Palmon Impex Pvt. Ltd. Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, delivered a common order on the appeals filed by both the assessee, Palmon Impex Pvt. Ltd., and the Revenue against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] for the Assessment Year (AY) 2011-12. The core dispute centered on the validity of reassessment proceedings and, more significantly, the quantum of addition made on account of alleged bogus purchases of approximately Rs.2.19 crores.
Background and Assessment Proceedings
Palmon Impex Pvt. Ltd., engaged in the business of trading, export, and import of garments, textiles, metal, and computers, filed its Return of Income (ROI) for AY 2011-12 declaring an income of Rs.5,36,685/−. The case was subsequently reopened under section 147 of the Income Tax Act, 1961, based on information suggesting the assessee had availed accommodation entries in the form of bogus purchases totaling Rs.2,19,33,171/− from three specific concerns: M/s. Monica International, M/s. Arihant Trading Co., and M/s. Gold Star Trading Co.
Following the initiation of reassessment proceedings, the Assessing Officer (AO) completed the assessment under sections 143(3) read with 147 of the Act. The AO, treating the purchases as non-genuine, estimated the gross profit (GP) percentage at 18.5% of the bogus purchases and made an addition of Rs.40,57,637/−.
