Principal Commissioner Of Income Tax v. M/S. Paramshakti Distributors Pvt. Ltd

31 ITXA 413 OF 2017.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.413 OF 2017 Principal Commissioner of Income Tax, Central – 4 …Appellant versusM/s. Paramshakti Distributors Pvt. Ltd. …Respondent M/s. Paramshakti Distributors Pvt. Ltd. Mr. Shyam Walve, for Appellant. CORAM: AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : 15th JULY, 2019 P.C.: 1.The Revenue has filed this Appeal to challenge the Judgment of the Income Tax Appellate Tribunal (“the Tribunal” for short). The following questions arepresented for our consideration : (i) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in reducing the addition from Rs.23.16 Lakhs to Rs.2,21,600/- under Section 68 of the Income Tax Act in respect of the purchases made from M/s. Chevron Metal Products Pvt. Ltd., in spite of the fact that the Director of the said Company had admitted that the transactions were merelyaccommodation entries ? (ii)Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the enhancement of GP made by the Ld. SSP 1/3 CIT(A) from 2.59% to 6.00% of the turnover of Rs.151 crores, thereby giving undue relief of Rs.4.92 Crores to the assessee ? 2.The first question pertains to restricting the addition of Rs.23.16 Lakhs toRs.2,21,600/- by the Tribunal. The Assessing Officer had made the said addition onthe ground that the assessee's purchases were found to be bogus. The entire purchaseamount was therefore, added to the assessee's income. The Tribunal, however,restricted to the said sum of Rs.2,21,600/-. The Tribunal recorded that the AssessingOfficer has not rejected either the purchases or the sales made out of the saidpurchases. The Tribunal therefore, was of the opinion that the addition should berestricted to 10% of the total purchases. The Revenue strongly disputes thisproposition.3.Without elaboration, what the Tribunal by the impugned Judgment held isthat the Department had not rejected the instance of the purchases since the sales outof purchase of such raw material was accounted for and accepted. With aboveposition, the Tribunal applied the principle of taxing the profit embedded in suchpurchases covered by the bogus bills, instead of disallowing the entire expenditure.We do not find any error in the view of the Tribunal. No question of law arises. 4.The second issue pertains to addition at the hands of the Assessee made bythe CIT (Appeals). It appears that the Assessee had disclosed profit at GP rate 2.59%.The Assessing Officer had not tinkered with this disclosure. However, in Appeal, the SSP 2/3 Commissioner (Appeals) after putting the Assessee to notice, enhanced the profit @ 6%GP. The Tribunal by the impugned Judgment deleted such addition and allowed theAssessee's Appeal. The Tribunal noted that there was no material to discard theAssessee's book results. No incriminating material or evidence of the Assessee'stransactions outside the books have been brought on record. It was under thesecircumstance, the Tribunal deleted the addition made by the CIT (Appeals). We donot find any error in the view of the Tribunal. There was no evidence on record todisturb the Assessee's book results. No question of law arises. The Income TaxAppeal is dismissed. ( S.J.KATHAWALLA, J. ) ( AKIL KURESHI, J. ) SSP 3/3