M/S PRIME STEEL CORPORATION , MUMBAI V. ITO WD 19(2)(5), MUMBAI

ITA 6069/MUM/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9416 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 24-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Rejection of books of accounts
• Section: 234B

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “एस एम सी” , मुंबई Įी ǒवकास अवèथी, Ûयाियक सदèय के सम¢ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं. 6069/मुं/2019 (िन.व.2011-12) ITA NO.6069/MUM/2019 (A.Y.2011-12) M/s Prime Corporation Office No.6, Ground Floor, 32, Parekh House, Old Kashinath Bldg. 7 th Khetwadi, Mumbai-400004. PAN: AAEFP2796C ...... अपीलाथȸ /Appellant बनाम Vs. ITO-19(2)(5) Room No.210, 2 nd Floor, Matru Mandir, Tardeo Road, Mumbai-400007. ..... Ĥितवादȣ/Respondent अपीलाथȸ Ʈारा/ Appellant by : Sh. Mahendra Sanghvi Ĥितवादȣ Ʈारा/Respondent by : Sh. Sanjay J. Sethi सुनवाई कȧ ितिथ/ Date of hearing : 24/06/2021 घोषणा कȧ ितिथ/ Date of pronouncement : 17/09/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-6, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 10/07/2019 for the Assessment Year (AY) 2011-12. 2. The assessee in appeal has inter alia assailed re-opening of assessment, as well as, addition on merits. 2 आअसं. 6069/मुं/2019 (िन.व.2011-12) ITA NO.6069/MUM/2019 (A.Y.2011-12) 3. Sh. Mahendra Sanghvi appearing on behalf of assessee submitted at the outset that he is not pressing ground No.1 assailing re-opening of assessment. In respect to Ground No.2 assailing addition on account of bogus purchases, the ld. Authorized Representative of the assessee (AR) submitted that the assessee is engaged in trading of Ferrous and Non-ferrous metals. During re-assessment proceedings, the Assessing Officer (AO) held that the assessee has obtained bogus purchase bills amounting to Rs. 1,30,40,292/- from hawala operators. The AO made addition of Rs. 16,30,036/- by estimating suppressed margin on alleged bogus purchase at 12.5%. The assessee carried the issue in appeal before the CIT(A). The CIT(A) dismissed the appeal of assessee without appreciating the facts and documents on record, hence, the present appeal. The ld. Authorized Representative submitted that estimation of Gross Profit on bogus purchases at 12.5% is very much on the higher side, the assessee had furnished various documents to substantiate genuineness of the purchases, however, same were not considered by the authorities below. The ld. AR further submitted that the AO in an arbitrary and unjustified manner rejected the books of accounts. No opportunity was given to the assessee by CIT(A) after seeking remand report from the AO. No opportunity was afforded to the assessee to cross-examine alleged hawala dealers on the basis of whose statement, the AO had made addition. 4. Per contra, Sh. Sanjay J. Sethi representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. 5. Both sides heard, orders of authorities below examined. Undisputedly, the assessee failed to discharge its onus in proving genuineness of the dealers 3 आअसं. 6069/मुं/2019 (िन.व.2011-12) ITA NO.6069/MUM/2019 (A.Y.2011-12) and the purchases made from them. In such like unproved purchases, it is only the suppressed profit margin that can be brought to tax. Taking into consideration nature of assessee’s business, estimation of GP at 12.5% on alleged bogus purchases is very much on the higher side. Generally, in trading of Iron & Steel, GP ranges between 5% to 8%. To meet the ends of justice, profit margin on alleged bogus purchases is restricted to 6%. I hold and direct accordingly. Consequently, ground no.2 of the appeal is partly allowed. 6. In ground no. 1 of appeal, the assessee has assailed re-opening of assessment. The ld. AR of the assessee stated at the bar that he is not pressing ground no.1, accordingly, the said ground is dismissed as not pressed. 7. The ground No.3 of appeal is against charging of interest under section 234B of the Act. The short contention of ld. AR of the assessee is that the AO may be directed to charge interest u/s. 234B of the Act in accordance with the provisions of the Act. This issue is restored to the AO with a direction to re- compute interest u/s. 234B of the Act, at a rate and period specified under the said section. Hence, ground no.3 is allowed for statistical purpose. 8. In the result, appeal of assessee is partly allowed in the aforesaid directions. Order pronounced in the open court on Friday, the 17 th day of September, 2021. Sd/- (VIKAS AWASTHY) Ûयाियक सदèय / JUDICIAL MEMBER मुंबई/Mumbai, Ǒदनांक/Dated: 17/09/2021 SK, PS 4 आअसं. 6069/मुं/2019 (िन.व.2011-12) ITA NO.6069/MUM/2019 (A.Y.2011-12) Ĥितिलǒप अĒेǒषतCopy of the Order forwarded to : 1. अपीलाथȸ/The Appellant , 2. Ĥितवादȣ/ The Respondent. 3. आयकर आयुƠ(अ)/ The CIT(A)- 4. आयकर आयुƠ CIT 5. ǒवभागीय Ĥितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड[ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai