SAMRAT BHUPENDRA SHETH,MUMBAI vs. ITO WD 32(3) (2), MUMBAI

O R D E R

PER PAVAN KUMAR GADALE JM:

1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs

Samrat Bhupendra Sheth, Mumbai. - 2 -

5,82,780/- on account of non-genuine purchases which is bad in law.

2.The brief facts of the case are that the assessee is a individual and partner in the partnership firm in the name and style of M/s Nayana Organics dealing in chemicals and derives income from business. The assessee has filed the return of income for the A.Y 2011-12 on 30.09.2011 disclosing a total income of Rs.Nil and the return of income was processed u/s 143(1) of the Act. The Assessing Officer (A.O) has received information from Sales Tax Department and DGIT(Inv), Mumbai that the assessee has obtained the bogus purchase bills from certain dealers who are providing the bogus accommodation entries as per the information in the Website of Sales Tax Department and the assessee being one of the beneficiary of obtaining the bogus purchase bills. The AO find that the assessee has obtained the bogus bills from three parties aggregating to Rs.46,62,238/- and therefore has reason to believe that the income has escaped

Samrat Bhupendra Sheth, Mumbai. - 3 - assessment and issued notice u/s 148 of the Act. Subsequently the assessee has made request for providing the reasons for reopening of assessment. Further the AO has issued notice u/s 143(2) and 142(1) of the Act.

3.In compliance, the Ld. AR of the assessee appeared from time to time and submitted the explanations. The AO has called for the various details in respect of the purchases i.e. ledger account, bank statement etc and the assessee has complied partially. The A.O. was not satisfied with the information filed by the assessee and to test check the genuineness of the transactions has issued notice u/s 133(6) of the Act on the parties and the said notices were returned un- served with postal department remark not known or left or refused. Hence the AO has called for the additional information from the assessee and to produce the parties. Whereas the assessee has failed to produce the parties and additional information to prove the genuineness of the transactions. Hence, the AO has relied on the judicial decisions and the facts and estimated the gross profit(GP)@12.5% on non

Samrat Bhupendra Sheth, Mumbai. - 4 - genuine purchases which worked out to Rs. 5,82,780/- and assessed the total income of Rs. 5,82,780/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 24.08.2016.

4.Aggrieved by the order the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the scrutiny assessment but concord with the action of the AO and confirmed the addition and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Honble Tribunal.

5. At the time of hearing the Ld. AR submitted that the CIT(A) erred in confirming the addition irrespective of the fact that the assessee has substantiate the case in the appellate proceedings with material information. The contentions of the Ld. AR that the assessee has been consistently showing the Gross profit (GP) range from 3.8% to 6.2% and the Net profit (NP) range 2.2% to 5.3% for A.Y 2010-11 to Samrat Bhupendra Sheth, Mumbai. - 5 - 2012-13 and estimation of profit@ 12.5% is on the higher side and prayed for allowing the appeal. Contra, the Ld. DR supported the order of the CIT(A).

Order pronounced in the open court on 26.08.2022.