HARMONY ADDITIVES P.LTD, MUMBAI V. ITO 12(2)(3), MUMBAI

ITA 1103/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9739 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1103 /MUM/ 2017 (ASSESSMENT YEAR 20 0 9 - 1 0 ) HARMONY ADDITIVES P. LTD. PLOT NO. 77/77, RSC - 9 GORAI - 1, BORIVALI (WEST) MUMBAI - 400 091. PAN : AACCH0071R VS. ITO 12(2)(3) AAYAKAR BHAVAN M.K. ROAD NEW MARINE LINE MUMBAI - 400020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI M. SUBRAMANIAN DEPARTMENT BY SHRI S.K. BEPARI DATE OF HEARING 11.9. 201 7 DATE OF PRONOUNCEMENT 11 . 9 . 201 7 O R D E R THE ASSES SEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 30.11.2016 PASSED BY LD CIT(A) - 20, MUMBAI IN PARTIALLY CONFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES MADE IN AY 2009 - 10. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE I S A TRADER IN CHEMICALS. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, IT CAME TO THE NOTICE OF THE REVENUE THAT THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.6,15,532/ - DURING THE YEAR UNDER CONSIDERATION FROM THE PARTIES, WH O WERE LISTED OUT BY THE SALES TAX DEPARTMENT AS HAWALA DEALERS, I.E., THEY PROVIDED ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIAL. HENCE THE AO TREATED THE ABOVE SAID AMOUNT OF RS.6,15,532/ - AS BOGUS PURCHASES AND DISALLOWED THE SAME. THE LD CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.1,53,883/ - BY HOLDING THAT THE PROFIT ELEMENT EMBEDDED THEREIN ALONE HAS TO THE ASSESSED. THE LD CIT(A) ADOPTED THE RATE OF PROFIT AT 25% OF THE VALUE OF PURCHASES. STILL AGGRIEVED, THE ASSESSEE HA S FILED THIS APPEAL. HARMONY ADDITIVES P. LTD. 2 3. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ALREADY BEEN DECLARING GROSS PROFIT RATE OF MORE THAN 15% AND HENCE THE ADDITION MADE AT 25% IS ON THE HIGHER SIDE. THE LD D.R, ON THE CONTRARY, SUPPORTED THE ORDER PASSED BY LD CIT(A). 4. I NOTICE THAT THE NOTICES ISSUED TO THE SUPPLIERS HAVE BEEN RETURNED BACK UN - SERVED. HOWEVER, THE ASSESSEE IS MAINTAINING STOCK REGISTER AND IT HAS ALSO STATED THAT THE PURCHASES ARE SOLD IMMEDIATELY, SINCE THE CHEMICALS HAVE GOT SHORT SHELF LIFE . UNDER THESE SET OF FACTS, THE LD CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO THE EXTENT OF PROFIT ELEMENT INVOLVED IN THE PURCHASES. HOWEVER, THE RATE OF PROFIT OF 25% ADOPTED BY LD CIT(A) IS ON THE HIGHER SIDE, SINCE THE ASSESSEE ITSELF IS DEC LARING G.P RATE OF ABOUT 15%. ACCORDINGLY I AM OF THE VIEW THAT THE ADDITION MAY BE SUSTAINED TO THE EXTENT OF 12.5% AND THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO RESTRICT THE ADDITIO N TO 12.50% OF THE VALUE OF ALLEGED BOGUS PURCHASES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 11 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 11 / 9 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI HARMONY ADDITIVES P. LTD. 3 6. GUARD FILE. BY ORDER, // TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI