Case summary, Income Tax

ITO vs Gautam B. Bafna

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The only issue to be decided in this appeal is as to whether the Ld.CIT(A) was justified in restricting the addition made on account of non genuine purchases at 12.5% of value of purchases as against 100% made by the Ld. AO in the facts and circumstances of the instant case. The Assesee is an individual trader dealing in metal and had made certain purchases from the some parties whose names appear as tainted dealers in the records of sales tax department of Government of Maharashtra, the Ld. AO in the course of regular assessment proceedings sought to verify the genuinity of such purchases.

The Ld. AO issued notice u/s 133(6) to those parties which were returned back by the postal authorities. The Ld. AO observed that the assesee could not furnish the new address of these parties and was not able to produce the parties in person as directed and also could not prove the genuineness of purchases made from those parties. Accordingly, the Ld. AO concluded that the assessee had obtained accommodation bills for inflating purchases and treated the same as unexplained expenditure incurred by the assessee and made an addition u/s 69C. Mumbai ITAT found that the Ld.CIT(A) had reasonably estimated such profit element to be at 12.5% of the value of disputed purchases, which is prevalent rate adopted by this Tribunal in series of decisions considering the nature of industry in which the assessee is engaged in, which is also approved by the Hon’ble Gujarat High Court in the case CIT vs Simith P.Sheth. In the result, appeal of the revenue is dismissed.

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