SYNERGY CREATIONS,MUMBAI V. ITO, MUMBAI

ITA 3264/MUM/2024

AI Insights

The case involves Synergy Creations, which appealed against the order of the CIT(A) that enhanced the assessment of alleged bogus purchases from 25% to 100% of the value of these purchases. Initially, the Assessing Officer (AO) had added 25% of the value of the alleged bogus purchases to the income of Synergy Creations for the assessment year 2010-11, based on the suspicion of bogus transactions. The CIT(A) later enhanced this addition to 100%. The Tribunal, however, found that the books of accounts were not rejected by the AO or the CIT(A), and thus only the profit element from these purchases should be added, leading to the decision to restrict the addition to 12.5%.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28596 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 05-11-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2024
• Other Referred Cases: M/s. Kuldeep Glass and Aluminium vs. ITO in ITA No. 7139/Mum/2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI; DR
• Assessee Lawyers: SIDDHANT AGARWAL; AR
• Keywords: Rejection of books of accounts; Bogus purchase; Bogus
• Section: 143(1); 133(6)

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SUNIL KUMAR SINGH, HON’BLE JUDICIAL MEMBER I.T.A. No. 3264/Mum/2024 Assessment Year: 2010-11 Synergy Creations, Mumbai 17, Sona Shopping Center Hill Road Opposite Globus Bandra Maharashtra - 400050 [PAN: AAOFS7110D] Vs Income Tax Officer, Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Siddhant Agarwal, A/R Revenue by : Shri Asif Karmali, Sr. D/R सुनवाई की तारीख/Date of Hearing : 05/11/2024 घोषणा की तारीख/Date of Pronouncement : 08/11/2024 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the ld. CIT(A)/Addl./JCIT-(4), Kolkata, dated 29/01/2024 [hereinafter ‘ld. CIT(A)’] pertaining to AY 2010-11. 2. Delay of 83 days is condoned. 3. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in enhancing the assessment to 100% of the alleged bogus purchases on which the AO has made addition of 25%. 3.1. Briefly stated the facts of the case are that the assessee electronically filed its return of income on 15/10/2010 declaring total income at Rs. 5,99,826/-. The return was processed u/s 143(1) of the Act and the returned income was accepted. 4. Subsequently, on the basis of information that the assessee is indulged in showing bogus purchase by taking accommodation/fictitious I.T.A. No. 3264/Mum/2024 2 bills from certain entities/parties, the assessment was reopened and statutory notices were accordingly issued and served upon the assessee. 4.1. During the course of scrutiny assessment proceedings, the assessee was asked to explain and furnish details of the genuineness of transactions with following parties:- 4.2. The AO further issued notice u/s 133(6) of the Act to all the above parties but received no reply from any. 4.2.1. When the assessee was confronted with this, it replied that these people are not traceable at present and hence it is unable to produce them for verification. The AO formed a belief that the purchases from the aforementioned parties are bogus and drawing support from various judicial decisions, the AO made addition of Rs. 4,02,359/- being 25% of the alleged bogus purchases. 4.3. Assessee carried the matter before the ld. CIT(A) and reiterated that the purchases are genuine. 5. After considering the facts and the submissions, the ld. CIT(A) was of the opinion that the AO erred in making addition @25% of the bogus purchases whereas, the addition should have been made @100% of the alleged bogus purchases and enhanced the assessment by making addition of Rs. 16,09,434/-. I.T.A. No. 3264/Mum/2024 3 6. Before us, the ld. Counsel for the assessee reiterated that the purchases are genuine and only the profit element imbibed in the alleged bogus purchases should be added. Referring to the decision of the Co- ordinate Bench in the case of M/s. Kuldeep Glass and Aluminium vs. ITO in ITA No. 7139/Mum/2018, the ld. Counsel pointed out that the Co-ordinate Bench after considering the decisions relied upon by the lower authorities has confirmed the addition to the extent of 12.5% of the alleged bogus purchases. The ld. D/R, on the other hand, strongly supported the findings of the ld. CIT(A). 7. After giving a thoughtful consideration to the orders of the authorities below, we are of the considered view that the AO has neither rejected the books of accounts nor has specified as to under which Section of the Act, he is making the addition. Even the ld. First Appellate Authority has not rejected the books of accounts. Therefore, in our considered opinion, the bills may be bogus but the purchases are genuine and the sales have been accepted on such purchases. Therefore, the addition @12.5% of the alleged bogus purchases, should meet the ends of justice. We accordingly direct the AO to restrict the addition to 12.5% of the alleged bogus purchases. 8. In the result, appeal of the assessee is partly allowed. Order pronounced in the Court on 8th November, 2024 at Mumbai. Sd/- Sd/- (SUNIL KUMAR SINGH) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 8/11/2024 * * * *SC SrPs SC SrPs SC SrPs SC SrPs I.T.A. No. 3264/Mum/2024 4 आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014\u001cथ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "