CIT v. Simit P. Sheth

ITO 29(1)(5), Mumbai vs. Jayprkash D. Barbhaya, Mumbai

In the result, the departmental appeal is dismissed

Bench: Shri D.T. Garasia & Shri Rajesh Kumarassessment Year: 2009-10 Assessment Year: 2010-11

…ncy as well as of taxation laws that profit from business cannot be ascertained without deducting cost of purchase from sales. Estimation of profit ranging from 12.5% to 15% has been upheld by the Hon'ble Gujarat High Court in the case of CIT vs Simit P Sheth 356 ITR 451 (Guj.). Respectfully following the decision of Hon’ble Gujarat High Court in the case of CIT vs. Simit P. Sheth 38 taxman 385 (Guj), I direct the AO to estimate the GP @ 12.5% of the total purchases which comes to Rs.60,54,235/- for A.Y. 2009-10. Shri Jayprakash D. Barbhaya 6. In the result, the departmental appeal is dismissed. ITA No.3607/M/20…

Aas Mohammed Khan (Prop.Perfect Steel Corporation), Mumbai vs. Assistant Commissioner of Income Tax 26(1)(1), Mumbai

In the result, assessee’s appeal is partly allowed

Bench: Shri D.T. Garasia

…ncy as well as of taxation laws that profit from business cannot be ascertained without deducting cost of purchase from sales. Estimation of profit ranging from 12.5% to 15% has been upheld by the Hon'ble Gujarat High Court in the case of CIT vs Simit P Sheth 356 ITR 451 (Guj.). The Bombay benches of the Tribunal has taken a consistent view that if the assessee is doing iron and steel business then assessee might have saved the VAT i.e. up to 4 to 6 %. Therefore to link up the defect, I direct the AO to take the GP @ 8% of the total bogus purchases which comes to Rs.2,57,563/-. 6. In the result, assessee’s appea…

Income Tax Officer, Ward-3(2), Kalyan, Mumbai vs. Dinesh Devchand Sanghvi, Mumbai

In the result, departmental appeal is dismissed

Bench: Shri D.T. Garasiaassessment Year: 2009-10 Income Tax Officer, Shri Dinesh Devchand Sanghvi, 205, Jom Villa, 2Nd Floor, Ward 3(2), Kalyan, Vs. 2Nd Floor, Rani Mansion, S.P. Mukherjee Road, Kalyan-Murbad Road, Dombivali East Nr. Sbi, Kalyan (W)-421 301 Pan: Amups0932R (Appellant) (Respondent) Present For: Assessee By : Smt. Bindu D. Sanghavi, A.R. Revenue By : Smt. N. Hemalatha, D.R. Date Of Hearing : 07.11.2017 Date Of Pronouncement : 23.11.2017 O R D E R

…the purchases. The appellate authorities in such cases have restricted the additions varying from 3% (Shri Jitendra Motani l.T,A.No.5927/Mum/2009 A.Y 2006-07 and l.T.A.Nos.3024 to 3028/Mum/08 for A.Yrs.2001-02 to 2003-04 and 2005-06) to 12.5% (Simit P. Sheth 356 ITR 451, Gujrat,). The appellate authorities have also stressed upon the reasonability of the profit shown by the assessee while making any such disallowance (Ramesh Kumar and Co. v/s ITAT Mumbal (ITA No. 2959/Mum/2014). In the case of the assessee, out of total purchases of Rs, 43,44,838/-, the Purchases of Rs. 41,20,076/- are disallowed by the AO, whic…

Ramniklal S. Savla, Mumbai vs. ITO-19(3)(1), Mumbai

In the result, appeal of the assessee is dismissed

Bench: Shri D.T. Garasiaassessment Year: 2010-11 Shri Ramniklal S. Savla, Ito 19(3)(1), Room No.202, 2Nd Floor, Prop. Of M/S. Parag Steel, 74, Muljibhai Building, Matru Mandir, Tardeo, Vs. Khetwadi Main Road, Mumbai – 400 007 Behind Alankar Cinema, Mumbai-400 004 Pan: Aacps7486C (Appellant) (Respondent) Present For: Assessee By : None Revenue By : Smt. N. Hemalatha, D.R. Date Of Hearing : 06.11.2017 Date Of Pronouncement : 23.11.2017 O R D E R

