INCOME TAX OFFICER -5(3)(1), MUMBAI, MUMBAI V. M/S. SHREE SUNDHA STEELS PRIVATE LIMITED, MUMBAI

ITA 1756/MUM/2025

AI Insights

The case involves the Income-tax Officer (ITO) challenging the order of the Commissioner of Income-tax (Appeals) [CIT(A)] which had reduced the addition made on account of alleged bogus purchases by the assessee, M/s Shree Sundha Steels Private Limited. Initially, the ITO had added Rs. 3,53,418 to the assessee's income based on a gross profit rate of 1.31% applied to the value of the alleged bogus purchases amounting to Rs. 2,69,78,490. The CIT(A), referencing a previous ITAT decision concerning the same assessee for a different assessment year, reduced this addition significantly by applying a lower gross profit rate of 0.2%. The revenue's appeal to the ITAT contested this reduction, but the ITAT upheld the CIT(A)'s decision, citing consistency with judicial precedent and the principle of avoiding double calculation of gross profit on the same purchases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126354 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: misc
• Other Referred Cases: ITAT, Mumbai Bench 'C' in the assessee's own case for Assessment Year 2011-12 in ITA No. 5919/Mum/2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHARAT KUMAR; ASIF KAR MALI
• Keywords: Set aside; Reassessment proceedings; Bogus purchase; Bogus; Grounds of appeal; Dismissed; Judgment; Section 139(1); HRA; Commissioner; Purchases; Transactions; Section 143(1) of the Act; Department; Net Purchase
• Section: 147; 148; 143(3); 250; 143(1); 139(1); 143(3) read with section 147

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J(SMC)”, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.1756/Mum/2024 (Assessment year: 2008-09) Income-tax Officer -5(3)(1), Mumbai, Room NO.526, 5th Floor, Aayakar Bhawan, Mumbai-400 020 vs M/s Shree Sundha Steels Private Limited, 15/16, D-Wing,GroundFloor, Gora Gandhi Palace, 122, Khetwadi Back Road, Khetwadi, Mumbai-400 004 PAN: AAICS1816M APPELLANT RESPONDENT Assessee by : Shri Bharat Kumar, CA Respondent by : Shri Asif Karmali (SR. DR.) Date of hearing : 21/04/2025 Date of pronouncement : 21/04/2025 O R D E R Per Anikesh Banerjee (JM): The instant appeal of the revenue was filed against the order of the Ld. Commissioner of Income-tax (Appeals) / Addl / JCIT(A)-2, Siliguri, [in short, ‘Ld.CIT(A)’]passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’)for A.Y. 2008-09, date of order 20/01/2025. The impugned order was 2 ITA 1756/Mum/2025 Shree Sundha Steels Pvt Ltd emanated from the order of the Ld. Income-tax Officer- 5(3)(4), Mumbai (in short, the “Ld. AO”) passed under section 143(3) read with section 147 of the Act, date of order 30/03/2016. 2. The revenue has taken the following grounds:- “1. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in reducing the quantum of addition from 1.31% to 0.2% of the purchases of Rs.2,69,78,490/- provided by Shri Dinesh Bohra 2. The appellant prays that the order of the CITTA) on the grounds be set aside and confirm the order of the AO. 3. The appellant craves leave to add, amend or alter all or any of the grounds of appeal.” 3. The brief facts of the case are that the assessee filed its return of income (ROI) under section 139(1) of the Act, which was processed under section 143(1) of the Act. Subsequently, the case was selected for scrutiny, and the assessment was completed under section 143(3) of the Act. Thereafter, notice under section 148 of the Act was issued based on information received from the Investigation Wing of the Income Tax Department regarding alleged bogus purchase transactions undertaken by the assessee during the relevant assessment year. The assessee is engaged in the business of trading in ferrous and non-ferrous metals. During the reassessment proceedings, the Assessing Officer determined the value of alleged bogus purchases at Rs.2,80,57,630/-. After deducting the VAT component of Rs.10,79,140/-, the net purchase value was computed at Rs.2,69,78,490/-. The Ld.AO applied a gross profit rate of 1.31% on the said amount, resulting in an addition of Rs.3,53,418/-, which was added to the total income of the assessee. 3 ITA 1756/Mum/2025 Shree Sundha Steels Pvt Ltd Aggrieved by the said addition, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) considered the submissions of the assessee and noted that the issue had already been adjudicated by the ITAT, Mumbai Bench “C” in the assessee’s own case for Assessment Year 2011-12 in ITA No. 5919/Mum/2016, with the order pronounced on 31/07/2018. Relying upon the said decision, the Ld. CIT(A) applied a gross profit rate of 0.2% on the bogus purchase amount of Rs.2,69,78,490/-, which resulted in a revised addition of Rs.53,957/-. Consequently, the assessee was granted a relief of Rs.2,99,461/-, and the addition was sustained only to the extent of Rs.53,957/-. Being aggrieved by the relief granted, the Revenue has preferred the present appeal before us. 4. Ld. DR supported and relied upon the impugned assessment order but failed to bring on record any contrary judicial decision to rebut the findings of the Ld. CIT(A). 5. We heard the rival submissions and considered the documents available on the record. The Ld.AR fully relied on the order of the Ld.CIT(A). The relevant paragraph of the impugned appellate order is as below:- “Briefly stated, sole ingredient of addition made in the case of the appellant remains its transaction with Hawala dealers for making bogus purchases. Since, jurisdiction ITAT has already given its verdict in the matter holding that total profit embedded in such bogus purchases may be computed @ 0.2% of such purchases and the order has attained finality, applying the ratio of the same judgment would serve the interest of justice in the instant case because facts and circumstances of both the years are almost identical. Even otherwise, if the 4 ITA 1756/Mum/2025 Shree Sundha Steels Pvt Ltd quantum of GP of 1.31% which was applied for making addition during scrutiny assessment is left alone, it would give rise to double calculation of GP on the quantum of bogus purchases. It is therefore found quite rational to follow the spirit of the judgment given by Hon’ble ITAT in the appellant’s own case and hold that the quantum of profit attributable to total bogus purchases of Rs. 2,69,78,490/- may be calculated @ 0.2% of the same. Since, 0.2% of Rs. 2,69,78,490/- works out at Rs. 53,957/- only, the appellant is held eligible for getting relief of Rs. 2,99,461/-. Accordingly, the appeal stands partly allowed and the addition stands confirmed to the extent of Rs. 53,957/- only. Hence, the appeal is partly allowed.” We have also duly considered the order of the Coordinate Bench of the Tribunal rendered in the assessee’s own case for Assessment Year 2011-12 (supra). In view of the binding judicial precedent and consistent findings in earlier years, the grounds raised by the revenue are hereby rejected. Accordingly, we uphold the impugned appellate order passed by the Ld. CIT(A). 6. In the result, the appeal filed by the revenue bearing ITA 1756/Mum/2025 is dismissed. Order pronounced in the open court on 21st day of April, 2025. Sd/- sd/- (VIKRAM SINGH YADAV) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 21/04/2025 Pavanan 5 ITA 1756/Mum/2025 Shree Sundha Steels Pvt Ltd Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकरआयुक्त CIT 4. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्डफ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "