ITAT Mumbai Judgments — August 2017

The Tribunal upheld the CIT(A)'s estimation of GP at 13.13% as a reasonable measure, dismissing the revenue's grounds on this issue. The Tribunal also allowed the assessee's appeal on the Section 40(a)(ia) disallowance, holding that it was a case of shortfall in TDS deduction, not non-deduction, and thus Section 40(a)(ia) was not applicable.

The Tribunal upheld the order of the CIT(A), stating that the AO failed to discharge the onus to prove that the apparent purchases were not real. The assessee had provided documentary evidence, and the AO did not verify these or ask for the stock register.

The Tribunal recalled its ex-parte order and heard the appeal. It directed the AO to recompute the income by estimating the profit rate at 8% on the bogus purchases, considering a Settlement Commission order for similar issues in other assessment years.

The Tribunal observed that the assessee was not interested in prosecuting the appeal due to the failure to rectify defects and non-appearance. Therefore, the appeal was considered incomplete and invalid.

The Tribunal upheld the CIT(A)'s estimation of profit at 12.5% on bogus purchases, finding it to be a fair estimation in the absence of specific material. The Tribunal agreed with the CIT(A)'s reasoning and dismissed the Revenue's appeal.

The Tribunal held that the reopening of assessment was valid as it was based on tangible material. However, it ruled that only the profit element on the alleged bogus purchases, not the entire purchase price, should be added to the income.

The Tribunal held that unabsorbed depreciation available on April 1, 2002, is to be dealt with as per the amended Section 32(2) of the Income Tax Act, 1961, which allows indefinite carry forward. The Gujarat High Court's decision in General Motors India Pvt. Ltd. was followed.