…ayee cheques cannot be conclusive in a case where genuineness of delivery/transaction is in doubt and held that the payments made through account payee cheques are not sacrosanct and further relying on the Gujarat High Court decision of CIT vs. Simit P. Sheth 356 ITR 451 proceeded to make an addition @12.% of the total purchases of Rs.2,33,89,804/- which comes to Rs.29,23,7267/- 4. Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has partly allowed the claim by observing as under: “3.3.2. The action of the AO in making an addition of 12.5% of the alleged bogus purchases is confirmed. However, the AO is direc…

Deepak Gogri, Mumbai vs. ITO 25(3)(2), Mumbai

In the result, appeal of the assessee is allowed

Bench: Shri C.N. Prasad, Hon'Ble & Shri Rajesh Kumar, Hon'Ble

…on certain purchases treated as unexplained expenditure. Assessing Officer did not doubt the sales made by the assessee from out of such purchases. Assessing Officer based on the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [356 ITR 451] estimated the profit element in such purchases at 12.5% and by reducing the Gross Profit already declared by the assessee. In the circumstances, we hold that there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation. Coming to the interest, the assessee furnished com…

Asst CIT 5(3)(2), Mumbai vs. Samdani Steels P.Ltd, Mumbai

In the result, appeal of the Revenue is dismissed whereas appeal of assessee is allowed in part

Bench: Shri R.C.Sharma, Am & Shri Ravish Sood, Jm Asst. Cit 5(3)(2) Vs. M/S. Samdani Steels R.No.519, Aayakar Bhavan Pvt.Ltd., M.K. Road, 65/73, Habib Building R.No.16, 1St Floor Mumbai -400020 C.P. Tank Road Mumbai – 400 004 Pan/Gir No. Aakcs1663A Appellant) .. Respondent) M/S. Maruti Inox (India) Pvt. Ltd., Vs. Dcit 5(3) (Formerly Kniwn As Samdani Aayakar Bhavan Steel Pvt. Ltd.,) Mumbai 65/73, Habib Building R.No.16, 1St Floor C.P. Tank Road Mumbai – 400 004 Pan/Gir No.Aakcs1663A Appellant) .. Respondent)

…ti Inox(India) Pvt. Ltd., dealers were not genuine, accordingly he added the entire amount of purchases by invoking provisions of Section 69C. 20. By the impugned order CIT(A) after relying on the decision of the Gujarat High Court in the case of Simit P Shah 356 ITR 451 restricted addition to the extent of 12.5% of the disputed bogus purchases. 21. We found that during assessment proceedings the assessee has submitted all evidences in support of the alleged bogus purchases alognwith corresponding sales which the Assessing Officer has not found any deficiency or defects. Quantitative details of each commodity in…

ITO 26(2)(1), Mumbai vs. Keyur Shailesh Sanghvi, Mumbai

Bench: Shri R. C. Sharma, Am & Shri Sandeep Gosain, Jm आयकरअपीलसं./ I.T.A. No. 2592/Mum/2017, (निर्धारणवर्ा / Assessment Year: 2009-10)

…enuine parties is required to be estimated. The estimation of rate of profit must necessarily vary with the nature of business and no uniform yardstick should be adopted for which reliance is placed on the recent judgment in the case of CIT vs. Simit P. Sheth 356 ITR 451 (Guj.) of Hon'ble Gujrat High Court wherein disallowance on account of bogus purchases in the case of traders was sustained at 12.5% of the alleged bogus purchases. 4.2.20 In such a case, the best course of action would be to apply OP ratio and confirm certain percentage of alleged purchases to cover any leakage of revenue. In the given circumsta…

