Case Law Details
ITO Vs M/s Ami Riddhi Chem Private Limited (ITAT Mumbai)
The assessee claim to have made purchases of Rs.34,92,40,689/-, therefore, the assessee was asked to furnish the details of purchases made from these parties. The notices issued/served under section 133(6) of the Act, however, there was no reply from the concerned parties. The facts are that neither the parties were produced nor the transaction was substantiated with positive material therefore, the Ld. Assessing Officer made the addition at the rate of 12.5% of such bogus purchases. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the GP was adopted at the rate of 8% by granting the benefit of gross profit (4.5%) already declared by the assessee. The Revenue is aggrieved and is in appeal before this Tribunal. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, admittedly, there cannot be any sale without purchases and only the profit element embedded in the bogus purchases can be added. Since, the assessee has already declared gross profit @ 4.5%, therefore, we find no infirmity in granting the benefit of the GP already declared by the assessee, because in the competitive world of trade, there may not be huge profit. Since, the facts are identical in both the appeals, therefore, the stand taken by the Ld. Commissioner of Income Tax (Appeal) is affirmed, resulting into dismissal of appeal of the Revenue.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals are by the Revenue against the impugned order dated 01/06/2017 of the Ld. First Appellate Authority, Mumbai, restricting the disallowance of bogus purchases shown by the assessee to 8% without appreciating the fact that the assessee has not proved the genuineness of the transaction.
2. During hearing, Shri Pankaj Kumar, Ld. DR, advanced arguments, which is identical to the ground raised by contending that the assessee did not prove the genuineness of the transaction, therefore, the Ld. Commissioner of Income Tax (Appeal) is not justified in restricting the addition @8% of the bogus purchases against 12.5% made by the ld. Assessing Officer. On the other hand, Shri Ravindra Poojary, ld. counsel for the assessee, contended that the Ld. Commissioner of Income Tax (Appeal) has merely granted the benefit of already declared gross profit of 4.5%, therefore, there is no infirmity in the impugned orders.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
