2023 (9) TMI 1604

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....on 69C of the Act towards purchases made based on peak credit. The assessee is a partnership firm and is involved in the business activity of trading in iron and steel. ITA No.1421/Mum/2023 (A.Y. 2009-10) 3. The assessee filed the return of income for the assessment year 2009-10 on 28/09/2009 declaring total income at Nil. The assessee's case was selected for scrutiny and the assessment under section 143(3) was completed on 23/12/2011 wherein the profit of the assessee was estimated at 5%. The assessee preferred appeal against the assessment order under section 143(3) before the CIT(A) who confirmed the addition. The assessee preferred further appeal before the Tribunal and the SMC bench vide order dated 28.07.2023 has held that 4% gr....

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....tax. The Assessing Officer did not accept the submissions of the assessee and proceeded to make a disallowance based on the peak purchases for an amount of Rs.3,47,99,999/- under section 69C of the Act. On further appeal, the CIT(A) confirmed the addition made by the Assessing Officer. Aggrieved, the assessee is in appeal before the Tribunal. 4. With regard to the addition made for AY 2009-10, the Ld.AR for the assessee submitted that the assessment made under section 143(3) was completed by estimating the gross profit of the assessee at 5% and the re-assessment on the same purchases are done by making an addition under section 69C based on the credit which is a change of opinion by the Assessing Officer. The ld AR further submitted that....

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....ion 69C in the assessment under section 147 is not tenable. Accordingly the addition is hereby deleted. ITA 1423/Mum/2023 (A.Y. 2010-11) 7. For assessment year 2010-11, the assessee filed its return of income on 26/09/2010 declaring total income at NIL. In this year, the Assessing Officer on same grounds as in AY 2009-10, disallowed the peak of cumulative purchases to the tune of Rs. 1,33,49,985/- and added the same to the income as unexplained expenditure under section 69C of the Act. The CIT(A) confirmed the addition and the assessee is in appeal before us against the order of CIT(A). 8. The Ld.AR for AY 2010-11 submitted that the peak credit addition made by the Assessing Officer on the total purchases debited by the assessee in....

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....a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to th....