ITAT Mumbai Judgments — August 2018

The Tribunal, while not fully convinced by the assessee's reasons for non-appearance, decided to provide one more opportunity for the assessee to present their case on merits to meet the ends of justice. The CIT(A)'s ex-parte order was set aside.

The Tribunal noted that the assessee was presenting new facts not considered by the lower authorities and that the CIT(A) had passed an ex-parte order. In the interest of natural justice, the case was restored to the CIT(A) for a fresh adjudication.

The Tribunal held that the segregation of composite and interlinked services into separate segments for TP adjustment was not justified and directed the AO/TPO to re-examine the issue on a composite basis. It also held that liquidated damages cannot be considered direct costs for computing gross profit margin.

The Tribunal held that while the purchases were not entirely genuine, the assessee had provided basic evidence. Therefore, instead of disallowing the entire purchase, the AO was directed to estimate a net profit of 12.5% on the alleged bogus purchases.

The Tribunal held that the transactions were illusory and bogus, supported by SEBI's confirmation that no such trades were carried out. The assessee was found to be a beneficiary of these accommodation entries provided by the broker.

The Tribunal held that the assessee had discharged its onus by providing all necessary documentary evidence to prove the identity, creditworthiness, and genuineness of the loan transactions. The AO failed to make any independent inquiry or seek further information from the assessee or the creditors.

The Tribunal, following its own precedent in an identical case for AY 2009-10, decided to sustain the addition to the extent of 8% of the value of alleged bogus purchases.