2017 (1) TMI 448 - AT - Income Tax

Tribunal decision: Revenue appeal dismissed, assessee appeal partially allowed. Profit element adjusted.

ACIT-25 (2), Mumbai Versus Shri Pratap Uttam Purohit and Vice-versa

The tribunal dismissed the revenue's appeal and partially allowed the assessee's appeal, adjusting the profit element addition. The delay in filing the ... Non genuine purchases u/s.69C - amount offered to income - double taxation of the same income - Held that:- We have considered rival contentions and found that for the impugned assessment year total purchases from alleged MVAT parties were to the tune of ₹ 2,33,36,015/-. Pursuant to survey action on 27/02/2011, while recording the statement the assessee himself has offered these purchases as his income for A.Y. 2012-13, as he was unable to explain the same at the time of survey. The authorized officer at that time aggregated the purchases made from alleged MVAT parties and took the disclosure of ₹ 20Crs in the AY 2012-13. The assessee has also offered the said sum of ₹ 20Crs as his income for AY 2012-13. A categorical finding has been recorded by CIT(A) to the effect that impugned purchase of ₹ 2,33,36,015/- was offered as income by the assessee in the assessment year 2012-2013. This finding of CIT(A) has not been controverted by learned DR by bringing any positive material on record. Since the assessee bonafidely offered the income of ₹ 20Crs in AY 2012-13 and also paid the due tax along with interest thereon, taxing the same in the impugned year will amount to double taxation of the same income. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the said addition. Addition of 15% of profit element on such purchases - Held that:- From the record, we found that with regard to these purchases, what is to be seen is utilisation of goods purchased which has been proved by assessee by providing all the details. From the record we found that the during year under consideration, assessee had sales of ₹ 1,01,88,39,392/- on which assessee has declared gross profit of ₹ 17,79,05,770/- . Thus, assessee has declared gross profit rate of 17.46%. However, in the assessment year 2009-2010 and 2010-2011, the gross profit rate so declared by assessee was 8.60% and 10.64% respectfully. Thus, it is very much clear that during the year consideration, assessee has declared much better gross profit rate of 17.46% as compared to the earlier years, therefore, making further addition of 15% on such purchase appear to be very unreasonable. Keeping in view the gross profit rate so declared by the assessee during the year under consideration, we upheld the addition of 2% on such purchases in place of 15% as upheld by CIT(A). Issues Involved:Cross appeals filed by the revenue and assessee against the order of CIT(A), Mumbai for the assessment year 2011-2012.Analysis:Issue 1: Condonation of DelayThe assessee filed an appeal with a delay of 188 days, providing reasons for the delay. The tribunal, after considering the reasons, condoned the delay in the substantial interest of justice, allowing the appeal to be heard on merits.Issue 2: Non-Genuine PurchasesThe Assessing Officer (AO) raised concerns about the genuineness of purchases made by the assessee from certain parties suspected of providing accommodation entries. The AO added a substantial amount for similar purchases. However, the CIT(A) deleted the major addition, recognizing that the amount was already offered as income in a subsequent assessment year. The CIT(A) upheld a 15% profit element addition on the purchases, considering the modus operandi admitted by the assessee during a survey.Issue 3: Double TaxationRegarding the purchases disputed by the AO, the CIT(A) found that the assessee had already offered the same amount as income in a subsequent assessment year, which was duly taxed. Taxing the same amount again in the impugned year would lead to double taxation. The tribunal agreed with the CIT(A) and upheld the deletion of the addition.Issue 4: Profit Element AdditionThe CIT(A) upheld an addition of 15% as the profit element on certain purchases. However, the assessee, in further appeal, presented evidence of better gross profit rates during the relevant year compared to previous years. The tribunal, considering the declared gross profit rate of the assessee, reduced the addition to 2% instead of 15% as decided by the CIT(A).In conclusion, the tribunal dismissed the revenue's appeal and partially allowed the assessee's appeal, adjusting the profit element addition.