Pr. Commissioner of Income Tax-5, Mumbai Versus Kanak Impex (India) Ltd.

Parties Involved

Facts Summary

The respondent-assessee, Kanak Impex (India) Ltd., is a company engaged in trading iron and steel. During the reassessment proceedings for the assessment year 2009-10, the appellant-revenue (Pr. Commissioner of Income Tax-5, Mumbai) added Rs.20,06,80,150/- on account of bogus purchases. The respondent-assessee did not appear before the Assessing Officer (AO) during the reassessment proceedings. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld the reassessment proceedings but reduced the addition to 12.5% of the bogus purchases. Both parties filed cross-appeals before the Income Tax Appellate Tribunal (Tribunal), which dismissed the revenue's appeal and directed the AO to restrict the additions to bring the gross profit rate of disputed purchases to the same rate as that of other genuine purchases. The revenue then appealed to the High Court.…

Legal Issues

• 1. Whether the Tribunal, after accepting that this is a case of bogus purchases, could have proceeded to determine profit rate without confirming the disallowance of purchases, without considering the provisions of Section 69C of the Income Tax Act, 1961.
• 2. Whether the ITAT has erred in restricting the disallowance to profit margin on unproven purchases without considering the position of law established by the Hon’ble Apex Court in the case of N. K. Protiens Ltd, that 100% disallowances on bogus purchases is upheld.

Judgment Outcome

Decided in favour of Revenue.

Precedents Relied Upon

Similar Judgements

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