Income Tax Appellate Tribunal - Mumbai
Arihant Corporation, Mumbai vs Income Tax Officer Ward-1(1), Thane on 24 July, 2019
आयकर अपीलीय अधिकरण "SMC " न्यायपीठ मब
ुं ई में
IN THE INCOME TAX APPELLATE TRIBUNAL " SMC" BENCH, MUMBAI
श्री महावीर स हुं , न्याययक दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JUDICIAL MEMBER
Aayakr ApIla saM . / ITA No. 4407/Mum/2018
(inaQa- a rNa baYa- / Assessment Year 2011-12)
Arihant Corporation The Income Tax Officer,
1, Pawar Industrial Estate, W ard 1(1), Ashar I.T. park
Edulji Road, Thane -400 601 6 t h Floor, B-W ing Room No.
Vs.
23, Road No. 16 Z, W agle
Industrial Estate, Thane
(W ), Mumbai-400 604
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा सं . / PAN No. AANFA1160G
अपीलाथी की ओर से / Appellant by : Shri Sashank Dundu, AR
प्रत्यथी की ओर से / Respondent by : Shri Rajat Mittal, DR
सन
ु वाई की तारीख / Date of hearing: 27.06.2019
घोषणा की तारीख / Date of pronouncement : 24.07.2019
AadoSa / O R D E R
महावीर स हुं , न्याययक दस्य/
PER MAHAVIR SINGH, JM:
This appeal of the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in Appeal No. 42/16-17/NSK (old 751/15-16/THN) vide order dated 27.01.2017. The Assessment was framed by the Income Tax Officer, Ward 1(1), Thane (in short 'ITO/ AO') for the A.Y. 2011-12 vide order 2 ITA No . 44 0 7/ Mu m/ 20 1 8 dated 23.03.2015 under section 144 read with section 147 of the Income Tax Act, 1961 (hereinafter 'the Act').
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance made by AO off non-genuine and bogus purchases.
3. Briefly stated facts are that the assessee is engaged in the business of manufacturing and trading of engineering goods. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to Rs.26,56,827/- as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: -
Name Amount
Payal Enterprises 7,896
Sheetal Trading Co 12,987
Macos Iron and Steel 150316
Pvt. Ltd.
Ceeport Iron and steel 302164
Pvt ltd.
Khodiyar Enterprises 304010
Deep Enterprises 796010
Purav Enterprises 1083444
Total 26,56,827
4. During the course of assessment proceedings and during appellate proceedings, the assessee submitted documentary evidences such as payment received against such sales, receipt of material purchases, account payee cheque. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of the whole amount of unproved purchase to the returned income of the assessee. Aggrieved, assessee preferred the appeal 3 ITA No . 44 0 7/ Mu m/ 20 1 8 before CIT(A), who confirmed the action of the AO by observing in para 8.1 by observing as under:
"8.1 It is observed from the assessment order that the assessee case of the assessee is one of such cases. The AO asked the assessee to prove the genuineness of these purchases. The assessee neither compiled to the notices issued by the Assessing Officer nor to the final show cause notice issued by him. Even during appellate proceedings, despite repeated opportunities, did not furnish the basic details like copies of the Bills, Bank account, the Ledger account. For proving genuineness of these purchases, the appellant is not only required to submit these details but also substantiate with quantitative details of the goods purchase that the same goods were sold. The assessee neither co-related purchases and sales, nor produced proof for movement of goods, nor produced proof of payment to impugned purchases parties. In such circumstances, in my considered view that addition made by the Assessing Officer of ₹ 26,56,827/- as bogus purchases is in order and is upheld."
5. I have considered the issue and gone through the facts and circumstances of the case. I find from the facts of the case and argument of both the sides. The CIT(A) has confirmed the action made by the AO by applying whole amount of bogus purchases to the return of income of the assessee. I noted from the facts of the case that the Revenue has not 4 ITA No . 44 0 7/ Mu m/ 20 1 8 disputed that the assessee has not carried out any sales out of the bogus purchases made by assessee from grey market. Hence, I am of the view that only a reasonable profit can be estimated. Going by the nature of the business and fact that the assessee's profit rate has already been included in the sales made out of bogus purchases, the profit rate at the rate of 10% can be estimated of the bogus purchases. Hence, I direct the AO to re-compute the income after applying profit rate at the rate of 10% of the bogus purchases and compute the income accordingly. The issue of assessee's appeal is partly allowed.
6. In the result, the appeal of assessee is partly allowed.
Order pronounced in the open court on 24-07-2019.
Sd/-
(महावीर ससंह /MAHAVIR SINGH) (न्याययक सदस्य/ JUDICIAL MEMBER) मुंबई, ददनांक/ Mumbai, Dated: 24-07-2019 दीप रकार, व.यिजी धिव / Sudip Sarkar, Sr.PS आदे श की प्रयिसलपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयक् ु त(अपील) / The CIT(A)
4. आयकर आयक् ु त / CIT
5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शाि ार/ BY ORDER, सत्यावपत प्रयत //True Copy// उप/ हायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मंुबई / ITAT, Mumbai