Case Law Details
V.R.Enterprises Vs ITO (ITAT Mumbai)
We find that assessee was in possession of primary purchase documents and the payments to the suppliers was through banking channels. The assessee had established corresponding sales before Ld. AO. The books of accounts were audited wherein quantitative details of stock was provided. We are of the considered opinion that there could be no sale without actual purchase of material keeping in view the fact that the assessee was engaged in trading activities. At the same time, the assessee failed to produce even a single supplier to confirm the purchase transactions. The delivery of material could not be substantiated. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases. The Ld. AO, in our opinion, had clinched the issue in the right perspective and was fair enough to estimate the additions @12.5%. Therefore, concurring with the stand of Ld. AO, we restore the order of Ld. AO. Accordingly, the enhancement of Rs.72.93 Lacs as made by Ld. first appellate authority stands deleted.
FULL TEXT OF THE ITAT JUDGEMENT
1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-28, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-28/IT-488/ITO-17(3)(5)/2015-16 dated 29/06/2018 qua enhancement of certain additions on account of alleged bogus purchases. Although, the additional grounds have been filed, however, the same has not been pressed during hearing before us and therefore, not considered while adjudicating the appeal.
2.1 Facts in brief are that the assessee being resident firm stated to be engaged in trading of iron & steel was assessed u/s 143(3) r.w.s.147 for impugned AY on 23/03/2015 wherein the assessee was saddled with addition of Rs.10.41 Lacs on account of alleged bogus purchases The original return of income filed by the assessee was processed u/s 143(1).
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