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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI PAVAN KUMAR GADALE, HONBLE & ACIT – Circle – 17(3) v. Shri Vijay N. Mehta Shri Manoj Mundra
O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the revenue against order of the Learned Commissioner of Income Tax (Appeals) – 28, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 28.06.2018 for the A.Y. 2010-11 in restricting the disallowance to 3.73% of impugned purchases as against the entire purchases disallowed as non-genuine/bogus by the Assessing Officer.
(A.Y: 2010-11) Shri Vijay N. Mehta 2. Briefly stated the facts are that, the assessee engaged in the business of chemicals and solvent trader, filed return of income for the A.Y.2010-11 on 14.10.2010 declaring income of ₹.23,24,206/- and the return was processed u/s. 143(1) of the Act. Subsequently, Assessing Officer received information from the DGIT (Investigation), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessment was reopened U/s. 147 of the Act based on the information received from DGIT (Investigation), Mumbai, that the assessee has availed accommodation entries from various dealers who are said to be providing accommodation entries without there being transportation of any goods. In the reassessment proceedings, the assessee was required to prove the genuineness of the purchases made from various parties as mentioned in the Assessment Order. In response, assessee vide letter dated 09.10.2015 furnished bill and vouchers along with corresponding bank statement and submitted that the payments are made through account payee cheques as such contended that all the purchases are genuine.
Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there
(A.Y: 2010-11) Shri Vijay N. Mehta being any transportation of materials and the assessee might have made purchases in the gray market. It is the finding of the Assessing Officer that the assessee failed to produce vital documents such as delivery challans, transport receipts, octroi receipt etc., and assessee had unaccounted funds. Therefore, Assessing Officer treated purchases of ₹.8,63,304/ made from Blue Nile enterprises as non-genuine and added to the income of the assessee. On appeal the Ld.CIT(A) considering the evidences and various submissions of the assessee restricted the disallowance to the extent of 3.73% which is Gross Profit shown by the assessee.
Ld. Counsel for the assessee reiterated the submissions made before the lower authorities. Ld. Counsel for the assessee requested to uphold the order of the Ld.CIT(A).
Ld. DR vehemently supported the order of the Assessing Officer.
We have heard the rival submissions, perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), we find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and averments of the (A.Y: 2010-11) Shri Vijay N. Mehta Assessing Officer restricted the addition/disallowance to 3.73% of the impugned purchases, while holding so, the Ld.CIT(A) observed as under: “5.2 The only issue against the appellant is the non-verification of parties: selling goods and the secondary evidence of Sales tax department investigation. Onus in terms of sec.101 of Evidence Act, 1872 too is on appellant which has not been discharged. | A key factor in my view is non confirmation | by parties concerned (which was not so in NIKUNJ case) and not their non appearance which stands settled in terms of NIKUNJ judgment(supra). 5.3 On circumstances, I find that an addition of percentage is warranted as profit embedded in purchases because if indeed they were made from unregistered dealers and accommodation entry obtained from other parties, as preponderance of probability strongly indicates, that addition is warranted. The gross profit this year is Rs.21,887,008/- against turnover of Rs.512,853,643/- giving GP % of 4.27. Last year it was turnover of Rs.371,378,970/- with GP of Rs.12,674,153/- giving GP of 3.41%. Under the facts, GP % of 4.27 shown by appellant himself this year shall be a good yardstick to be applied on unverified purchases of Rs.2,22,9,213/- following my predecessor's order. In similar Circumstances and fact situation. Directed accordingly. Appellant gets relief of the rest.” [UNQUOTE] 8. As in AY 11-12 the remand reference dated 23.8.17 remains unanswered till date. It is regrettable that such additions are mace and then no response is given in appeal. Copy of reference is enclosed for record and strictures are passed against this apathy shown by AO. 8.1 G.P. rates applied in A.Y. 2012-13 is that of the same year. This year G.P. rate is 3.73% which is in same league. Following my own order for A.Y. 2012-13 in appellant’s own case AO is directed to make addition @3.73% of impugned purchases. Rest of the addition is directed to be deleted. In the result, the appeal is Partly Allowed.”
(A.Y: 2010-11) Shri Vijay N. Mehta 7. On a careful perusal of the order of the Ld.CIT(A) and the reasons given therein, we do not find any infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of Gross Profit @3.73% of the impugned purchases. Grounds raised by the revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 04.02.2022 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.