CIT v. Bholanath Poly Fab. Pvt. Ltd.

ACIT Cir 4(2), Mumbai vs. Kaysons Agencies P.Ltd, Mumbai

The appeal of the assessee is partly allowed

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year:2007-08

…med. Hon'ble Apex Court in Kachwala Gems vs JCIT (2007) 158 taxman 71 observed that an element of guesswork is inevitable in cases, where estimation of income is warranted. 3.2. The Hon'ble Gujarat High Court in CIT vs Bholanath Poly Fab. Pvt. Ltd. (2013) 355 ITR 290 (Guj.) held/observed as under:- “5. Having come to such a conclusion, however, the Tribunal was of the opinion that the purchases may have been made from bogus parties, nevertheless, the purchases themselves were not bogus. The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock…

Kaysons Agencies Pvt. Ltd., Mumbai vs. A.C.I.T.Cir.4(2), Mumbai

The appeal of the assessee is partly allowed

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year:2007-08

…med. Hon'ble Apex Court in Kachwala Gems vs JCIT (2007) 158 taxman 71 observed that an element of guesswork is inevitable in cases, where estimation of income is warranted. 3.2. The Hon'ble Gujarat High Court in CIT vs Bholanath Poly Fab. Pvt. Ltd. (2013) 355 ITR 290 (Guj.) held/observed as under:- “5. Having come to such a conclusion, however, the Tribunal was of the opinion that the purchases may have been made from bogus parties, nevertheless, the purchases themselves were not bogus. The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock…

Kaysons Agencies P.Ltd, Mumbai vs. ACIT Cen Cir 20, Mumbai

The appeal of the assessee is partly allowed

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year:2007-08

…med. Hon'ble Apex Court in Kachwala Gems vs JCIT (2007) 158 taxman 71 observed that an element of guesswork is inevitable in cases, where estimation of income is warranted. 3.2. The Hon'ble Gujarat High Court in CIT vs Bholanath Poly Fab. Pvt. Ltd. (2013) 355 ITR 290 (Guj.) held/observed as under:- “5. Having come to such a conclusion, however, the Tribunal was of the opinion that the purchases may have been made from bogus parties, nevertheless, the purchases themselves were not bogus. The Tribunal adverted to the facts and data on record and came to the conclusion that the entire quantity of opening stock…

Maheshkumar D. Chandak, Mumbai vs. DCIT 15(2), Mumbai

The appeal of the assessee is partly allowed

Bench: Shri G.S.Pannu, Am & Shri Ravish Sood, Jm आयकर अपील सं./ I.T.A. No. 2732/Mum/2016 (निर्धारण वर्ा / Assessment Year: 2009-10) Shri Mahesh Kumar D. Chandak, Dcit 15(2), 102/104 Praveen House, बिधम/ Mumbai 2Nd Floor, 1St Pathan Street, Vs. 4Th Kumbharwadi Mumbai- 400004 स्थायीलेखासं./जीआइआरसं./ Pan/Gir No. Acypc2181J (अपीलाथी/Appellant) (प्रत्यथी / Revenue) :

…m certain unknown parties, therefore, an addition towards the peak investment in respect of the said purchases was not justified. The CIT(A) thus concluded that as held by the Hon’ble High Court Gujarat in the case of CIT Vs. Bholanath Ployfab Pvt. Ltd (2013) 355 ITR 290 (Guj), in a case where it is established that the assessee had made the purchases of the goods, although not from the parties in question but from unknown parties operating in the open/grey market, then only the profit margin embedded in such amount of purchases could be brought to tax. The CIT(A) thus holding a conviction that the sole issue inv…

Shreekishan Joshi, Mumbai vs. DCIT 30(3), Mumbai

In the result, the appeals are partly allowed

Bench: Shri C.N. Prasad () & Shri N.K. Pradhan () Assessment Year: 2009-10 & Assessment Year: 2010-11

…the position, not the entire purchase added to the income of the assessee. The Hon’ble High Court referred to a similar view taken in the case of CIT vs. Vijay M. Mistry Construction Ltd. [2013] 355 ITR 498 (Guj) and CIT vs. Bholanath Poly Fab (P) Ltd. [2013] 355 ITR 290 (Guj). In view of the above, we set aside the order of the Ld. CIT(A) and direct the AO to estimate profit @ 6.96% on the purchases of Rs.70,97,399/- in AY 2009-10 and @ 5.67% on the purchases of Rs.1,08,73,782/- in A.Y 2010-11. Thus we allow the 2nd ground of appeal for the AY 2009-10 and AY 2010-11. 7.2 As the penalty u/s 271(1)(c) has been ini…

