2024 (4) TMI 190 - AT - Income Tax

Assessee fails to rebut bogus purchase admission, 12.5% gross profit margin addition upheld

ITAT Mumbai upheld CIT(A)'s addition of 12.5% gross profit margin on bogus purchases after assessee failed to rebut statement of Shri Rajesh Doshi ... Estimation of income - bogus purchases - CIT(A) restricting the addition to 12.5% - HELD THAT:- As observed that the Hon’ble Settlement Commission has not discarded the evidentiary value of the statement of Shri Rajesh Doshi who has admitted to the modus operandi of availing bogus purchase bill. Assessee has not raised this contention that Shri Rajesh Doshi was neither an employee nor a partner and that the assessee had not transacted with the said person before the Hon’ble Settlement Commission and the fact that Shri Rajesh Doshi has also not denied the transaction between him and the assessee. The assessee has failed to rebut the said statement of Shri Rajesh Doshi by any documentary evidence neither before the lower authorities nor before us. Thus no infirmity in the order of the ld. CIT(A) in making an addition on the gross profit margin @ 12.5% on the alleged bogus purchase where the sales are not in dispute. Decided against assessee and revenue. On-money received - unaccounted income from sale of flats along with the modus operandi of receiving such on-money by cash - seized material relied upon by the ld. A.O. during the search and seizure action - FAA deleted the impugned addition by relying on the order of the Hon’ble Settlement Commission in the case of sister concern of the assessee - HELD THAT:- Assessment order has not specified any details as to what was the seized material that was available before the ld. A.O. It is also pertinent to point out that the remand report sought for by the ld. CIT(A) was also not furnished by the ld. A.O. for the reason that the assessee has failed to co-operate. We also have observed that the retracted statement of Shri Daxesh Parmar, Shri Rajesh Doshi was also not in record for our consideration. The ld. CIT(A) has placed reliance on the order of the Hon’ble Settlement Commission which again was not placed on record. In order to fill the lacuna, we hereby deem it fit to remand this issue back to the file of the ld. CIT(A) for proper adjudication after duly seeking for the remand report and duly considering the same on the merits of the case - Ground raised by the Revenue is allowed for statistical purpose. Issues involved: Cross appeals filed by the assessee and the Revenue regarding the Assessment Year (A.Ys.) 2013-14 and 2014-15 challenging the order of the learned Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961.Issue 1: Alleged bogus purchasesThe assessee and Revenue appealed against the addition made on bogus purchases and the restriction of the addition to 12.5% on the gross profit margin. The assessment stemmed from a search and seizure action, where the assessee was observed to have benefited from accommodation entries through bogus purchases. The assessee contested the reliance on seized material, highlighting criminal cases against involved parties. The CIT(A) restricted the addition to 12.5% based on undisputed sales. The Tribunal upheld the CIT(A)'s decision, noting the lack of contradictory evidence by the assessee.Issue 2: On-money receivedThe Revenue challenged the deletion of the addition on on-money received by the assessee. The AO made the addition due to lack of substantiation by the assessee. The CIT(A) relied on the Settlement Commission's order in a related case to delete the addition. The Tribunal observed a lack of specifics in the assessment order regarding seized material and remand report. As a result, the issue was remanded back to the CIT(A) for proper adjudication. The Revenue's appeal on this ground was allowed for statistical purposes.In conclusion, the Tribunal dismissed the appeals filed by the assessee and partly allowed the appeals filed by the Revenue for statistical purposes. The decision was pronounced on 18.03.2024.