ACIT-6(1)(2) MUMBAI, MUMBAI vs. KRISHNA CONCHEM PRODUCTS PVT. LTD. , MUMBAI

In various grounds of appeal the Revenue has agitated the appellate order holding that the ld.CIT(A) was not justified in substantially reducing 100% disallowance of a bogus purchase without appreciating the facts that the assessee company had taken accommodation entries from M/s. Rinkoo International of Rs.8,73,600/- which was identified as one of the accommodation entry provider, as per information received from DGIT(Inv.), Mumbai and he also erred in relying on the order of the hon’ble ITAT in the assessee’s case for this very year in AY 2010-11, wherein the ITAT held on similar facts that entire purchase could not be added and only Gross Profit addition 2% of the purchase could be made to prevent loss of revenue, without appreciating the fact that both the authorities had not expressed any infirmity in the action of the AO in treating the purchases made by the assessee as bogus, by ignoring the findings of hon’ble Gujarat High Court in the case of NK Protein Ltd. vs. DCIT against which the SLP was dismissed by hon’ble Supreme Court [2017] 84 taxmann.com 195. 3. Brief facts of the case are that the assessee company engaged in the business of manufacturer of chemicals & chemical compounds filed its return of income declaring total income at Rs. 1,03,89,160/-. Subsequently, order u/s 143(3) was completed on determining the total income at Rs.1,15,28,630/-after making certain

In the subsequent appeal, the appellant drew attention to the order of ITAT dated 25.04.2017 in which the ITAT, Mumbai had decided the appeal of the assessee against the order u/s 143(3) passed earlier by the AO on the ground of bogus purchase from another party holding that the entire bogus purchase could not be added and only GP addition @ 2% of the purchase can be added back to prevent loss of revenue.The P a g e | 4 A.Y. 2010-11 ld.CIT(A) observed that the sole issue in this appeal pertained to the addition of Rs.8,73,600/-, being the amount of bogus purchase made from M/s Rinkoo International. Taking note of the order by the ITAT, Mumbai in assessee’s own case for this very assessment year where it held that addition @ 2% of bogus purchase could only be made, it was held by the ld.CIT(A) that the GP addition @ 2% of the bogus purchase made from M/s Rinkoo International could only be upheld. Accordingly, the addition was restricted to Rs.17,472/-, being 2% of the bogus purchase and the balance amount of Rs.8,56,128/- was deleted.

Before us, the ld.DR relied on the assessment order and the grounds of appeal stating that the impugned transaction could not be established as genuine purchase by the assessee. He did not however, controvert that similar addition was substantially reduced and upheld by the ITAT. On the other hand the ld,AR has relied on the appellate order as also on the order of hon’ble ITAT in its own case where in respect of similar transaction has been, addition has been restricted to 2% only. The ld.CIT(A) has followed the said order. We do not find any infirmity in the conclusion drawn by the ld.CIT(A). Accordingly, the grounds of appeal are dismissed and the appellate order is upheld.

In the result, the appeal of the Revenue is dismissed.