ITO 5(2)(2), Mumbai vs. Kanak Alloys Steel Ltd, Mumbai

In the result, appeal filed by the revenue is dismissed

Bench: Shri Mahavir Singh () & Shri G Manjunatha ()

…urchases with any evidence. Aggrieved by the assessment order, assessee preferred appeal before CIT(A). The CIT(A), for the detailed discussion in his order dated 29-08-2016, by following the decision of Hon’ble Gujarat High Court in the case of Simit P Sheth 356 ITR 451 (Guj) directed the AO to estimate net profit of 12.5% of the alleged bogus purchases. The relevant observations of the CIT(A) are extracted below:- 5.2. I have carefully considered the facts of the case and the submissions of the Id.AR. I have also gone through the decisions relied on by the AO and the ld.AR. As seen from the facts of the case…

ITO WD 3(1), Thane vs. Omkar Heavy Engineering Ltd, Thane

In the result, appeal filed by the assessee and the appeal filed by the

Bench: Shri Saktijit Dey() & Shri G Manjunatha ()

…e taken a consistent view in the case of bogus purchases and after considering various factors has upheld estimation of profit ranging from 12.5% to 25% depending upon the nature of business. The Hon’ble Gujarat High Court in the case of CIT vs Simit P Sheth 356 ITR 451 (Guj) observed that no uniform yardstick can be applied for estimation of net profit which depends upon nature of business of the assessee. The Hon’ble Gujarat High Court in the 11 M/s Omkar Heavy Engineering Ltd case of Vijay Proteins Ltd vs CIT Income Tax Reference No. 139 of 1996 order dated 21-07-2014 held that only profit element embedded…

Hemant R. Sanghavi, Mumbai vs. Asst CIT 16(2), Mumbai

In the result the assessee appeal is dismissed

Bench: Shri R.C.Sharma, Am & Shri Ram Lal Negi, Jm Shri Hemant R. Sanghavi Vs. Asst. Cit 16(2) R.No.210, 2Nd Floor D-502, Kukreja Palace Vallabh Baug Lane Matru Mandir, Extension-Ghatkopar (E) Tardeo Road Mumbai – 400 075 Mumbai – 400 007 Pan/Gir No.Aagps4816C Appellant) .. Respondent) Asst. Cit 19(1) Vs. Shri Hemant R. Sanghavi 2Nd Floor, Matru Mandir 411, Arihant Building, 4Th Floor, Ahmedabad Street Tardeo Road, Mumbai – 400 007 Carnac Bunder, Mumbai – 400 009 Pan/Gir No. Aagps4816C Appellant) .. Respondent)

…- 5% (GP already admitted)} following the decision of his predecessor for AY 2010-11. The Ld. CIT(A) while upholding the proportionate disallowance for AY 2010-11 had relied upon the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit Seth (356 ITR 451). However, the Hon'ble Gujarat High Court while deciding the appeal has held that Tribunal only estimated the possible profit out of purchases made through non-genuine parties and thus no question of law in such estimation would arise. The Hon'ble Ahemdabad Tribunal in ITA No. 3238 & 3293/Ahd/2009 while deciding the appeal has categorically held…

Filtertechniks P.Ltd, Mumbai vs. ITO 8(1)(4), Mumbai

In the result, appeal of the assessee is partly allowed

Bench: Shri Rajendra, Hon'Ble & Shri C.N. Prasad, Hon'Ble

…ngaged in the manufacture of engineering goods which are manufactured as per the customers’ drawings and designs and the items are not standard goods. Assessee also relied on the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Sheth [356 ITR 451] and submitted that on identical circumstances only 12.5% have been disallowed not the entire purchases. 4 ITA.No.1561/MUM/2016 (A.Y: 2011-12) Filtertechniks Private Ltd. 4. However, the Assessing Officer concluded that the parties from whom the assessee said to have been purchased the material namely M/s. Om Traders, M/s. S.M. Trading & M/s.Mah…

