Case Law Details
ITO Vs Vipul K Sheth (ITAT Mumbai)
In the present case the AO has not doubted the sales. The assessee could not establish the genuineness of the transaction to the satisfaction of the AO during assessment proceedings. Hence, from the facts of the case it can be concluded that assessee had made purchases from grey market. Under these circumstances, the AO had no option but to make addition on estimate basis. However, since the AO has not rejected the sales, 100% addition is not sustainable. As mentioned by the Ld. CIT(A) in its order, the Hon’ble Gujarat High Court in the case of CIT vs. Simit P. Sheth (supra) has upheld the addition of 12.5% of the total amount of bogus purchases sustained by the ITAT, holding that, only profit element embedded in such purchases could be added to the income of the assessee. Since, the Ld. CIT (A) has restricted the addition to 12.5% by following the ratio laid down by the Hon’ble Gujarat High Court, we do not find any reason to interfere with the findings of the Ld. CIT (A). Hence, in our considered view, the addition of 12.5% is reasonable to meet the ends of justice. We therefore, uphold the findings of the Ld. CIT (A) and the dismissed the revenue’s appeal.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal has been filed by the revenue against the order dated 20.02.2019 passed by the Commissioner of Income Tax (Appeals)-45 (for short ‘the CIT(A), Mumbai, for the assessment year 2010-11, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against the assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short the ‘Act’).
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