M/s Gupta Enterprises , Howrah V. I.T.O.,Ward-47(1), Kolkata

ITA 262/KOL/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6675 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” (Virtual Court Hearing) BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Rajesh Kumar, Accountant Member I.T.A. No.262/Kol/2020 Assessment Year: 2011-12 M/s Gupta Enterprises............................................................Appellant 88/1, C Road, Belgahia, Howrah-711101. [PAN:AAGFG1219D] vs. ITO, Ward-47(1), Kolkata...........................................................Respondent Appearances by: Shri Arya Das, A.R, appeared on behalf of the appellant. Shri Ranu Biswas, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : December 09, 2021 Date of pronouncing the order : December 09, 2021 Hearing through Video Conferencing ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 12.12.2019 of the Commissioner of Income Tax (Appeals)-14, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 143(3)/147 of the Income Tax Act (hereinafter referred to as the ‘Act’). The assessee has taken the following grounds of appeal: “1. The addition made by Ld. A.O. at the assessment stage and partly upholding such addition to the extent of G.P. Ratio made by Ld. Appellate Authority are absolutely bad, illegal and therefore deserve to quashed. 2. That in spite of showing all the necessary documents, the Ld. A.O. made disallowance of the entire purchase on the basis of a statement taken from Third Party and the Appellate Authority's subsequent action of disallowing the purchase to the extent of G.P. Ratio relying on the same statement obtained from Third Party are absolutely illegal and baseless. 3. For that the Third Party's statement relying on which the Ld. A.O. and the Ld. Appellate Authority made disallowance of purchase are not credible enough as the statement made by the same Third Party against other assesses were ultimately found to be untrue. 4. Other grounds, if any, will be placed before your honour on or before the hearing of the appeal petition.” I.T.A. No.262/Kol/2020 Assessment Year: 2011-12 M/s Gupta Enterprises 2 2. A perusal of the above grounds of appeal reveals that the only grievance of the assessee in this appeal is regarding the action of Ld. CIT(A) in making addition @10.10% of one alleged bogus purchases. 3. The brief facts of the case is that the Assessing Officer had got some information that the assessee had procured some bogus bills in respect of its purchases for some party. He added the total amount of purchases from that party as unaccounted income of the assessee. 4. In appeal, the Ld. CIT(A) observed that the assessee had shown gross profit @10.10% on the entire sales which included the sales pertaining to purchases which has been treated as bogus by the Assessing Officer. He observed that since the Assessing Officer had admittedly accepted the sales, therefore, this was not a case of unaccounted purchases rather it was a case of showing less profits as the assessee might have procured these items from market at lesser rate. He accordingly restricted the addition in respect of bogus purchases to 10.10% i.e. equal to the GP rate shown by the assessee on sales. Aggrieved by the action of the Ld. CIT(A), the assessee has come in appeal before us. 5. We have heard the rival contentions and gone through the records. The Ld. AR of the assessee has submitted that the assessee had already shown profit @10.10% in respect of alleged bogus purchases and that another addition @10.10% on such purchases would be highly excessive. The Ld. DR, on the other hand, has relied upon the findings of the CIT(A). 6. We find force in the contention of the Ld. AR in this case that the assessee had already shown gross profit @10.10%. The only allegation in the appellate order is that the assessee might have purchased the alleged items at some lesser rate whereas shown the purchases at a higher rate. If it is to be so assumed, then in our view, the approximate difference between the actual sale price and as shown by the assessee through bills should be added. The addition @10.10% i.e. equal to gross profit shown by the assessee is highly excessive. The assessee in this case has already shown gross profits on the alleged bogus purchases @10.10%. In our view, the interest of justice will be well-served if addition is restricted to 2% against 10.10% made by CIT(A) in respect of alleged I.T.A. No.262/Kol/2020 Assessment Year: 2011-12 M/s Gupta Enterprises 3 bogus purchases. In view of this, the addition is restricted to 2% as against @10.10% made by the CIT(A). 7. In the result, the appeal of the assessee is treated as partly allowed. Kolkata, the 9 th December, 2021. Sd/- Sd/- [Rajesh Kumar] [Sanjay Garg] Accountant Member Judicial Member Dated: 09.12.2021. RS Copy of the order forwarded to: 1. M/s Gupta Enterprises 2. ITO, Ward-47(1), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Sr.PS/D.D.O, Kolkata Benches