Svphn Steel Service, Mumbai vs. ITO 25(3)(4), Mumbai

In the result, appeal of the assessee is allowed in part

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm M/S. Svphn Steel Service Vs. Ito 25(3)(4), Mumbai – B-26, Hastiraj Bapubha 400 050 Vashi Road, Vile Parle (W) Mumbai – 400056 Pan/Gir No.Aabfs2247J Appellant) .. Respondent)

…the AO that he has accepted the corresponding sales and was only disputing profit element on such purchases. The CIT(A) has confirmed the action of the AO estimating profit at 12.5% by relying on the decision of Gujarat High Court in the case of Simit P Seth 256 ITR 451. It was argued by learned AR that in the case of Simit P Seth estimation of 4 M/s. SVPHN Steel Service profit of 12.5% by the High Court was made on the plea that rate of VAT was 10% in Gujarat and additional 2.5% profit was estimated. However, in the State of Maharashtra, where assessee carries on its business, the VAT is 4%, therefore, in place…

Asst CIT 25(3), Mumbai vs. P.B. Construction Compnay, Mumbai

In the result, the appeal of the revenue stands dismissed

Bench: Shri D.T.Garasia, Jm & Shri Rajesh Kumar, Am

…partly allowed the appeal of assessee restricting the addition to the tune of 12.5% of the alleged purchases by following the decision rendered by the Hon’ble Gujarat High 3 I . T . A . N o . 3 1 6 5 / M u m / 2 0 1 7 Court in the case of Simit P Seth, 2013(356 ITR 451). Aggrieved by the order of the FAA, the revenue is in appeal before us. 4. We have carefully considered the rival submissions and perused the material placed before us including the impugned orders of authorities below. The undisputed facts are that the assessee is a beneficiary of bogus purchases to the tune of Rs.95,48,660/- which could not be…

DCIT 10(2)(2), Mumbai vs. Minex Metallurgical Co. Ltd, Mumbai

In the result, appeals filed by the revenue for assessment years 2009-10

Bench: Shri Rajendra, Am & Shri Ram Lal Negi, Jm आिकर अपील सं./Ita No. 7345/Mum/2016 (धििाारण वर्ा / Assessment Year: 2009-10) The Dcit – 10(2)(2), Vs. M/S Minex Metallurgical Room No. 209, 2Nd Floor, Company Limited, Aayakar Bhavan, M.K. Road, 301, Rajguru Apartments, Mumbai - 400020 New Nagardas Road, Andheri (East), Mumbai - 400069 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacm7315B (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) आिकर अपील सं./Ita No. 7346/Mum/2016 (धििाारण वर्ा / Assessment Year: 2010-11) The Dcit – 10(2)(2), Vs. M/S Minex Metallurgical Room No. 216A, 2Nd Floor, Company Limited, Aayakar Bhavan, M.K. Road, 301, Rajguru Apartments, Mumbai - 400020 New Nagardas Road, Andheri (East), Mumbai - 400069 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacm7315B (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) यनर्ावररती की ओर से /Revenue By : Shri V. Jenardhanan (Dr) राजस्व की ओर से / Assessee By : Shri Paresh Shaparia (Ar) Date Of Hearing: 17/08/2017 Date Of Pronouncement: 10/11/2017 आदेश / O R D E R Per Ram Lal Negi, Jm These Appeals Have Been Filed By The Revenue Against The Orders Dated 23/09/2016 Passed By The Ld. Commissioner Of Income Tax (Appeals)-17, Mumbai, For The Assessment Years 2009-10 & 2010-11 Respectively, Whereby The Ld. Cit (A) Has Partly Allowed The Appeals Filed By The Assessee Against Assessment Years: 2009-10 & 2010-11

