DHARMIK EXIM PVT. LTD.,,MUMBAI vs. DCIT-12(2)(2),, MUMBAI

The Brief facts of the case are that, the assessee company is engaged in the business of export trader in steel. The assessee has filed the return of income for theA.Y2000-01 on 20.11.2000 disclosing a total income of Rs.20,27,420/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and the assessment was completed with an addition on account of bogus purchases by the A.O of Rs. 3,77,10,613/- and order u/s 143(3) of the Act was passed on 28.03.2003 determining a total income of Rs.3,97,38,030/-. Aggrieved by the A.O. order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has restricted the addition to the extent of 25% of total purchases and partly allowed the assessee’s appeal. Aggrieved by the CIT(A) order, the assessee and the revenue has filed appeal before the Hon’ble Tribunal, whereas the Hon’ble Tribunal in ITA No.2245 & 2916 /Mum/2004 dated 06.02.2007 had restored the issue of genuineness of purchases from 8 parties aggregating to Rs. 3,79,00,113/- to the file of the A.O. to decide a fresh. Therefore the A.O. as per the directions of the Honble Tribunal has passed an order

Aggrieved by the order, the assessee has filed an appeal before the CIT(A), but the CIT(A) has restricted disallowance to the extent of 25% of alleged bogus purchases. Against the CIT(A) order, both the assessee and the revenue has assailed an appeal with the Hon’ble Tribunal. Whereas, the Hon’ble Tribunal in ITA No. 232 & 151/Mum/2009 dated 09.09.2010 has confirmed the disallowance of entire purchases there by allowing the revenue appeal and dismissed the assessee’s ground on the issue of bogus purchase. Aggrieved by the Honble Tribunal order, the assessee has filed an appeal before the Hon’ble High Court of Mumbai and the matter was restored to the file of the Honble Tribunal for fresh consideration. Whereas, the Hon’ble Tribunal in ITANo.232/Mum/2009&1297/Mum/2012 dated 19.08.2015 as per the directions of the Hon’ble High Court of Mumbai has heard the matter and observed at page 2 Para 3 0f the order as under:

As per the directions of the Hon’ble ITAT, the A.O in order to examine the alleged bogus purchases of 8 parties amounting to Rs. 3,79,00,113/- has issued notice u/s 142(1) of the Act and also issued a show cause notice to the assessee referred at Para 4 of the A.O order. The assessee has filed the explanations in compliance to the show cause notice at page 4 Para 5 of the order.

Whereas, the A.O. found the submissions are not tenable and called for the copies of the affidavits filed before the Honble High Court. The assessee has filed the submissions on 26-12-2016 along with the PAN of the parties.

Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas in the appellate proceedings the CIT(A) considered the grounds of appeal, submissions of the assessee and the history of the assessee’s case at page 4 to 6 of the appellate order. Whereas, in respect of the disputed issue where the assessee has filed the confirmations of parties and the material information against the addition of Rs. 3,79,00,113/- the CIT(A) has granted relief in respect of 3 parties aggregating to Rs.2,06,32,149/- referred at Para 5.8 of the order and sustained the addition of RS.1,72,67,964/- and partly allowed the assessee’s appeal.

Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Honble Tribunal.

At the time of hearing, the Ld. AR submitted that the CIT(A) erred in sustaining the addition of Rs.1,72,67,964/- on account of bogus purchases, irrespective of the fact that the assessee has placed all the material information before the

We heard the rival submissions and perused the material available on record. The sole disputed issue is in respect of addition of bogus purchases made by the A.O. and partly confirmed by the Ld.CIT(A). We find on perusal of the Assessment Order, the Assessing Officer has made 100% addition of purchases in respect of parties and there was no proper compliance to the notice u/s. 133(6) of the Act. Whereas the assessee has made bogus purchases from the dealers and in turn it provides savings to the assessee in nonpayment of state taxes. We considered the facts,circumstances and the judicial decisions of the Honble High Court and Tribunal in the identical cases and the judicial precedence were estimating the profit element embedded @ 12.5% of doubtful/ bogus purchases was accepted. We find that the assessing officer has not doubted the sales but made 100% addition of purchases. We rely on the ratio of decision of Hon'ble Jurisdictional High Court in the case of CIT v. Nikunj Eximp (216 Taxman.com 171) and Honble

At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in granting the relief irrespective of the fact that the assessee has entered into bogus purchase transactions and the CIT(A) has over looked the genuineness of purchases. Contra, the Ld.AR submitted that the assessee has filed the cross appeal. The Ld.DR could not controvert the findings of the CIT(A) with any cogent material or new information and relied on the order of the A.O.

We heard the rival submissions and perused the material on record. We find the CIT(A) has relied on the judicial decisions, confirmations, PAN and passed a reasonable order. Accordingly, we are not inclined to interfere with the order of the CIT(A) on this disputed issue of granting the relief and uphold the same and dismiss the grounds of appeal of the revenue.

As the facts and circumstances in these appeals are identical to ITA No. 1480/Mum/2019 and 1813/Mum/2019 for A.Y. 2000-01, the decision rendered in above paragraphs would apply mutatis mutandis for this case also. Accordingly, grounds of appeal of the assessee are partly allowed and the revenue are dismissed

In the result, the assessee’s appeals ITA Nos. 1480 & 1481/Mum/2019 for the A.Y 2000-01 & 2001-02 are partly allowed and revenue appeal ITA Nos. 1812 & 1813/Mum/2019 for the A.Y 2000-01 & 2001-02 are dismissed.