SHRI PRANAV NALIN MEHTA ,NAGPUR vs. PR.CIT-1, NAGPUR , NAGPUR
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Income Tax Appellate Tribunal, NAGPUR BENCH
Before: SHRI R.S.SYAL & SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER R.S.SYAL, VP: This appeal by the assessee is directed against the order dated
30-03-2018 passed by the Pr.CIT, Nagpur-1 u/s.263 of Income-tax Act,
1961 (hereinafter also called ‘the Act’) in relation to the assessment
year 2011-12.
The appeal is time barred by 250 days. The assessee has filed an
affidavit explaining the reasons for the delay. We are satisfied with the
reasons. The delay in filing the appeal is, therefore, condoned and the
appeal is admitted for disposal on merits.
2 ITA No.28/Nag/2019 Pranav Nalin Mehta
Briefly stated, the facts of the case are that assessment in this case
was completed by means of an order u/s.143(3) r.w.s.147 assessing
total income at Rs.5,60,590/-. The ld. Pr.CIT, on perusal of records,
observed that the assessee made unsubstantiated purchases amounting
to Rs.6,37,988/- from M/s. Nisha Enterprises which were in the nature
of accommodation entries. He noticed that the AO made an addition of
Rs.51,677/- to the returned income on this score, being, the gross
profit @8.10% on the unsubstantiated purchases of Rs.6,37,988/-. In
his opinion, the addition ought to have been made for the full amount
of purchases at Rs.6,37,988/-. That is how, he set-aside the assessment
order by treating it as erroneous and prejudicial to the interest of the
Revenue directing the AO to frame the assessment afresh.
After hearing the rival submissions and going through the
relevant material on record, it is seen that the assessee recorded bogus
purchases in respect of which the AO made an addition at the gross
profit rate at 8.10%. The view point of the ld. Pr.CIT that the addition
should have been made for the whole amount of purchases is contrary
to various judgments of the Hon’ble High Courts, including, that of the
Hon’ble Bombay High Court in Pr.CIT Vs. M/s. Mohammad Haji
Adam and Company (2019) 104 CCH 0391 Mum-HC holding that
addition cannot be made for the bogus amount of purchases. In Pr.CIT
3 ITA No.28/Nag/2019 Pranav Nalin Mehta
Vs. Batilboi Environmental Engineering Ltd. (2022) 446 ITR 238
(Bom.), the Hon’ble Bombay High Court has held that only the profit
element in the bogus purchases can be added and not the amount of
purchases. Similar view has been canvassed in PCIT Vs. Paramshakti
Distributors Pvt. Ltd. ( ITA No.413/2017 dated 15-07-2019).
In view of the above discussion, it is clear that the AO passed the
correct order by making the addition towards gross profit on the bogus
purchases. The view point of the ld. Pr.CIT that the addition should
have been made towards the amount of purchases is, ergo, not
sustainable. We, therefore, overturn the impugned order.
In the result, the appeal is allowed.
Order pronounced in the Open Court on 23rd August, 2023.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT
पुणे / Pune; �दनांक / Dated : 23rd August, 2023 Satish
4 ITA No.28/Nag/2019 Pranav Nalin Mehta
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. !यथ� / The Respondent. 2. 3. The Pr.CIT concerned. "वभागीय �त�न%ध, आयकर अपील�य अ%धकरण, “नागपुर” ब'च, 4. / DR, ITAT, “Nagpur” Bench गाड� फ़ाइल / Guard File. 5. // True Copy // आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपील�य अ%धकरण, पुणे / ITAT, Pune
Date 1. Draft dictated on 22-08-2023 Sr.PS 2. Draft placed before author 23-08-2023 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