…ai Tribunal, has observed that merely because the suppliers had not appeared before the Assessing Officer or the CIT (A) one could not conclude that the purchases were not made by the respondent/assessee. The Hon’ble Gujrat High Court in CIT vs. Simit P. Seth 356 ITR 451(Guj) upheld the decision of the Tribunal and sustained the addition 12.5% of the total bogus purchases holding that only Assessment Years: 2009-10 & 2010-11 profit element embedded in such purchases can be added to income of the assessee. Hence, following the principles of law laid down by the Hon’ble High Courts of Bombay and Gujarat, discusse…

Piyush L Rambhia, Mumbai vs. ITO 30(2)(5), Mumbai

In the result, the appeal of the assessee is partly allowed

Bench: Shri C.N. Prasad, Jm & Shri Rajesh Kumar, Am Piyush L Rambhia Income Tax Officer-30(2)(5), C-13, 5Th Floor, B-403, Ankur Chs, फनधभ/ Nana Shankar Seth Chowk, Bkc Bandra, Vs. Malad(W) Mumbai-400051 Mumbai--400064 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) : स्थधमी रेखध सं./ Pan : Adrpr2130C अऩीरधथी की ओय से / Assessee By : Shri Hemant Sharma प्रत्मथी की ओय से/ Revenue By : Ms.Arju Garodia सुनवधई की तधयीख /Date Of Hearing : 28.9.2017 घोषणध की तधयीख /Date Of Pronouncement : 10.11.2017 आदेश / O R D E R Per Rajesh Kumar, A. M: This Is An Appeal Filed By The Assessee Challenging The Order Dated 1.7.2016 Of Ld.Cit(A) Upholding The Addition At 30% Amounting To Rs.15.20 Lakhs Of The Alleged Bogus Purchases With Regard To The Assessment Year 2009-10 As Against The 100% Made By The Ao.

…refore, it is held that the 4 appellant has failed to prove that the goods were purchased from the aforesaid parties. 5.2 On the issue of bogus purchase, decisions like Vijay Proteins Ltd. vs. CIT [2015] 58 taxmann.com 44 (Guj) , CIT vs. Simit P. Sheth [2013] 356 ITR 451 (Guj.) and several other decisions support disallowance of certain percentage of purchase price. The disallowance is justified because the exact source of goods or exact amount of inflation is known to the assessee only. Further, without a much bigger benefit than the normal GP ratio, no prudent person will enter into transactions of purchasing m…

DCIT Cir 3, Thane vs. Shekhar M Kharote, Thane

In the result, the appeal of Revenue is dismissed

Bench: Sri Mahavir Singh, Jm & Sri G. Manjunatha, Am The Deputy Commissioner Shekhar M Kharote Of Income Tax Prop. Of Riya Associates Circle-3, Room No. 02, 6 Th 1902, Whitfield, Vs. Floor, Ashar It Park, B-Wing, Hiranandani Meadows, Off. Wagle Indl. Estate, Thane(W)- Pokhran Road No. 2, 400604 Pokhran Thane (W)-400 067 Appellant .. Respondent Pan No.Aeepk8183L

…where the entire cash has been siphoned off, by debiting the bogus purchase. This is a case, where at the most, the purchases/expenses, might have been inflated. Therefore, relying upon the decision of Hon’ble Gujarat High Court, in the case of Simit P Seth, 356 ITR 451 (Gui.) (2013), etc and considering the fact that the appellant being wholesale supplier, I hereby restrict the disallowance to Rs 10,11,970/- @12.5% of bogus purchases of Rs. 80,95,765/- and delete 6 Shekhar M Kharote (AY:09-10) the balance amount of Rs. 70,83,795/- (Rs 80,95,765/- Less Rs 10,11,970/-), which will meet the end of justice. Thus a…

