The Tax Publishers2021 TaxPub(DT) 0633 (Mum-Trib)

INCOME TAX ACT, 1961

Section 69C

High Court in the case of CIT v. Simit P. Sheth [(2013) 356 ITR 451(Guj) : 2013 TaxPub(DT) 2115 (Guj-HC)] had upheld the addition of 12.5% of the total amount of bogus purchases holding that, only profit element embedded in such purchases could be added to the income of the assessee, therefore, addition of 12.5% was reasonable to meet the ends of justice.

Income from undisclosed source - Addition under section 69C - Bogus purchases - CIT(A) sustained addition to 25%

Assessee was engaged in the business of manufacturing and producing tubes, pipes, pipefitting components and accessories. Subsequently, on the basis of information received from Sales Tax Authorities that assessee had obtained bogus bills from a bogus bill provider, the case was reopened by issuing notice under section 148. AO after conducting enquiries completed the assessment under section 143(3) after making addition on account of bogus purchases shown by the assessee. CIT(A) restricted the addition to 25% of the total amount of bogus purchases. Held: High Court in the case of CIT v. Simit P. Sheth [(2013) 356 ITR 451(Guj) : 2013 TaxPub(DT) 2115 (Guj-HC)] had upheld the addition of 12.5% of the total amount of bogus purchases sustained by the ITAT, holding that, only profit element embedded in such purchases could be added to the income of assessee. CIT(A) had sustained the addition of 25%, which was not in consonance with decision of High Court. No merit in the contention of revenue that CIT(A) ought to have sustained the addition made by AO. Hence, addition of 12.5% was reasonable to meet the ends of justice.

Followed:CIT vs. Simit P. Sheth [(2013) 356 ITR 451(Guj-HC) : 2013 TaxPub(DT) 2115 (Guj-HC)]. Relied:Alfa Rubber Industries v. ACIT (2009) 2 Taxmann.com 61 (P & H), CIT v. Jeeva Raja (2013) 37 Taxmann.com 56 (Mad), Rameshchandra And Company v. CIT 1987 168 ITR 375 (Bom) : 1987 TaxPub(DT) 1167 (Bom-HC), Sterling Machine Tools v. CIT (1980) 123 ITR 181 (All) : 1980 TaxPub(DT) 774 (All-HC) and ITO v. Sidhivinayak Dyeing & Printing Mills (P) Ltd. (2009) 119 ITD 169 (Ahd-Trib)(TM) : 2009 TaxPub(DT) 1227 (Ahd-Trib).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2010-11



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