Case Law Details
DCIT Vs Shoreline Hotels Pvt. Ltd. (ITAT Mumbai)
In these cases, the AO reopened the assessment order passed u/s 143(3) of the Act, on the basis of information received from the DGIT (Inv.) Mumbai to the effect that during the previous year the assessee had obtained fake purchase bills from bogus parties who used to provide accommodation entries on commission basis. During the reassessment proceedings, the assessee failed to establish the genuineness of the transactions to the satisfaction of the AO. Accordingly, the AO made additions of the amounts of bogus purchases to the income of the assessee and passed assessment orders u/s 143(3) r/w section 147 of the Act. The assessee challenged the assessment orders before the CIT(A). The Ld. CIT(A) after hearing the assessee restricted the addition to 17% of the bogus purchases. Aggrieved by the action of the Ld. CIT(A), the revenue has filed the present appeals and the assessee has filed the cross objection.
Ld. counsel for the assessee fairly admitted that the findings of the Ld. CIT(A) are based on the decision of the Mumbai Bench of the Tribunal in the case of M/s Hotel Mayfair Pvt. Ltd, a Group concern of the appellant company, for the A. Y. 2011-12, wherein the addition of 17% of the total amount of bogus purchases made by the AO was sustained by the Tribunal in an appeal filed by the assessee against the order passed by the Ld. CIT u/s 263 of the Act. However, the Ld. counsel further submitted that a reasonable percentage of profit may be sustained considering the fact and circumstances of the present cases.
We notice that in the case of M/s Hotel Mayfair Pvt. Ltd. the facts of the case and the issues involved were identical to the facts and the issue involved in the present cases. The AO had made addition of 17% of the total amount of bogus purchases made by the assessee. The CIT exercising the jurisdiction u/s 263 of the Act set aside the assessment order holding that the AO should have disallowed the entire amount of bogus purchases. The matter traveled to the ITAT and the coordinate Bench following the ratio laid down by the Hon’ble Delhi High Court in the case of Jyoti Foundation (357 ITR 388) quashed the order of the CIT. Since, the findings of the Ld. CIT (A) are based on the decision of the coordinate Bench rendered in the case of M/s Hotel Mayfair Pvt. Ltd (supra), we do not find any reason to interfere with the findings of the Ld. CIT (A). Accordingly, we uphold the orders dated 22.01.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-47, Mumbai pertaining to the Assessment Years 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 & 2014-15 and dismiss the appeals of the revenue.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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