ITO -17(3)(1), MUMBAI vs. SANJAY H SHAH, MUMBAI

This appeal by the Revenue is directed against the order of learned CIT(A) dated 9.12.2019 pertains to A.Y. 2012-13.

read as under :- 1. "On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in directing the AO to restrict the addition to 5% of bogus purchases against 25% addition made by the AO on account of bogus purchases.

2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that the addition was made on the basis of information received from Sales Tax Department ,Maharashtra with regard to bogus purchases made by the assessee from dealers without actual supply of goods.

3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that the hawala operators have admitted on oath before the Sales tax Authorities that they have not sold any material to anybody."

4. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that the assessee could not prove the 2 Sanjay H. Shah genuineness and creditworthiness of the purchase transactions during the course of assessment proceedings?"

Renuka Sales Rs.11,55,058/- Rekha Trading Co. Rs.11,86,292/- National Trading Rs.11,02.918/- Co. RS. 34,44,268/- However, it is seen that these sellers are declared as hawala operators by the Sales Tax Department and their list is displayed on the website 'of Sales Tax Department. In the assessee's own case addition of 25% of the purchases for Assessment Years 2009-10 to 2011-12 were made for detailed reasoning. On similar lines addition is being made @25% of total purchases of Rs.8,61,067/- for this year also. It is to be mentioned that the assessee has already disclosed this amount during the course of assessment proceedings. However, since the declaration was made during assessment proceedings, assessee is liable for penalty u/s. 271(l)(c) of the I. T. Act.”

4. Upon assessee’s appeal learned CIT(A) held as under : "1. The assessee's case for the same matter was reopened for the A.Y.2009- 10, 2010-11 and 2011-12 u/s.148 of the Income Tax Act, 1961 and the addition @25% on the purchase made from alleged bogus dealer was made to the income of the appellant by the Id. AO and they had preferred appeal against the order of the AO.

2. The Hon'ble CIT(A) had taken the same stand as of the AO of addition of 25% of alleged bogus purchases for the A.Y.2009-10, 2010-11 and 2011-12.

3. The assessee aggrieved by the decision of CIT(a) had preferred an appeal against the order of CIT(A) in the ITAT, Mumbai and the decision of the ITAT had been announced. The Hon'ble Tribunal had given some relief to the appellant and had restricted the addition to the extent of 5%, copy of same order in given to your kindness with letter dated 23rd April, 2018.

5.4 I have very carefully perused the impugned order and remand report, the entire attendant facts and circumstances of the matter and the submissions of the Ld. AR. 1 have also perused with circumspection, the pertinent details and materials on record.

3 Sanjay H. Shah 5.5 On due perusal and consideration, I find that the present impugned issue is rather a simple one, in as much as the relevance of the fact that the matter is covered in the appellant's own case for the appeals in A.Y.2009-10, 2010-11 & 2011-12 [in 5064 & 5065/Mum/2O17] by the order of the Hon'ble ITAT, Mumbai dated 16.02.2018 as per which the Hon'ble Tribunal held as under;- QUOTE

"Thus, respectfully following the decision of Hon'ble Gujarat High Court in CIT Vs. Simit P Sheth (supra) and by Hon'ble Bombay High Court in Hariram Bhambani (supra), the disallowance of cost of purchases of steel is restricted to 5% of the purchases. The AO is directed accordingly. In the result the ground no.1 of the appeal is partly allowed."

5.6 Even the AO has not commented adversely about the factual parity and the applicability thereof of the earlier 3 years decision as quoted above, viz., the ITAT decision for A.Y.2009-10, 2010-11 & 2011-12, in the appellant's own case.

5.7 All in all, in the factual matrix of the matter, 1 respectfully by following the above quoted ITAT decision, direct the AO to restrict the addition to 5% of the total of the bogus/suspicious purchases from 3 parties. Accordingly, the AO shall make the necessary recalculations. Thus, the appeal is PARTLY ALLOWED.”

Order pronounced in the open court on 06.04.2022.