Shreekishan Joshi, Mumbai vs. DCIT 30(2), Mumbai

In the result, the appeals are partly allowed

Bench: Shri C.N. Prasad () & Shri N.K. Pradhan () Assessment Year: 2009-10 & Assessment Year: 2010-11

…the position, not the entire purchase added to the income of the assessee. The Hon’ble High Court referred to a similar view taken in the case of CIT vs. Vijay M. Mistry Construction Ltd. [2013] 355 ITR 498 (Guj) and CIT vs. Bholanath Poly Fab (P) Ltd. [2013] 355 ITR 290 (Guj). In view of the above, we set aside the order of the Ld. CIT(A) and direct the AO to estimate profit @ 6.96% on the purchases of Rs.70,97,399/- in AY 2009-10 and @ 5.67% on the purchases of Rs.1,08,73,782/- in A.Y 2010-11. Thus we allow the 2nd ground of appeal for the AY 2009-10 and AY 2010-11. 7.2 As the penalty u/s 271(1)(c) has been ini…

Hans Chemicals P.Ltd, Mumbai vs. ITO 12(2)(3), Mumbai

In the result, this appeal by the assessee stands dismissed

Bench: Shri Shamim Yahya

…hat the items purchased were used as input into assessee's product for sales which have been accepted by the department. It is noted that only profit element is liable to tax in such cases as was held in the case of : 1. CIT vs. Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj). (HC) 2. CIT v Simit P. Sheth (2013) 356 ITR 451 (Guj) (HC) 3. CIT vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) 4. ITO vs. Permanand (2007) 107 TTJ 395 (Jd)(Trib.) 5. Madhukant B. Gandhi vs. ITO ITA No. 1950/M/2009 Bench 1B' dt. 23-02-2010 (AY 2005-06) (Mum.)(Trib,) 6. Sanjeev Woolen Millls Vs. CIT (2005) 279 ITR 434 (SC) 6. Sanj…

ACIT 25(3), Navi Mumbai vs. Shree Ganesh Developers, Mumbai

In the result, the appeal filed by the revenue is dismissed

Bench: S/Shri B.R. Baskaran (Am) & Ramlal Negi (Jm)

…en it was not shown that the funds have flown back to the assessee. Identical view was taken in the case of M.K. Brothers (163 ITR 249)(Guj). The Ld CIT(A) noticed that the Hon’ble Gujarat High Court has held in the case of CIT Vs. Bholanath Poly Fab Pvt Ltd (355 ITR 290) and CIT Vs. Simit P Sheth has held that the profit element involved in the alleged bogus purchases is required to be assessed. The Ld CIT(A) noticed that the Mumbai bench of Tribunal has deleted the addition relating to bogus purchases in the case of DCIT Vs. Rajeev G Kalathil (51 taxman.com 514) by holding that the addition cannot be made on su…

DCIT Cir 29(3), Mumbai vs. SMC Sbk Jv, Mumbai

In the result, appeal of the Revenue is dismissed

Bench: Shri R.C.Sharma, Am & Shri Ravish Sood, Jm Dcit Cir 29(3), Mumbai – Vs. Smc Sbk Jv 400 051 Shop No.2, Aakruti Elgance, 90 Feet Road Govanpada, Mulund (W), Mumbai – 400 080 Pan/Gir No. Ablfs7647H Appellant) .. Respondent)

…ut in the assessment order. The decisions of various ITAT/High Court on identical facts are also considered to decide the issue in the present case. Some of the recent Cases, which are also relied upon by the AR, are as under:- 6.5 In Bholanath Polyfab P.Ltd. 355 ITR 290 (Guj), the facts of the case were that the assessee was engaged in the business of trading in finished fabrics. For the A.Y. 2005-06, the A.O held that the purchases worth RAO,69,546/-were unexplained. He, therefore, disallowed such expenditure claimed by the assessee and computed the total income of Rs.41,10,187/-. The issue was carried in appea…

Metal Power Analytical (I) P.Ltd, Mumbai vs. DCIT 8(2), Mumbai

In the result, the appeal is partly allowed

Bench: Shri Joginder Singh () & Shri N.K. Pradhan () Assessment Year: 2010-11

…ioned in the books of account, only profit element embedded in such 9 purchases could be added to assessee’s income. The decision in the case of CIT vs. Vijay M. Mistry Construction Ltd. (2013) 355 ITR 498 (Guj) and CIT vs. Bholanath Poly Fab (P) Ltd. (2013) 355 ITR 290 (Guj) was followed by the Hon'ble High Court. 8.3 In the instant appeal, the facts being similar, we have to ascertain the profit element embedded in such purchases which can be added to the income of the assessee. We find it just and fair to estimate 12.5% of the purchase cost of Rs. 62,40,000/- as the profit element and direct the A.O. to adop…

