Siddharth Structurals Mumbai v. Ito 29 3 4 Mumbai

In The Income Tax Appellate Tribunal Smc Bench Mumbai Before Shri R C Sharma Am Ita No 1607 Mum 20 17 Assessment Year 2009 10 M S Siddharth Structurals A 1801 18 Th Floor Park Royal Building M M Malaviya Road Mulund W Mumbai 400 080 Vs Ito 29 3 4 Mumbai Pan Gir No Abkfs 5656 B Appellant Respondent Assessee By Shri Devendra H Jain Revenue By Shri S K Mitra Date Of Hearing 07 09 201 7 Date Of Pronounceme Nt 05 12 201 7 O R D E R Per R C Sharma A M This Is An Appeal Filed By Assessee Against The Order Of Cit A 40 Mumbai Dated 01 12 2016 For A Y 2009 10 In The Matter Of Order Passed U S 143 3 R W S 147 Of The It Act 2 The Following Grounds Have Been Tak En By The Assessee 1 In The Facts And In The Circumstances Of The Case And In Law The Learned Cit A Has Erred In Upholding The Reassessment Proceedings Initiated U S 147 By The Learned Assessing Officer Without Independent Application Of Mind On The In Formation Received From Dgit Investigation 2 In Facts And In The Circumstances Of The Case And In Law The Learned Cit A 40 Has Erred In Confirming The Action Of The Assessing Officer Of Completing The Assessment U S 143 3 Without Providing Any Oppor Tunity Of Cross Examination Of The Witnesses Relied Upon By The Assessing Officer And Thus Violating The Law Laid Down By Honorable Supreme Court In The Case Of Kishanchand Chellaram V Cit 1980 125 Itr 713 And Andaman Ita No 1607 Mum 2017 M S Siddharth Structurals 2 Timber Industries V Commissioner O F Central Excise Civil Appeal No 4228 Of 2006 3 In Facts And In The Circumstances Of The Case And In Law The Learned Cit A 40 Mumbai Has Erred In Upholding The Ad Hoc Addition Of Rs 29 21 470 Being 12 5 Of Alleged Bogus Purchases Of Rs 2 33 71 789 Merely On Surmises And Conjectures 3 Rival Contentions Have Been Heard And Record Perused In This Case Ao Got Information From Sales Tax Department As Well As Investigation Wing Of The Income Tax Department That Assessee Has Made Purchases From Bogus Suppliers After Considering The Fact That Without Purchases There Cannot Be Any Sales Ao Estimated Profit At 12 5 And Same Was Added In Assessees Income 4 By The Impugned Order Cit A Upheld The Reopening And Further Held That Estimation Of Profit At 12 5 Is Reasonable The Precise Observation Of Cit A Was As Under 5 24 The Ld A O In This Case Has Held That The Parties From Whom The Purchases Were Made By The Assessee Were Found To Be Bogus And That Is The Reason For Which It W As Not Produced During The Assessment Proceedings Not Having Doubted The Consumption Sales The Motive Behind Obtaining Bogus Bills Thus Appears To Be Inflation Of Purchase Price So As To Suppress True Profits As Mentioned Above The Ao Had Never Disput Ed The Sales Once Sales Are Accepted Corresponding Purchases Have To Be Considered And Cannot Be Disregarded In Totality Looking To The Market Trend The Assessee May Have Made Purchases From Other Parties Which Were Not Recorded In The Books And Took Only Bills From These Parties As Accommodation To Explain The Purchases The Purchases Themselves Are Not Bogus But The Purchase Parties Shown In Books Are Therefore The Entire Purchase From These Parties Cannot Be Added As Bogus And What Needs To Be Ta Xed Is The Profit Element Embedded In Such Transactions Estimations Ranging From 12 5 To 25 Have Been Upheld By The Honble Gujarat High Court Depending The Nature Of The Business It Has Been Held In The Case Of Simit P Sheth That No Uniform Yardwtic K Could Be Applied To Estimate The Rate Of Profit And It Varies With The Nature Of Business Ita No 1607 Mum 2017 M S Siddharth Structurals 3 In The Facts And Circumstances Of The Case I Am Of The Considered Opinion That Estimation Of 12 5 As Profit Embedded In Impugned Purchases Shown From The Said Pa Rties And Adding The Same To The Total Income Returned Would Meet The Ends Of Justice Therefore The Addition Made By The Ld Ao Of Rs 29 21 470 Being 12 5 Of The Alleged Bogus Purchases Of Rs 2 33 71 789 Is Justified 5 I Have Considered Rival Contentions And Gone Through The Orders Of The Authorities Below As Per The Reasons Recorded And Material Brought On Record I Do Not Find Any Infirmity In The Reopening Of The Assessment With Regard To Merit Of Addition I Found That Assessee Is Dealing In Iron And Steel And Had Shown Gp Of 3 4 During The Year As Per Learned Ar Normal Gp Rate In Case Of Iron And Steel Is 3 To 3 5 Keeping In View Totality Of Facts And Circumstances Of The Case I Restrict The Addition To The Extent Of 10 Of The Gp On The Alleged Bogus Purchases I Direct Accordingly 6 In The Result Appeal Of The Assessee Is Allowed In Part O Rder Pronounced In The Open Court On This 05 12 2017 S D R C Sharma Accountant Member Mumbai Dated 05 12 201 7 Karuna Sr Ps Copy Of The Order Forwarded To By Order Asstt Registrar Itat Mumbai 1 The Appellant 2 The Respondent 3 The Cit A Mumbai 4 Cit 5 Dr Itat Mumbai 6 Guard File True Copy