2020 (11) TMI 416 - AT - Income Tax

Rectification u/s 154 - bogus purchases - Estimation of income - HELD THAT - Assessee seeks a review of the order of the Tribunal in the grab of rectification of mistake apparent from record. It is a settled law that review of order in the grab of rectification of mistake apparent from record is not permissible in law. Moreover, it is also noted that the MA has been filed on 15.06.2020 and the Tribunal order was passed on 2017 (9) TMI 1903 - ITAT MUMBAI - MA dismissed.

Summary

Issues:
Rectification of mistake under section 254(2) of the Income Tax Act in the order of ITAT Mumbai for assessment year 2011-12.

Detailed Analysis:
1. The appellant, a private limited company engaged in trading and manufacturing of electronic parts, sought rectification of the ITAT order dated 14.09.2017. The appellant contended that the addition made in the order was unreasonable and should be restricted to maintain uniformity with other decisions.

2. The Tribunal examined the case where the appellant had purchased goods from parties identified as hawala parties. The assessing officer reopened the assessment due to suspicions of grey market dealings. The AO estimated a profit element of 12.50% on the value of purchases based on the Gujarat High Court decision in Smit P Shah case, which was confirmed by the CIT(A).

3. The appellant argued that the purchases were genuine, supported by delivery proofs and payment through account payee cheques. The appellant had also sold the goods and possessed relevant documentation. The GP on alleged hawala purchases was significantly lower than the overall GP, indicating genuineness.

4. Despite the appellant's submissions, the Tribunal upheld the addition, considering the suppliers' admission of providing accommodation entries and the failure to produce suppliers before the AO. The Tribunal noted a decrease in GP rate from previous years and suspected inflated purchases due to a substantial increase in turnover.

5. The Tribunal found the AO's estimation of profit element reasonable given the circumstances and dismissed the appellant's appeal. The Tribunal also rejected the Miscellaneous Application seeking a review of the order, citing that such review is impermissible in law. The MA was dismissed due to being filed after a significant delay.

In conclusion, the Tribunal upheld the addition of profit element on alleged hawala purchases, considering the circumstances and the appellant's failure to provide conclusive evidence of genuineness. The Tribunal also emphasized that seeking a review under the guise of rectification of mistake is not permissible in law, leading to the dismissal of the Miscellaneous Application.