OIL SEALS MANUFACTURING COMPANY P. LTD, MUMBAI V. ITO WD 2(2)(4), MUMBAI

ITA 3944/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1463 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-06-2016
• Court: TRIBUNAL
• Department Lawyers: S R KIRTANE
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 3943 / MUM/20 1 6 & ITA NO.3944/MUM/2016 ( ASSESSMENT YEAR : 2009 - 10 & 2011 - 12 ) M/S. OIL SEALS MANUFACTURING COMPANY PVT. LTD., 1 ST FLOOR, ELPHINSTON BLDG., 10, VE ER NARIMAN ROAD VS. ITO WD - 2(2)(4), MUMBAI PAN/GIR NO. AAACO3062D APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI PRAKASH G JHUNJHUNWALA & SHRI POOJAN MEHTA REVENUE BY SHRI S.R.KIRTANE DATE OF HEARING 19 / 12 /2016 DATE OF PRONO UNCEME NT 23 / 12 /2016 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2009 - 10 AND 2011 - 12, IN THE MATTER OF ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. IN THE COURSE OF ASSESSMENT MADE U/S.143(3) R.W.S. 147 OF THE IT ACT, AO MADE AN ADDITION ON ACCOUNT OF PURCHASES MADE BY THE ASSESSEE ON THE PLEA THAT THESE ARE BOGUS PURCHASES. AO APPLIED GP RATE OF 32% IN THE ASSESSMENT YEAR 2009 - 10 AND 32.85% IN THE ASSESSMENT YEAR 2011 - 12 OF SUCH BOGUS PURCHASES AND MADE AN ADDITION. ITA NO. 3943 & 3944/MUM/2016 OIL SEALS MANUFACTURING COMPANY PVT. LTD., 2 4. BY THE IMPUGNED ORDER CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF SUCH BOGUS PURCHASES AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT CIT(A) HAS RESTRICTED THE ADDITION TO 12.5% BY FOLLOWING THE DECISION OF GUJARAT HIGH COURT IN CASE OF SIMIT P SHETH 356 ITR 451. CONTENTION OF LEARNED AR WAS THAT RATE OF VAT IN THE CASE APPLIED BY CIT(A) WAS 12.5% WHEREAS IN THE INSTANT CASE, THE RATE OF VAT TAX ON PURCHASE WAS JUST 5%. 6. WE FOUND THAT COMPARATIVE RATE O F GROSS PROFIT DISCLOSED BY THE ASSESSEE DURING THE ASSESSMENT YEAR 2009 - 10 WAS 32%, 2010 - 11 WAS 34.73% AND 2011 - 12 WAS 33.73%. THUS, THE GP RATE SHOWN BY THE ASSESSEE APPEARS TO BE QUITE REASONABLE LOOKING TO THE NATURE OF TRADE ASSESSEE WAS INVOLVED. UND ER THESE FACTS AND CIRCUMSTANCES UPHOLDING ADDITION OF 5% BEING RATE OF VAT TAX ON PURCHASES AS APPLICABLE TO THE ASSESSEE DURING THE YEARS UNDER CONSIDERATION WILL SERVE THE PU RPOSE OF JUSTICE. ACCORDINGLY, I UPHELD THE ADDITION OF RS. 1 , 95 , 376/ - AS AGAINS T ADDITION OF RS.4,88,440/ - UPHELD BY THE CIT(A) IN THE ASSESSMENT YEAR 2009 - 10. IN THE ASSESSMENT YEAR 2011 - 12, I UPHOLD ADDITION OF 5% BEING RATE OF VAT TAX ON PURCHASE WHICH AMOUNTS TO BE RS.99,827/ - AS AGAINST ADDITION OF RS. 2,49,568/ - AS UPHELD BY THE CIT(A). ITA NO. 3943 & 3944/MUM/2016 OIL SEALS MANUFACTURING COMPANY PVT. LTD., 3 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 12 /2016 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 12 /201 6 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//