KETAN JAYSUKHLAL SHAH, MUMBAI V. ITO WARD 20(2)(3), MUMBAI

ITA 1657/MUM/2023

AI Insights

The case involves Shri Ketan Jaysukhlal Shah, who appealed against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, which confirmed the addition of Rs. 13,48,973 to his income for the Assessment Year 2009-10. This amount represented 12.5% of alleged bogus purchases amounting to Rs. 1,07,91,783 from four parties. The assessee argued that similar cases had seen profit margins applied between 2% to 5% for such purchases. The Tribunal, referencing a similar case, reduced the profit margin to 5% and directed the Assessing Officer to adjust the income addition accordingly.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302558 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 30-08-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2023
• Other Referred Cases: Dinesh H Trivedi Vs ITO- 18(1)(4)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC‘ BENCH MUMBAI BEFORE: SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.1657/Mum/2023 (Assessment Year :2009-10) Shri Ketan Jaysukhlal Shah P/2, D.L. Jain Colony 64, Dr. Ambedkar Road Chinchpokli Mumbai-400 012 Vs. ITO Ward 20(2)(3) 210, Piramal Chambers Lalbaug, Parel Mumbai-400 012 PAN/GIR No.AAGPS0969J (Appellant) .. (Respondent) Assessee by Shri Devendra Jain Revenue by Shri Anurag Tripathi Date of Hearing 31/08/2023 Date of Pronouncement 31/08/2023 आदेश / O R D E R PER NARENDER KUMAR CHOUDHRY This appeal has been preferred by the assessee against the order dated 17/03/2023 impugned herein passed by the Ld. Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC) (in short ‘Ld. Commissioner’) u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y.2009-10. ITA No.1657/Mum/2023 Shri Ketan Jaysukhlal Shah 2 2. In the instant case, the case of the assessee was reopened u/s.147/148 of the Act on the basis of information received from the Sales Tax Department with regard to the alleged bogus purchases to the tune of Rs.1,07,91,783/- made by the Assessee from four parties i.e. Shiv Industries, Maruti Steel Traders, Forum Steels and Jai Krishna Enterprises. In order to verify the genuineness of the transactions, the assessee was asked to substantiate by producing relevant details and documents which the Assessee failed to produce therefore, the books of account of the assessee were rejected u/s.145(3) of the Act and ultimately an amount of Rs.13,48,973/- being 12.5% of the alleged bogus purchases of Rs.1,07,91,783/- has been made and added the same in the income of the Assessee, which stands affirmed by the ld. Commissioner by the impugned order, against which the Assessee is in appeal and mainly claimed that the Tribunal in various decisions considered the identical issues/circumstances and applied the profit margin embedded in the bogus purchases from 2% to 5% invariably. I observe that the Assessee is dealing in Iron and Steel and during the argument the Assessee relied upon various judgments, somehow in my considered view, judgment in the case of Dinesh H Trivedi Vs ITO- 18(1)(4) {ITA No.4523/Mum/2018 decided on 05/02/2020}, wherein the profit was estimated at 12.5% by authorities below, however, the Hon’ble Bench restricted the same to 5% of the alleged bogus purchases and therefore is more peculiar and similar to the facts and issues involved in the instant case, hence for just and proper decision of the case and for the ends of justice and litigation, I am inclined to direct the Assessing Officer to apply 5% of the alleged bogus purchases of Rs. 1,07,91,783/- as profit earned and add the same in the income of the Assessee, hence, directed accordingly. ITA No.1657/Mum/2023 Shri Ketan Jaysukhlal Shah 3 3. In the result, appeal filed by the assessee is partly allowed. Order pronounced on 31 st August, 2023. Sd/- (N K Choudhry) JUDICIAL MEMBER Mumbai; KARUNA, sr.ps 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//