ACIT, CIRCLE-14(1)(2), MUMBAI V. M/S D RAVILAL RESOURCE MANAGEMENT PVT LTD, MUMBAI

ITA 2989/MUM/2022

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the CIT(A) which had modified the assessment made by the Assessing Officer (AO) under sections 143(3) read with section 147 of the Income Tax Act, 1961. The AO had reopened the assessment for the Assessment Year 2010-11 based on information from the Sales Tax authorities that certain parties involved in transactions with the assessee were not genuine. The CIT(A) reduced the addition made by the AO from the total amount of purchases to a gross profit addition of 12.5%. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee had substantiated the purchases with adequate documentation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302358 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 23-11-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.2989/Mum/2022 (Assessment Year :2010-11) ACIT, Circle-14(1)(2) Room No.455, 4 th Floor Aayakar Bhavan M.K.Road, Mumbai – 400 020 Vs. M/s. D. Ravilal Resource Management Pvt. Ltd. Shop No.18, SORREL Ghatkopar, KIROL Pantnagar, Ghatkopar(E) Mumbai – 400 075 PAN/GIR No.AACCG2374E (Appellant) .. (Respondent) Assessee by None Revenue by Smt. Mahita Nair Date of Hearing 25/01/2023 Date of Pronouncement 27/04/2023 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against the order dated 30/09/2022 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) r.w.s. 147 for the A.Y.2010-11. ITA No.2989/Mum/2022 M/s. D. Ravilal Resource Management Pvt. Ltd 2 2. In the grounds of appeal, the Revenue has raised the following grounds:- “1.Whether on the facts & circumstances of the case and in law the Ld. CIT(A) has erred in restricting the addition at the rate 12.5% out of total addition of Rs. 65,88,578/- made in the assessment order ignoring the findings of the AO based on information received from Sales Tax Authorities, Mumbai?” 3. The facts in brief are that assessee has filed the return of income on 13/10/2010 declaring total income of Rs.96,80,322/-. Later on assessee’s case was selected for scrutiny and assessment order was passed u/s.143(3) on 10/01/2013 determining total income at Rs.1,02,19,420/-. Later on assessee’s case was reopened u/s.147 by issuance of notice u/s.148 dated 18/03/2015, which was based on some information from Sales Tax authorities that some of the parties were found to be engaged in providing bills as per the requirement of the customer and no goods were transacted in these transactions. Since, assessee was also found to have carried out purchases for sum aggregating to Rs.65,88,578/- from six of those parties, therefore, assessee’s case was reopened u/s 147 and accordingly, addition has also been made by the ld. AO by disclosing that the entire purchases are made from six parties. 4. Ld. CIT(A) after considering the various submissions and following various decisions of the Tribunal, held that only gross profit should be added and he held that 12.5% of GP on the ITA No.2989/Mum/2022 M/s. D. Ravilal Resource Management Pvt. Ltd 3 gross purchases which worked out to Rs.8,25,572/- is reasonable. 5. After considering the findings given in the impugned orders as well as the submissions incorporated in the appellate order, we find that assessee is engaged in the business of civil contractor and the infrastructure development. During the course of assessment proceedings, assessee has filed ledger confirmations, copy of invoices and the bills raised and the copy of bank statements highlighting the said purchase transaction from all the parties including six parties. Thus, the source of purchases has been shown from the books and the payments have been made by account payee cheques. At the most it could be a case where assessee might have paid the cheque for purchase and thereafter purchased goods from grey market only to suppress gross profit. Once, the corresponding sales have not been doubted or the contract receipts, then the entire purchases cannot be disallowed. Accordingly, addition on account of GP rate of 12.5% on said purchases as done by the ld. CIT (A) following the decisions of the Tribunal and the Hon’ble High Court is confirmed and the appeal of the Revenue is dismissed. 6. In the result, appeal of the Revenue is dismissed. Order pronounced on 27 th April,2023 Sd/- (GAGAN GOYAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 27/04/2023 KARUNA, sr.ps ITA No.2989/Mum/2022 M/s. D. Ravilal Resource Management 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//