DMSONS METAL PVT LTD,MUMBAI V. DCIT, CENTRAL CIRCLE-4(1), MUMBAI

MA 62/MUM/2024

AI Insights

The case involves D.M. Sons Metal Pvt. Ltd., the appellant, contesting an order by the CIT(A) which applied a GP rate of 12.5% on alleged bogus purchases for the assessment year 2015-16. The Tribunal had previously applied different GP rates in earlier years. The appellant filed a Miscellaneous Application pointing out inconsistencies in the Tribunal's application of GP rates compared to previous years. The Tribunal acknowledged the oversight and modified the GP rate to 5%, consistent with earlier rulings. Furthermore, the Tribunal recalled its order to address additional grounds related to enhancements made by the CIT (A), which had not been previously adjudicated.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473392 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESWARI MENON
• Assessee Lawyers: PRAYAG JHA
• Keywords: Bogus purchase; Bogus

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER MA No.62/Mum/2024 (Arising out of ITA No.762/Mum/2023) (Assessment Year :2015-16) M/s. D.M. Sons Metal Pvt. Ltd., 502, Peninsula Heights Juhu Lane, Andheri West Mumbai – 400 058 Vs. Dy. CIT, Central Circle 4(1), Mumbai Room No.1916, 19th Floor, Air India Building Nariman Point Mumbai – 400 021 PAN/GIR No. AACCD6037D (Appellant) .. (Respondent) Assessee by Shri Prayag Jha Revenue by Ms. Rajeswari Menon Date of Hearing 22/11/2024 Date of Pronouncement 30/01/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid Miscellaneous Application has been filed by the assessee against ITAT order in ITA No.762/Mum/2023 dated 27/11/2023 pointing out certain mistakes which has occurred in the order of the Tribunal which needs to be rectified / recalled. MA No.62/Mum/2024 D.M. Sons Metal Pvt. Ltd., 2 2. The first issue which has been raised that in ground Nos. 2 & 3 assessee has contested the order of the ld. CIT(A) that ld. CIT(A) has applied GP rate of 12.5% on alleged bogus purchases. In the earlier years the Tribunal for A.Y.2013-14, 2014-15, 2016-17 and 2018-19 has reduced the disallowance by applying GP rate of 5% of alleged bogus purchases from 12.5%. However, the Tribunal in the impugned order had observed as under:- “10. The aforesaid table goes to prove that the assessee has not given the GP rate on genuine purchases earned for the year under consideration in 2015-16. In the given circumstances, we are of the considered view that when in the assessee's earlier years and subsequent years GP rate is at the average rate of about 15%, it would be in the interest of justice to estimate the GP rate for the year under consideration on the bogus purchases of Rs 1,26,88,604/- @ average GP rate earned by the assessee during the last five years on genuine purchases Neither CIF(A) nor the AO has brought on record as to what was the GP rate earned by the assessee during the year under consideration on genuine purchases. So in these circumstances the AO is directed to make addition on the genuine purchases @gross profit earned by the assessee on average basis on its genuine purchases for the last five years. So ground Nos 2 & 3 are partly allowed in favour of the assessee.” 3. It has been stated that the direction of the Tribunal is contrary to the judgment of the earlier years. 4. After considering the aforesaid submissions and material on record we find that the Tribunal has directed the ld. AO to restrict the addition by taking the gross profit earned by the assessee on average basis on genuine purchases for the last five years. It is seen that in the last five years, the average genuine purchases in the earlier years were ranging from MA No.62/Mum/2024 D.M. Sons Metal Pvt. Ltd., 3 10.73% to 18.28%. Already on alleged bogus purchases assessee has disclosed huge GP rate and therefore, such a direction of applying further GP rate on same purchases would be too arbitrary. Therefore, in line with the earlier Tribunal orders GP rate of 5% on alleged bogus purchases should be applied which is in consonance with the precedents for the last several years in the case of the assessee. Accordingly, para number 10 of the ITAT order is modified. 4. Further, it has been stated that ground Nos.4-6 which pertain to enhancement of addition by the ld. CIT (A) has not been adjudicated by the Tribunal. Accordingly, the order of the Tribunal is recalled to decide the issue relating to ground Nos.4-6. Accordingly, Miscellaneous Application filed by the assessee is allowed and Registry is directed to fix the hearing of the appeal before Regular Bench to decide Ground Nos.4-6. 5. In the result, Miscellaneous Application filed by the assessee is allowed. Order pronounced on 30th January,2025. Sd/- (NARENDRA KUMAR BILLAIYA) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 30/01/2025 KARUNA, sr.ps MA No.62/Mum/2024 D.M. Sons Metal Pvt. Ltd., 4 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "