MR. SANJAT DEVRAJ DHANRESHA,MUMBAI vs. ITO 18(3)(2), MUMBAI

आदेश/ ORDER

(i) Niddhish Impex P. Ltd. : Rs. 64,57,346/-

(ii) Moksha Impex : Rs. 83,02,604/- During assessment proceedings the assessee furnished various documents viz. copies of purchase invoice, bank statement evidencing payment by account payee cheque, copy of purchase and sales register, ledger account of parties, etc. to substantiate genuineness of purchases from the aforesaid parties. The Assessing Officer rejected the books of account and made addition of Rs.18,44,993/- by estimating G.P @12.5% on alleged bogus purchases. Aggrieved by the assessment order passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A), inter-alia assailing validity of assessment in the absence of notice issued u/s.143(2) of the Act, rejection of books of account and addition on merits. The CIT(A) without appreciating the facts and documents on record dismissed the appeal of assessee in toto. Hence, the assessee is in second appeal before the Tribunal. The ld. Authorized Representative for the assessee submitted that the assessee has declared G.P @ 13.37% during the relevant period therefore, the addition made by Assessing Officer at 12.5% and sustained by CIT(A) on alleged bogus purchases is very much on the higher side. The ld. Authorized Representative for the assessee stated that although the assessee has raised ground challenging reopening of assessment however, the assessee is not pressing the legal grounds at this stage.

5. Undisputedly, during assessment proceedings the assessee has failed to produce the dealers stated to be hawala dealers from whom the assessee had made purchases aggregating to Rs.1,47,59,950/-. No confirmations from the said dealers were furnished either. Payments made through banking channel are not sacrosanct and does not absolve assessee to discharge its onus to prove genuineness of purchase transactions. The Assessing Officer made addition by estimating G.P on unproved purchases @ 12.5% and the same has been accepted by the CIT(A) . The assessee has suo-motu declared G.P @ 13.37%. Taking into consideration entire facts, including the nature of assessee’s business and the G.P already declared, I find that estimation of G.P on unproved purchases at 12.5% is on the higher side. It is only the suppressed profit margin in unproved purchases that can be brought to tax. In my considered view restricting addition to 5% on bogus purchases would meet the ends of justice. I hold and direct accordingly. The impugned order is modified and the addition in respect of bogus purchases is restricted to 5% of bogus transactions. The ground No.4 of the appeal is thus, partly allowed in the terms aforesaid.

Order pronounced in the open Court on Wednesday the 1st day of December, 2021