SHREENOX SYNTHETICS, BHIWANDI V. CIT-II, THANE

ITA 3973/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2632 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2015
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: KIRAN DOIPHODE
• Keywords: Bogus purchase; Business income

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ./ ITA NO. 3973 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 1 1 - 20 1 2 M/S SHREENOX SYN THETICS, SR.NO.9, 548, AASBIBI, KALYAN ROAD, BHIWANDI - 421302 VS. ACIT, CIRCLE - I, KALYAN ./ ./ PAN/GIR NO. : A BFFS 4088 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : MS. KIRAN DOIPHODE /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 12 / 0 7 /201 6 / DATE OF PRONOUNCEMENT 14 / 07 /201 6 / O R D E R THIS IS AN APPEAL FILED B Y THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 1 1 - 20 1 2 . 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED FOR ADDITION SUSTAINED BY CIT( A) WITH RESPECT TO THE BOGUS PURCHASES. 3. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ON THE BASIS OF INFORMATION FROM THE SALES TAX DEPARTME NT THE AO MADE AN ADDITION OF RS.31,36,444/ - ON ACCOUNT OF BOGUS PURCHASES. 4. BY THE IMPUGNED ORDER THE CIT(A) UPHELD THE ADDITION OF INFLATED PURCHASES TO THE EXTENT OF 25% BY OBSERVING THAT THE AO HAS ACCEPTED THE TRADING RESULTS AS DISCLOSED IN THE AUDITED PROFIT AND LOSS ACCOUNT, WHEREIN TOTAL SALES OF RS.21.83CRORES HAVE BEEN ACCEPTED. ONCE THE SALES ARE ACCEPTED, AS PER CIT(A), PURCHASES CANNOT BE DOUBTED. HOWEVER, AGAINST THE ORDER OF CIT(A) UPH OLDING THE DISALLOWANCE OF 25% , ITA NO. 3973 / 1 5 2 ASSESSEE IS IN APPE AL BEFORE US . REVENUE IS NOT IN APPEAL AGAINST ORDER OF CIT(A) DELETING ADDITION TO THE EXTENT OF 75% OF SUCH PURCHASES. 5. FOR THE ADDITION SO SUSTAINED THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. FROM THE RECORD I FOUND THAT CIT(A) HAD NOT GIVEN ANY BASIS FOR UPHOLDING THE ADDITION OF 25% OF THE PURCHASE AMOUNT TREATED AS BOGUS BY THE AO. HOWEVER, TRADING RESULTS OF THE ASSESSEE HAVE NOT BEEN DISTURBED NOR BOOKS OF ACCOUNTS HAVE BEEN REJECTED. THE GP RATE DISCLOSED BY THE ASSESSEE IN THE ASSESSMENT Y EAR 2009 - 2010 WAS 4.73%, WHEREIN ASSESSMENT YEAR 2010 - 11 WAS 3.72 . HOWEVER, THERE IS INCREASE OF 33% IN THE SALES AMOUNT DURING THE YEAR UNDER CONSIDERATION. THE SALES HAS INCREASED FROM 16.62 CRORES TO 21.83 CRORES DURING THE YEAR. INCREASE IN SALES REDUC ES THE NET PROFIT MARGINS SLIGHTLY , THEREFORE, KEEPING IN VIEW THE GP RATE OF 3.72% IN EARLIER YEAR AS WELL AS INCREASE IN TURN OVER DURING THE YEAR UNDER CONSIDERATION, WE DIRECT THE AO TO RESTRICT THE ADDITION BY APPLYING THE GP RATE OF 3.50% IN PLACE O F 3.44% SHOWN BY THE ASSESSEE. WE DIRECT ACCORDINGLY. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 14 /07 / 201 6 . SD/ - ( R.C.SHARMA ) / ACCOUNTANT MEMBER MUMBAI ; DATED 14 /07 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE C IT(A), MUMBAI. ITA NO. 3973 / 1 5 3 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//