INCOME-TAX OFFICER, PUNE vs. M/S. REGAL FOOTWEAR, PUNE

PER ANIL CHATURVEDI, AM :

This appeal filed by assessee is emanating out of the order of 1. Commissioner of Income Tax (Appeals) – 5, Pune dated 29.11.2018 for A.Y. 2009-10. 2. The relevant facts as culled out from the material on record are as under :-

Assessee is a partnership firm stated to be engaged in retail trading of footwear. Assessee electronically filed its return of income for A.Y. 2008- 09 on 30.10.2009 declaring total income of Rs.3,800/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dt.27.08.2010 and the total income was determined at Rs.60,490/-. Subsequently, the case was re-opened by issuing notice u/s 148 of the Act which was served on the assessee and thereafter, the assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order

dt.18.03.2015 and the total income was determined at Rs.8,07,250/-.

Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A),

who vide order dt.29.11.2018 granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal and has raised the following grounds :

“1. On the facts and circumstances of the case and in law the Learned Assessing Officer erred in initiating reassessment proceeding u/s. 147, on the basis of alleged bogus purchases from three parties merely, on the basis of information received from Maharashtra sales tax department, since action is not based on any tangible material and no live link has been established by Learned Assessing Officer for alleged bogus purchases entire action is bad in law and deserves to be struck down.

Department about certain persons providing entries of bogus purchases

through bogus purchase bills noted that assessee also made purchases

from such alleged bogus suppliers. Accordingly, the case was re-opened.

In the re-assessment proceedings, assessee was asked to justify the purchases made amounting to Rs.18,83,573/- from the alleged bogus entry

providers. Assessee inter-alia submitted that the purchases are genuine.

However assessee was unable to produce the documents to show the delivery of goods payment of octroi and transport charges etc. AO

accordingly considered the purchases of Rs.18,83,573/- to be unproved.

He made addition @ 42.39% on such purchases being the rate of GP

declared by the assessee and accordingly made addition of Rs.7,98,447/-.

Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A),

who granted partial relief by directing the AO to apply G.P. Ratio at 25% on unproved purchases. Aggrieved by the order of Ld.CIT(A), assessee is now

in appeal.

that the assessee would have no objection if the addition is restricted to 10% as held in Para 40 of Chabbi Electricals (supra). Ld.D.R. on the other

hand, relied on the order of lower authorities.

of bogus purchases. AO treated the purchases of Rs.18,83,573/- to be bogus and worked out the G.P. @ 42.39% of such bogus purchases and made addition of Rs.7,98,447/-. When the matter was carried before

Ld.CIT(A), Ld.CIT(A) keeping in view the totality of the circumstances,

nature of trade of the assessee and quantum of sales restricted the addition

to the extent of 25% of purchases. I find that similar issue of bogus

purchase was decided by the Pune Tribunal in group of cases, the lead case

being in the case of Chhabi Electricals (supra). In the case similar to the present case, addition was restricted to 10% of purchases. Since the facts

in the present case are similar to the group of cases in Chabbi Electricals

(supra) decided by the tribunal, I following the decision in the case of Chhabi Electricals (supra) direct that the addition be restricted the G.P.

declared by the assessee plus 10% bogus purchases. I thus direct so and thus the grounds of Assessee are partly allowed.

Order pronounced on 11th day of October, 2019. - (ANIL CHATURVEDI) लेखा सद"य / ACCOUNTANT MEMBER

पुणे Pune; "दनांक Dated : 11th October, 2019. Yamini

आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

//// / व"र" िनजी सिचव / Sr. Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune.