SNEHA ALLOYS PVT. LTD., MUMBAI V. ITO 7(2)(4), MUMBAI

ITA 5090/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7750 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-08-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: YASH SALAVI
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 5090/M/2016 (AY 2006 - 2007 ) M/S. SNEHA ALLOYS PVT LTD., 193/3, STATION ROAD, WADALA, MUMBAI 400 031. / VS. ITO - 7(2)(4), AAYAKAR BHAVAN, CHURCHGATE, MUMBAI. ./ PAN : AAFCS8231F ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI YASH SALAVI / RESPONDENT BY : MS. BEENA SANTOSH, DR / DATE OF HEARING : 23 .03.2017 / DATE OF PRONOUNCEMENT : 29 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 10.08.2016 IS AGAINST THE ORDER OF THE CIT (A) - 14, MUMBAI DATED 27.05.2016 FOR THE ASSESSMENT YEAR 2006 - 07. 2. IN THIS APPEAL, ASSESSEE RAISED FOUR GROUNDS IN TOTO. IN THE GROUNDS, ASSESSMENT MENTIONED THAT THE CIT ( A) HAS APPLIED THE FLAT RATE OF 12.50% ON THE SUSPECTED BOGUS PURCHASES AMOUNTING TO RS. 21,56,486/ - . MENTIONING THAT THE ASSESSEE IS IN LOSS AND THE SAID GP RATE OF 12.50% IS NEVER EARNED BY THE ASSESSEE EVENING DURING THE TIME WHERE THERE WERE NO SUCH B OGUS PURCHASES. CONSIDERING THE FACTS OF THE CASE, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ADDITION SHOULD BE RESTRI CTED TO THE GP OF THE ASSESSEE PLUS LOSS ON ACCOUNT OF VAT, IF ANY, TO THE GOVERNMENT EXCHEQUER. 3. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE THE TRIBUNAL, I AM OF THE OPINION THAT BORROWING 12.50% IS APPROVED BY THE HONBLE GUJARAT HIGH COURT VIDE ITS JUDGMENT IN THE CASE OF CIT VS. SIMIT P SHETH [2013] (356 ITR 451) (GUJ.) IS FOUND TO BE APPLICABLE TO THE REAL ESTATE / CIVIL CONTRACT BUSINESS AND NOT TO THE ASSESSEE, WHO IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL. IT IS AN 2 AGREED POSITION THAT THE MATTER S HOULD BE REMANDED TO THE FI LE OF THE AO FOR CONSIDERING THE FACTS OF THE PRESENT CASE, IE NEGATIVE GP OF THE PRESENT CASE, AND THE APPLICABLE VAT RATES OF THE PRESENT CASE AND DECIDE THE ISSUE AFRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE S ET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY I ORDER. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE AL LOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRON OUNCED IN THE OPEN COURT ON 2 9 T H MARCH, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 29.03.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI