Income Tax Appellate Tribunal - Mumbai
Keyman Trading Company P.Ltd, Mumbai vs Ito Wd 5(2)(2), Mumbai on 24 August, 2017
THE INCOME TAX APPELLATE TRIBUNAL
"SMC" Bench, Mumbai
Before Shri B.R. Baskaran (AM)
I.T.A. No. 2684/Mum/2017 (Assessment Year 2009-10)
M/s. Keyman Trading ITO Ward 5(2)(2)
Company Private Limited Vs. Room No. 526
Room No. 221 5 t h Floor
119-JRajmudra Building Aayakar Bhavan
Bhandari Street M.K. Road
Mumbai-400 004. Mumbai-400 020.
(Appellant) (Respondent)
PAN No. AACCK233G
Assessee by Shri Brijmohan
Pooranmal Agarwal
Department by Ms. N. Hemalatha
Date of Hearing 24.8.2017
Date of Pronouncement 24.8.2017
ORDER
The appeal filed by the assessee is directed against the order dated 27- 12-2016 passed by the learned CIT(A)-10, Mumbai and it relates to A.Y. 2009-
10. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the disallowance relating to bogus purchases.
2. The assessee is a dealer in ferrous and non-ferrous metals. Consequent to the information received from the Sales Tax Department that certain dealers are indulging in providing accommodation bills without actually supplying materials and upon noticing that the assessee has purchased goods from such hawala dealers, the Assessing Officer reopened the assessment the year under consideration by issuing notices u/s. 148 of the Act. The aggregate amount of purchases made was Rs.205.24 lakhs in the year under consideration. In the reopened assessment, the Assessing Officer asked the assessee to furnish all relevant details to prove the genuineness of the purchases. After considering the replies, the Assessing Officer held that the genuineness of purchases was 2 M/s. Keyman Trading Company Pr i v a te L i m i te d not proved and accordingly he proposed to add 15% of the value of alleged bogus purchases less the amount computed at 3.19% of the value of bogus purchases, being the average Gross profit declared by the assessee. Accordingly he disallowed a sum of Rs.24.23 lakhs. In the appellate proceedings, the learned CIT(A) confirmed the addition. Aggrieved, the assessee has filed this appeal.
3. Learned AR submitted that the assessee has furnished to the AO the details of purchases and details of sales made out of those purchases. He submitted that the assessee has furnished copies of invoices, delivery challans and payment details to prove the genuineness of purchases. Accordingly, learned AR submitted that the Ld CIT(A) was not justified in confirming the addition made by the AO. The Ld A.R further submitted that the G.P ratio declared in the earlier years was in the range of 3% only. However, the tax authorities have made addition @ 11.81%. Accordingly he submitted that the addition is on the higher side.
4. Learned Departmental Representative, on the contrary, submitted that the AO as well as learned CIT(A) has given proper reasoning for confirming the addition. Accordingly, she submitted that entire addition has been rightly sustained by Ld CIT(A).
5. I have heard the parties and perused the record. I noticed that the assessee has furnished copies of purchase bills and payment details. The assessee has also made one to one reconciliation of purchases and sales. The assessee has, however, failed to furnish any proof to show that the materials were physically transported to the premises of the assessee. Since the assessee has reconciled the purchase and sales, I am of the view that the AO has rightly added the profit element embedded in the purchases, as goods cannot be sold without making corresponding purchases. Since the impugned suppliers have been named as hawala dealers and since the assessee could not produce those 3 M/s. Keyman Trading Company Pr i v a te L i m i te d parties before the AO, one of the possible views is that the assessee should have sourced the materials from some other person.
6. The Ld A.R submitted that the estimation of profit @ 11.81% is on the higher side, since the VAT rate applicable to the items dealt with by the assessee is only 4%. Considering this fact and also the rate of G.P declared by the assessee and also considering the fact that the assessee should have sourced the material at lower rate, I am of the view that the addition may be sustained to the extent of 8% of the value of alleged bogus purchases. Accordingly I modify the orders of the learned CIT(A) on this issue and direct the Assessing Officer to sustain the addition to the extent of 8% of the value of alleged bogus purchases. I order accordingly.
7. In the result, the appeal filed by the assessee is partly allowed.
Order has been pronounced in the Court on 24.8.2017.
Sd/-
(B.R.BASKARAN) ACCOUNTANT MEMBER Mumbai; Dated : 24/8/2017 Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. The CIT(A)
4. CIT
5. DR, ITAT, Mumbai
6. Guard File.
BY ORDER, //True Copy// (Dy./Asstt. Registrar) PS ITAT, Mumbai