ITO WD 23(2)(4), Mumbai vs. Mukesh Kantial Shah (HUF), Mumbai

Bench: Shri B.R Baskaran, Am & Shri Ravish Sood,Jm आयकर अपील सं./ I.T.A. No.6756/Mum/2014 (निर्धारण वर्ा / Assessment Year: 2009-10) Income Tax Officer, M/S Mukesh Kantilal Shah (Huf) Ward 23(2)(4); B-12, Chandra Niwas, P.K Road, बिधम/ Mumbai Panch Rasta, Mulund (West) Vs. Mumbai – 400 080. स्थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaghs3814L (अपीलाथी/Appellant) (प्रत्यथी / Respondent : आयकर अपील सं./ I.T.A. No.75/Mum/2014 (निर्धारण वर्ा / Assessment Year: 2009-10) M/S Mukesh Kantilal Shah (Huf) Income Tax Officer, B-12, Chandra Niwas, P.K Road, Ward 23(2)(4); Panch Rasta, Mulund (West) Mumbai Mumbai – 400 080. अपीलाथी की ओर से/Assessee By : Shri Devendra H. Jain प्रत्यथी की ओर से/ Revenue By : Smt. Jyotilakshmi Nayak

…give the color of genuineness to the purchases made by the assessee from the aforesaid parties operating in the grey market. (v). That placing reliance on the judgment of the Hon’ble Gujarat High Court in the case of CIT Vs. Bholanath Polyfab P. Ltd. (2013) 355 ITR 290 (Guj), it was held that as in the case of the present assessee it was observed by the A.O that the assessee did purchase and sell the goods and had offered the income on such sale of goods, therefore neither it could be held that the assessee had carried out purchases in cash, nor the entire purchases could be disallowed. P a g e | 7 (vi). That…

Manish Kanji Patel, Mumbai vs. ITO 4(1)(4), Mumbai

In the result Departmental appeal ground No

Bench: Shri D.T. Garasia, Jm & Ashwani Taneja, Am

…be added he relied on various judgements which reads as under: Sr. No. Copy of Judgments Balaji Textile Industries P Ltd v Third Income Tax Officer [1994] 49 1 ITD 177 2 CIT v Simit P Sheth [2013] 356 ITR 451 (Gujarat) 3 CIT v Bholanath Poly Fab P Ltd [2013] 355 ITR 290 (Gujarat) 4 CIT v Sathynarayan P Rathi [2013]351 ITR150 (Gujarat) ITO v Maharashtra State Co-operative, Consumers' Federation 5 Ltd[2011]13taxmann.com 163 (Mumbai) 6 CIT v Hotline Electronics Ltd [2012] 18 taxmann.com 363 (Delhi) 8. We have heard the rival contention of both the parties looking to the facts and circumstances of the case we find t…

ITO 4(1)(4), Mumbai vs. Manish Kanji Patel, Mumbai

In the result Departmental appeal ground No

Bench: Shri D.T. Garasia, Jm & Ashwani Taneja, Am

…be added he relied on various judgements which reads as under: Sr. No. Copy of Judgments Balaji Textile Industries P Ltd v Third Income Tax Officer [1994] 49 1 ITD 177 2 CIT v Simit P Sheth [2013] 356 ITR 451 (Gujarat) 3 CIT v Bholanath Poly Fab P Ltd [2013] 355 ITR 290 (Gujarat) 4 CIT v Sathynarayan P Rathi [2013]351 ITR150 (Gujarat) ITO v Maharashtra State Co-operative, Consumers' Federation 5 Ltd[2011]13taxmann.com 163 (Mumbai) 6 CIT v Hotline Electronics Ltd [2012] 18 taxmann.com 363 (Delhi) 8. We have heard the rival contention of both the parties looking to the facts and circumstances of the case we find t…

ITO 4(1)(4), Mumbai vs. Manish Kanji Patel, Mumbai

In the result Departmental appeal ground No

Bench: Shri D.T. Garasia, Jm & Ashwani Taneja, Am

…be added he relied on various judgements which reads as under: Sr. No. Copy of Judgments Balaji Textile Industries P Ltd v Third Income Tax Officer [1994] 49 1 ITD 177 2 CIT v Simit P Sheth [2013] 356 ITR 451 (Gujarat) 3 CIT v Bholanath Poly Fab P Ltd [2013] 355 ITR 290 (Gujarat) 4 CIT v Sathynarayan P Rathi [2013]351 ITR150 (Gujarat) ITO v Maharashtra State Co-operative, Consumers' Federation 5 Ltd[2011]13taxmann.com 163 (Mumbai) 6 CIT v Hotline Electronics Ltd [2012] 18 taxmann.com 363 (Delhi) 8. We have heard the rival contention of both the parties looking to the facts and circumstances of the case we find t…

