these are bogus purchases. AO applied GP rate of 32% in the assessment year 2009-10 and 32.85% in the assessment year 2011-12 of such bogus purchases and made an addition.
2 & 3944/Mum/2016 Oil Seals Manufacturing Company Pvt. Ltd., 4. By the impugned order CIT(A) restricted the addition to the extent of 12.5% of such bogus purchases against which assessee is in further appeal before us. Assessee is in further appeal before us.
I have considered rival contentions and carefully gone through the orders of the authorities below and found that CIT(A) has restricted the addition to 12.5% by following the decision of Gujarat High Court in case of Simit P Sheth 356 ITR 451. Contention of learned AR was that rate of VAT in the case applied by CIT(A) was 12.5% whereas in the instant case, the rate of VAT tax on purchase was just 5%.
We found that comparative rate of gross profit disclosed by the assessee during the assessment year 2009-10 was 32%, 2010-11 was 34.73% and 2011-12 was 33.73%. Thus, the GP rate shown by the assessee appears to be quite reasonable looking to the nature of trade assessee was involved. Under these facts and circumstances upholding addition of 5% being rate of VAT tax on purchases as applicable to the assessee during the years under consideration will serve the purpose of justice. Accordingly, I upheld the addition of Rs.1,95,376/- as against addition of Rs.4,88,440/- upheld by the CIT(A) in the assessment year 2009-10. In the assessment year 2011-12, I uphold addition of 5% being rate of VAT tax on purchase which amounts to be Rs.99,827/- as against addition of Rs.2,49,568/- as upheld by the CIT(A).