ITO 32(2)(3) VS MAYUR R KAMDAR

Case snapshot

Sections / provisions: See packaged judgment

Questions before the Court / Tribunal

• Bogus purchases in trading business: profit element versus full purchase addition where sales are not doubted.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

आयकर अपील सं./I.T.A. No.5089/Mum/2015 (िनधा रण वष / Assessment Year: 2009-10) Income Tax Officer 32(2)(3) Mayur R.Kamdar Room No. 305, 3 r d Floor बनाम/ 705, Shashi Apartment C-11, Pratyakshar Kar Bhawan Vs. Devidas Lane, Borivali (W) BKC, Bandra, Mum bai-400 051 Mumbai – 400 092 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AFUPK-8611-C (अपीलाथ /Appellant) : ( थ / Respondent) & आयकर अपील सं./I.T.A. No.5741/Mum/2015 (िनधा रण वष / Assessment Year: 2009-10) Mayur R.Kamdar Income Tax Officer 32(2)(3) 705, Shashi Apartment Room No. 305, 3 r d Floor बनाम/ Devidas Lane, Borivali (W) C-11,Pratyaksh Kar Bhawan Mumbai – 400 092 Vs. BKC, Bandra Mumbai-400051 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AFUPK-8611-C (अपीलाथ /Appellant) : ( थ / Respondent)

Assessee by : Anil Thakrar, Ld. AR Revenue by : Aarju Garodia, Ld. Sr. AR

Per Manoj Kumar Aggarwal (Accountant Member) 1. These are cross appeal for Assessment Year [AY] 2009-10 which contest stand of Ld. Commissioner of Income-Tax (Appeals)-44 [CIT(A)], Mumbai, Appeal No.CIT(A)-44/ITA-135/32(2)(3)/2014-15 dated 01/09/2015 qua addition on account of alleged bogus purchases. The assessment for impugned AY was framed by Ld. Income Tax Officer- 32(2)(3) [AO] u/s 143(3) read with Section 147 of the Income Tax Act, 1961 on 16/03/2015 wherein the assessee has been saddled with addition of Rs.90,43,090/- on account of certain alleged bogus purchases. 2.1 Facts leading to the same are that the assessee being resident individual engaged in the business of trading of building material under proprietary concern namely N.M.Traders was subjected to reassessment proceedings for impugned AY vide issuance of notice u/s 148 dated 16/01/2014 which was followed by statutory notices u/s 143(2) and 142(1). The original return of income was filed by the assessee at Rs.4,58,690/- which was processed u/s 143(1). 2.2 The reassessment proceedings were initiated upon receipt of certain information from Sales Tax Department, Maharashtra & DGIT (Investigation) regarding dealers…

ITA No.5089/Mum/2015 & ITA No.5741/Mum/2015 Mayur Kamdar Assessment Year- 2009-2010 known. After considering assessee’s submissions, documentary evidences and certain judicial pronouncements, Ld. AO adopted Gross Profit Rate of Rs.22.61% as against 6.07% reflected by the assessee against turnover of Rs.546.63 Lacs and added the differential profit of Rs.90,43,090/- to the income of the assessee. 3. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 01/09/2015 where Ld. CIT(A) restricted the disallowance to 3% of alleged bogus purchases which came to Rs.13,56,900/- and deleted the balance. Aggrieved, the assessee as well as revenue is in appeal before us. 4. The Ld. Departmental Representative [DR] submitted that the addition was on lower side whereas Ld. Authorised Representative for assessee [AR] pleaded for some more relief on the premise that the assessee had reconciled the sale and purchase transactions. 5. After considering rival contentions, we find no reason to interfere with the stand of Ld. CIT(A) since the assessee was engaged in trading activities and could not achieve the sales turnover without purchase of…

ITA No.5089/Mum/2015 & ITA No.5741/Mum/2015 Mayur Kamdar Assessment Year- 2009-2010 profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which Ld.CIT(A) has rightly done. Therefore, finding the same quite fair and reasonable, we dismiss both the appeals. 6. Resultantly, both the appeals stands dismissed. Order pronounced in the open court on 28th February, 2018.

Appellant / assessee submissions

ITA No.5089/Mum/2015 & ITA No.5741/Mum/2015 Mayur Kamdar Assessment Year- 2009-2010 known. After considering assessee’s submissions, documentary evidences and certain judicial pronouncements, Ld. AO adopted Gross Profit Rate of Rs.22.61% as against 6.07% reflected by the assessee against turnover of Rs.546.63 Lacs and added the differential profit of Rs.90,43,090/- to the income of the assessee. 3. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 01/09/2015 where Ld. CIT(A) restricted the disallowance to 3% of alleged bogus purchases which came to Rs.13,56,900/- and deleted the balance. Aggrieved, the assessee as well as revenue is in appeal before us. 4. The Ld. Departmental Representative [DR] submitted that the addition was on lower side whereas Ld. Authorised Representative for assessee [AR] pleaded for some more relief on the premise that the assessee had reconciled the sale and purchase transactions. 5. After considering rival contentions, we find no reason to interfere with the stand of Ld. CIT(A) since the assessee was engaged in trading activities and could not achieve the sales turnover without purchase of…

Revenue / respondent submissions

ITA No.5089/Mum/2015 & ITA No.5741/Mum/2015 Mayur Kamdar Assessment Year- 2009-2010 known. After considering assessee’s submissions, documentary evidences and certain judicial pronouncements, Ld. AO adopted Gross Profit Rate of Rs.22.61% as against 6.07% reflected by the assessee against turnover of Rs.546.63 Lacs and added the differential profit of Rs.90,43,090/- to the income of the assessee. 3. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 01/09/2015 where Ld. CIT(A) restricted the disallowance to 3% of alleged bogus purchases which came to Rs.13,56,900/- and deleted the balance. Aggrieved, the assessee as well as revenue is in appeal before us. 4. The Ld. Departmental Representative [DR] submitted that the addition was on lower side whereas Ld. Authorised Representative for assessee [AR] pleaded for some more relief on the premise that the assessee had reconciled the sale and purchase transactions. 5. After considering rival contentions, we find no reason to interfere with the stand of Ld. CIT(A) since the assessee was engaged in trading activities and could not achieve the sales turnover without purchase of…

Court / Tribunal analysis and reasoning

The reasoning is integrated into the packaged record. Read it with the facts, statutory text and operative directions; this editorial article does not invent missing reasons.

Operative decision and relief

ITA No.5089/Mum/2015 & ITA No.5741/Mum/2015 Mayur Kamdar Assessment Year- 2009-2010 profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which Ld.CIT(A) has rightly done. Therefore, finding the same quite fair and reasonable, we dismiss both the appeals. 6. Resultantly, both the appeals stands dismissed. Order pronounced in the open court on 28th February, 2018.

Ratio and legal principle

• The packaged judgment addresses Bogus purchases in trading business: profit element versus full purchase addition where sales are not doubted. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with bogus purchases in trading business: profit element versus full purchase addition where sales are not doubted. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

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Section / provision impact

• See the statutory provisions identified in the packaged judgment.

Case network

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Different outcome / possible distinction

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Full judgment and source control

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Source class: Sanitized local full-judgment copy; official primary replacement pending · Repository status: Later-history status: verification on hold pending source confirmation