Case Law Details
JMD Corporation of India Limited Vs ITO (ITAT Mumbai)
In a recent decision by the Income Tax Appellate Tribunal (ITAT) Mumbai, the case of JMD Corporation of India Limited vs Income Tax Officer (ITO) for the assessment year 2011-12 has drawn attention. The appeal focused on the disallowance of purchases amounting to Rs. 173,86,509, with the ITAT Mumbai ultimately restricting the profit element of these purchases to 4%. Here’s a comprehensive overview of the case.
Background
The dispute originated from the Income Tax Department’s suspicion of bogus purchases made by JMD Corporation of India Limited from Akash Steel Traders. The Sales Tax Department flagged these transactions, leading to the initiation of the reassessment proceedings by the assessing officer. The department alleged that the assessee obtained bills of bogus purchases, prompting a notice under section 148 of the Income Tax Act in May 2013.
During the reassessment proceedings, the assessing officer issued various notices and show cause notices. However, the assessee failed to comply, resulting in the assessment being finalized ex-parte under section 144 read with section 147 of the Act. The assessing officer contended that the assessee made no actual purchases from the specified party and treated 100% of the purchases as bogus.
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