NISHANT MURAR LATKE ,MUMBAI vs. ITO, WARD 3(3), MUMBAI

O R D E R

PER ABY T. VARKEY, JM:

2 A.Y. 2009-10 Nishant Murar Latke 3. Brief facts the AO noted are that the assessee had filed return disclosing total income of Rs.4,19,671/- which was processed vide intimation dated 08.03.2011 u/s 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”). Later on based on an information received from the Sales Tax Department (Maharashtra), the assessee’s case was reopened. According to the information from the Sales Tax Department, the assessee was a beneficiary of bogus purchase bills from accommodation entry providers to the tune of Rs.15,03,225/-[ i.e, from M/s. Vijay Sagar Trading Pvt. Ltd and M/s. Manibhadra Sales Pvt. Ltd.] Thereafter, the AO disallowed the entire purchases made from both the parties to the tune of Rs.15,03,225/- u/s 69C of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) dismissed the appeal of the assessee by holding as under: - “5.1 Adjudication: The assessment was reopened to consider the claim of bogus purchases amounting to Rs.15,03,225/-. AO has conducted detailed enquiries with regard to the bogus claim of purchases by calling for documentary evidence and production of parties. Even after getting fair opportunities at the time of scrutiny proceedings, the appellant could not produce the parties and at the time of appellant proceedings also, other than the grounds of appeal and statement of facts nothing is available on record to rebut the averments of the Assessing Officer. In view of the above, the addition made under Sec. 69C is upheld. In the result, this ground is “Dismissed”.

3 A.Y. 2009-10 Nishant Murar Latke 5. Heard both the parties and perused the records. The only plea of the Ld. AR of the assessee Shri Dharan Gandhi is that since the AO has not disturbed the sales (turnover) shown by the assessee in his Profit & Loss account, the suspected purchases to the tune of Rs.15,03,225/- could not have been entirely disallowed; and at the most, AO could have only taxed the profit embedded in such purchases and for that he relied on the decision of the Hon’ble Bombay High Court in the case of PCIT Vs. Mohommad haji Adam & Co. (Bom). It is noted in this case, the AO/Ld. CIT(A) has not disputed the assessee’s sales (turnover). In such a scenario, the purchases cannot be entirely rejected without disturbing the sales in the case of a trader like assessee. The Ld. AR has brought to our notice that on similar facts this Tribunal had estimated the GP rate at 12.5% of the purported bogus sales (Rs. 15,03,225/-in this case). So the impugned order of Ld. CIT(A) is set aside. And the AO is directed to restrict the addition to 12.5% of Rs.15,03,225/- and the balance amount which was added is directed to be deleted.