Hitesh Tilokchand Bohra, Mumbai vs. Income Tax Officer-19(1)(5), Mumbai

In the result, appeal for A

Bench: Shri R.C. Sharma

…IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" Bench, Mumbai Before Shri R.C. Sharma, Accountant Member ITA Nos. 4945 & 4946 /Mum/2017 (Assessment Years: 2010-11 & 2011-12) Shri Hitesh Tilokchand Bohra Income Tax Officer-19(1)(5) Shree Chandra Bhawan Room No. 215 Vs. 11/13, Parsiwada Lane Matrumandir, Tardo Road Mumbai 400004 Mumbai 400007 PAN – AERPB7638E Appellant Respondent Appellant by: None Respondent by: Smt. N. Hemalatha Date of Hearing: 24.10.2017 Date of Pronouncement: 09.11.2017 O R D E R Per R.C. Sharma, A.M. These are appeals filed by the assessee against the order of the CIT(A)- 29, Mumbai for assessmen…

Padmaram R. Choudhary, Mumbai vs. ITO 19(2)(5), Mumbai

In the result, appeal filed by the assessee is dismissed

Bench: Shri B.R. Baskaran (Am)

…` 333.90 lakhs. Hence the Assessing Officer reopened the assessment for the year under consideration by issuing notice u/s. 148 of the Act. The Assessing Officer, by following the decision rendered by Hon'ble Gujarat High Court in the case of Simit P. Sheth (356 ITR 451), determined the profit from such bogus purchases at 12.5% of the purchase value, which worked out to ` 41.73 2 Shri Padmaram R. Choudhary lakhs. The Assessing Officer completed the assessment by adding ` 41.73 lakhs to the total income of the assessee. 3. In the appellate proceedings, the learned CIT(A) agreed in principle with the Assessing…

Pratik Enerprises, Mumbai vs. ITO 25(3)(2), Mumbai

In the result, appeal is allowed in part

Bench: Shri R.C.Sharma, Am Pratik Enterprises Vs. Ito – 25(3)(2),Mumbai 201, Shatrunjay Mahant Road, Vile Parle (E) Mumbai – 400 057 Pan/Gir No. Aajfp0010C Appellant) Respondent) ..

…r, they have restricted the addition to the extent of certain profit element having been embedded in such purchases. The CIT(A) has restricted the addition to the extent of 12.5% by relying on the decision of the Gujarat High Court in the case of Simit P Seth 356 ITR 451. It was contended by learned AR that the decision relied on by CIT(A) was pertaining to the Gujarat jurisdiction wherein the rate of VAT is 10%, however which is 4% in Maharashtra, therefore, it was requested that the estimation of profit should be reduced. 7. From the record, I found that during the year assessee had shown profit at 6.64%. Keepi…

Chhaganlal S. Mehta, Mumbai vs. ITO-19(1)(3), Mumbai

In the result, appeal filed by the assessee for assessment year 2009-10 is dismissed

Bench: Shri Rajendra, Am & Shri Ram Lal Negi, Jm आिकर अपील सं./Ita No. 6138/Mum/2016 (धििाारण वर्ा / Assessment Year: 2009-10) Shri Chhaganlal S. Mehta, Vs. The Income Tax Officer, Prop. Mehta Metal Corporation, Ward 19(1) (3), 2Nd Khetwadi Lane, Room No. 220, 1St Floor, Near Alankar Cinema Varsha, Matru Mandir, Tardeo, Mumbai - 400007 Shop No. 5, Mumbai - 400004 स्थािी लेखा सं./जीआइआर सं./Pan/Gir No. : Aekpm5292E (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) यनर्ावररती की ओर से /Assessee By : Shri Rajesh Chamaria (Ar) राजस्व की ओर से / Revenue By : Shri Jenardhanan (Dr)

…not made by the respondent/assessee. Accordingly, we hold that the purchases in question were made by the assessee from gray market in order to evade VAT/other taxes applicable during the relevant period. The Hon’ble Gujrat High Court in CIT vs. Simit P. Seth 356 ITR 451(Guj) upheld the decision of the 5 Assessment Year: 2009-10 Tribunal and sustained the addition 12.5% of the total bogus purchases holding that only profit element embedded in such purchases can be added to income of the assessee. Hence, following the principles of law laid down by the Hon’ble High Courts of Bombay and Gujarat, discussed above,…