ACIT 16(3), Mumbai vs. Tirupati Earth Neeprima Jv, Mumbai

In the result, all the appeals of Revenue are dismissed

Bench: Sri Mahavir Singh, Jm & Sri Manoj Kumar Aggarwal, Am

…ue would boil down to finding out the element of profit embedded in such purchases which the appellant would have made from some unknown entities. In this regard, it is apt to refer to decision of Gujarat High Court in the case of Bholanath Poly Fab Pvt. Ltd. 355 ITR 290 (Guj) where the Hon’ble Court was battling with the finding of Hon'ble ITAT that purchases were made from bogus parties since notice issued by the A.O. to these parties were allegedly received 'returned/unserved' and the assessee was unable to produce any confirmation from these parties. The Tribunal had held that though purchases were made from…

Asst CIT 16(3), Mumbai vs. Tirupati Earth Neeprima Jv, Mumbai

In the result, all the appeals of Revenue are dismissed

Bench: Sri Mahavir Singh, Jm & Sri Manoj Kumar Aggarwal, Am

…ue would boil down to finding out the element of profit embedded in such purchases which the appellant would have made from some unknown entities. In this regard, it is apt to refer to decision of Gujarat High Court in the case of Bholanath Poly Fab Pvt. Ltd. 355 ITR 290 (Guj) where the Hon’ble Court was battling with the finding of Hon'ble ITAT that purchases were made from bogus parties since notice issued by the A.O. to these parties were allegedly received 'returned/unserved' and the assessee was unable to produce any confirmation from these parties. The Tribunal had held that though purchases were made from…

Asst CIT 16(3), Mumbai vs. Tirupati Earth Neeprima Jv, Mumbai

In the result, all the appeals of Revenue are dismissed

Bench: Sri Mahavir Singh, Jm & Sri Manoj Kumar Aggarwal, Am

…ue would boil down to finding out the element of profit embedded in such purchases which the appellant would have made from some unknown entities. In this regard, it is apt to refer to decision of Gujarat High Court in the case of Bholanath Poly Fab Pvt. Ltd. 355 ITR 290 (Guj) where the Hon’ble Court was battling with the finding of Hon'ble ITAT that purchases were made from bogus parties since notice issued by the A.O. to these parties were allegedly received 'returned/unserved' and the assessee was unable to produce any confirmation from these parties. The Tribunal had held that though purchases were made from…

Shree Gurudev Traders, Boisar vs. ITO WD 4 Palghar, Palghar

In the result, appeals of the assessee are allowed in part

Bench: Shri R.C.Sharma, Am

…consider affidavit made by the above party. Further I required affidavit copy of above party. 2. I am also enclosing Xerox copy of the decision Gujrat High Court CIT V/so Simith P. Seth (2013) 356 ITR 451 (Gujrat) & ict v/s. Bholenath Polyfab Pvt. Ltd. (2013) 355 ITR 290 (Gujrat) for your record." 4. However, AO did not agree with assessee’s contention and added entire purchases in assessee’s income. 5. By the impugned order, CIT(A) confirmed the same. Assessee is in further appeal before us. 6. I have gone through the orders of the authorities below and deliberated on the judicial pronouncements cited at bar. F…

DCIT 13(3)(1), Mumbai vs. Royal Palms (India )P. Ltd, Mumbai

Bench: Shri D.T.Garasia () & Shri Ashwani Taneja ()

…e considered view that in the context of the situation , the cause of justice would be served by looking at the gross profit margins being declared by the appellant. Recently Hon'ble Gujarat High Court in the case of CIT vs. Bholanath PolyFab Pvt. Ltd. (2013) 355 ITR 290 and thereafter in the case of CIT vs. Simit P. Sheth2013) 219 Taxman 85 (Guj) has held that in such facts and circumstances, not entire purchase price but only profit element embedded in such purchases can be added. The finding of the Hon'ble Gujarat High Court in the case of CIT vs. Simit P. Seth is as under:- "We are broadly in agreement with t…

ITO 32(2)(5), Mumbai vs. Pushpaben R.Shah, Mumbai

In the result, both the appeals of Revenue are partly allowed

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

…d by Sales Tax Authorities from these parties held that the assessee’s purchases are bogus and accordingly considering the decision of Hon’ble Gujarat High Court in the case of CIT v. Smith P Seth (2013) 365 ITR 451(GJ) and Bholanath Poly Fab Pvt. Ltd. (2013) 355 ITR 290 applied profit rate at the rate of 12.5% of the bogus purchases at Rs.3,79,80,768 and made addition accordingly for an amount of Rs. 47,47,596/-. For this the AO gave following reasons: - “a. The assessee has failed to substantiate the claim' of purchases made from the parties against overwhelming evidence in the form of depositions, affidavits e…