Dinesh P. Parekh v. Income-tax Officer, Ward-3(2), Kalyan
[Citation -2019-LL-0911-99]

Citation 2019-LL-0911-99
Appellant Name Dinesh P. Parekh
Respondent Name Income-tax Officer, Ward-3(2), Kalyan
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 11/09/2019
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags estimation of profit • bogus purchase • quantum assessment • delivery of material • disallowance of purchases • gross profit rate • actual purchase • reassessment proceedings • banking channel • sales turnover • grey market
Bot Summary: The assessee is aggrieved by estimation on account of alleged bogus purchases. 143(3) r.w.s. 147 on 18/02/2015 wherein the income of the assessee was determined at Rs.13.15 Lacs after sole addition of alleged bogus purchases for Rs.10.97 Lacs as against returned income of Rs.1.91 Lacs filed by the assessee on 29/09/2009 which was processed u/s.143(1). The statutory notices u/s 143(2) 142(1) were issued in due course of assessment proceedings wherein the assessee was directed to substantiate the purchase transactions. 2.3 Although the assessee defended the purchase transactions the assessee, in the opinion of Ld. AO, failed to demonstrate the delivery of material. We are of the considered opinion there could be no sale without actual purchase of material keeping in view the assessee s nature of business. The sales turnover reflected by the assessee has not been disturbed / disputed by Ld. AO. However, at the same time, the assessee miserably failed to substantiate the purchases during assessment proceedings and could not produce any of the suppliers to confirm the transactions. The additions which could be sustained, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done.


IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE HON BLE SHRI MAHAVIR SINGH, JM AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. No.4987/Mum/2018 (Assessment Year 2009-10) I.T.A. No.4988/Mum/2018 (Assessment Year 2010-11) Dinesh P. Parekh Income tax Officer-Ward 3(2) 8, Balaram Bhavan 2nd Floor, Rani Mansion Corporation, Sagaon Murbad Road, Kalyan (West). Manpada Road Vs. Dombivli East-421 201. PAN/GIR No. AHEPP-0886-E (Appellant) (Respondent) Revenue by Shri Ashutosh Rajhans-Ld.DR Assessee by Shri Bhadresh K. Doshi-Ld. AR 11/09/2019 Date of Hearing 11/09/2019 Date of Pronouncement ORDER Per Bench:- 1. Aforesaid appeals by assessee for Assessment Years [AY] 2009-10 & 2010-11 contest common order of first appellate authority on certain 2 Dinesh P. Parekh Assessment Years 2009-10 & 2010-11 grounds of appeal. Since facts as well as issues are identical, both appeals are being disposed-off by way of this common order for sake of convenience & brevity. assessee is aggrieved by estimation on account of alleged bogus purchases. 2.1 Facts of AY 2009-10 are that assessee being resident individual stated to be engaged in trading of hardware / engineering items was assessed u/s. 143(3) r.w.s. 147 on 18/02/2015 wherein income of assessee was determined at Rs.13.15 Lacs after sole addition of alleged bogus purchases for Rs.10.97 Lacs as against returned income of Rs.1.91 Lacs filed by assessee on 29/09/2009 which was processed u/s.143(1). 2.2 Pursuant to receipt of certain information from investigation wing / Sales tax Department, Govt. of Maharashtra, it transpired that assessee stood beneficiary of alleged bogus purchases to tune of Rs.10.97 Lacs from 9 parties, details of which has already been extracted at para-3 of quantum assessment order. Accordingly, as per due process of law, re- assessment proceedings were initiated against assessee u/s 147 by issuance of notice u/s 148 on 05/04/2013. statutory notices u/s 143(2) & 142(1) were issued in due course of assessment proceedings wherein assessee was directed to substantiate purchase transactions. 2.3 Although assessee defended purchase transactions, however, assessee, in opinion of Ld. AO, failed to demonstrate delivery of material. Accordingly, stated purchases were disallowed and added to income of assessee. 3 Dinesh P. Parekh Assessment Years 2009-10 & 2010-11 3. learned first appellate authority, applying Gross profit Rate of AY 2012-13, worked out suppressed Gross Profit to extent of Rs.6.49 Lacs and deleted balance additions. Aggrieved, assessee is under appeal before us. It appears that revenue is not in further appeal. 3. We have heard and considered arguments of respective representatives. 4. We are of considered opinion there could be no sale without actual purchase of material keeping in view assessee s nature of business. assessee was in possession of primary purchase documents and payments to suppliers were through banking channels. sales turnover reflected by assessee has not been disturbed / disputed by Ld. AO. However, at same time, assessee miserably failed to substantiate purchases during assessment proceedings and could not produce any of suppliers to confirm transactions. assessee also failed to prove delivery of material. Under such circumstances, additions which could be sustained, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in grey market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done. However, approach of Ld. first appellate authority in estimating suppressed Gross Profit by adopting GP rate of subsequent year, in our considered opinion, was not correct approach. We estimate additions @12.5% of alleged bogus purchases 4 Dinesh P. Parekh Assessment Years 2009-10 & 2010-11 of Rs.10,97,982/- which comes to Rs.1,37,248/-. balance addition stands deleted. appeal stands partly allowed. 5. In AY 2010-11, first appellate authority has confirmed full addition of Rs.2,52,691/- as made by learned AO. Taking same stand, we restrict same to 12.5% and sustain addition to extent of Rs.31,586/-. This appeal also stands partly allowed. 6. In result, both appeals stand partly allowed. Order pronounced in open court on 11th September, 2019. Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) Judicial Member Accountant Member Mumbai; Dated 11/09/2019 Sr.PS:-Jaisy VargheseCopy of Order forwarded to 1. Appellant 2. (The Respondent 3. CIT(A) 4. CIT concerned 5. DR, ITAT, Mumbai 6. 4 Guard File BY ORDER, (Dy. Asstt.Registrar) , ITAT, Mumbai. Dinesh P. Parekh v. Income-tax Officer, Ward-3(2), Kalyan
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