PRABHAT RAJMAL NIBJIYA,PUNE vs. INCOME-TAX OFFICER, WARD - 5(3), PUNE

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeal)-13, Pune dated 22.06.2018 for the assessment year 2011-12 as per following grounds of appeal on record:

“1.On the facts and in the circumstances of the case and in law the Ld. CIT(A) is not justified in confirming the addition of Rs.9,24,803/-

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holding that the purchases were from the Hawala Dealers as reported by the Sale-tax Department but at the same time accepting the sales made out of it. The A.O. did not follow the matching principle of accountancy i.e. to say that the A.O. has not doubted the sales made but has disallowed whole of the purchases. The addition be deleted. 2. On the facts and in the circumstances of the case and in law the Hon'ble Bombay High court in an unreported judgment had confirmed the matching principle of accountancy and further held purchases cannot be added. The addition of Rs.9,24,803/- be deleted. 3. On the facts and in the circumstances of the case and in law the Ld.CIT(A) is not justified in making the addition of Rs.1,98,649/- on account of stock discrepancy. No such discrepancy was found so also the addition is "Revenue Neutral" as the subsequent years opening stock will get increased as per the Hon'ble Supreme Court verdict. In any case there is no loss of revenue. The addition be deleted. 4. On the facts and circumstances of the case and in law the levy of interest u/s 234B and 234C is not justified. 5. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.”

engaged in the business of proprietary concern in the name and style of M/s.

Blue Point Powerlines which is dealing in Computer hardware and

peripherals. The assessee filed the original return on 30.09.2011 declaring

total income at Rs.11,66,240/-.

the assessee's opening stock amounted to Rs.1,61,32,612/- as per his P&L

account whereas the same was shown at Rs.1,59,33,963/- as per his stock

summery. Thus, there was a discrepancy in the opening stock to the extent of

Rs.1,98,649/- which was later admitted by the assessee. The same was

added back to the assessee's total income by the Assessing Officer. The

Assessing Officer also observed that the assessee had made purchase

transactions from certain parties who have been identified as Hawala dealers

providing bogus purchase bills by the Sales Tax Department, Maharashtra.

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Such purchases totalled to Rs 9,24,803.0n being asked to explain the same,

the assessee submitted that it had made due payment to these vendors

inclusive of the taxes thereon and hence, there has been no default thereof.

The assessee also furnished ledger extract with such vendors. The contention

of the assessee was rejected by the Assessing Officer on the ground that the

Sale Tax Department specifically furnished the benefit received by the

assessee from one of the vendors M/s. Siddhi Enterprises to the extent of

Rs.5,96,298/-. Whereas the purchase from such vendor stood in the

assessee's books at Rs.3,27,982/-. It was also noticed that no bills of

purchase have been filed by the assessee below Rs.20,000/- against which

cash payment have been made. No delivery challans, Octroi receipt have been

submitted for the said purchases. The Assessing Officer thus, opined that the

purchases so claimed to have been made and shown by the assessee are not

genuine, but, bogus accommodation bills and that he is involved in hawala

transaction. Therefore, he added the entire amount of bogus purchases so

made of Rs 9,24,803/-to the assessee's total income.

of bogus purchases and also confirmed the addition of Rs.1,98,649/- on

account of stock discrepancy. Being further aggrieved the assessee has

preferred this appeal before us.

on the ratio laid down by the Hon'ble Bombay High Court in the case of

Pr.CIT Vs. Mohammad Haji Adam & Co. vide its judgment dated 11.02.2019

in ITA No.1004 of 2016. The Ld. AR of the assessee has further submitted

that in such situation of bogus purchases, the GP rate of genuine purchases

has to be identified and along with that bogus purchase GP also have to be

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identified. The difference of these two can be added to the income of the

assessee. For example, if the GP percentage of genuine purchases comes to

8% whereas GP percentage of bogus purchases comes to 10%, then 2% of

bogus purchases can be added to the income of the assessee.

considered the judicial pronouncement placed before us. We have also given

considerable thought to the judgment of the Hon'ble Bombay High Court in

the case of Pr. CIT Vs. Mohommad Haji Adam (supra.) wherein it has been

held that no ad-hoc addition at the rate of 10% of bogus purchases is

warranted. Rather, the addition should be made to the extent of difference

between gross profit rate on genuine purchases and gross profit rate of bogus

purchases.

Reverting to the facts of the present case and taking guidance from the

said judgment of the Hon'ble Bombay High Court in the case of Pr.CIT Vs.

Mohommad Haji Adam (supra.), we set aside the order of the Ld. CIT(Appeal)

and restore the matter back to the file of the Assessing Officer for undertaking

this exercise and finding out the excess gross profit rate earned from bogus

purchases and then making the addition accordingly after allowing

reasonable opportunity of hearing to the assessee.

Order pronounced on 30th day of April, 2019.

Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 30th April, 2019. SB

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आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-13, Pune. 4. The Pr. CIT-3, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

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Date 1 Draft dictated on 29.04.2019 Sr.PS/PS 2 Draft placed before author 30.04.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order