ITO, WARD7(1), PUNE vs. SHIVKUMAR SHARMA, PUNE

The only issue raised in this appeal is against the deletion of part addition made by the Assessing Officer (AO) by treating purchases made from two suppliers as bogus on the basis of some information received from Sales Tax department and Law Enforcement Agencies.

Briefly stated, the facts of the case are that the AO found the assessee to have recorded purchases, inter alia, from two parties, namely, M/s. Yash Impex and M/s. Balaji Traders totaling to Rs.7,39,688/-. The same were held to be not genuine as per the information received from Sales Tax department. The AO, therefore, made an addition equal to the amount of purchases at Rs.7,39,688/-. The ld. CIT(A) directed the AO to restrict the addition to Rs.92,461/-, being, profit element at 12.5% on the said purchase amount. The Revenue is aggrieved by the part deletion of addition.

I have heard the ld. DR and perused the relevant material on record. There is no appearance for the side of the assessee.

It is seen that cases of several assessees who had obtained bogus purchase bills from hawala parties came up for consideration before the Pune Benches of the Tribunal. Vide its common order dated 26.9.2019 in Dinesh Rathi vs. DCIT (ITA No. 975/PUN/2018) and others, the Tribunal has restored this issue to the file of the AO by observing in para no. 11 as under : -

`Now we turn to the merits of the cases. The assail is to the making of addition(s) on the basis of bogus purchase bills received by the assessee(s) as accommodation entries from hawala dealers. It is seen that the issue of bogus purchases has recently come up for consideration before the Hon’ble Bombay High Court in Pr.CIT Vs. Mohommad Haji Adam & Co. Vide its judgment dated 11-02-2019 in of 2016 and others, the Hon’ble jurisdictional High Court has held that no ad hoc addition for bogus purchases should be made. It laid down that the addition should be made to the extent of difference between the gross profit rate on genuine purchases and gross profit rate on hawala purchases. Such case specific details are not readily available with the respective ld. ARs or the ld. DRs for facilitating the calculation of gross profit rates of genuine and hawala purchases. Under these circumstances, we set-aside the impugned orders and remit the matter to the file of the respective AOs for applying the ratio laid down by the Hon’ble jurisdictional High Court in the above noted case and recompute the amount of additions, if any, after allowing a reasonable opportunity of hearing to the assessee.’

In the light of the above decision taken by the Pune Benches of the Tribunal in several similar cases, I set-aside the impugned order and remit the matter to the file of the AO for deciding it in conformity with the above directions. In the absence of notice of any appeal filed by the assessee, the amount of relief is directed not to exceed the extent as allowed by the ld. CIT(A).

In the result, the appeal is allowed for statistical purposes. Order pronounced in the Open Court on 07th February, 2020.