ITO 24 (2)(3), MUMBAI vs. SMT KETKI BHAVESH AJMERA, MUMBAI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals) -36, Mumbai [in short ‘the CIT(A)’] dated 20/09/2019 for the assessment year 2009-10.

The brief facts of case as emanating from records are : The assessee is a trader in industrial chemicals. The assessment for assessment year 2009-10 in the case of assessee was reopened on the basis of information received from DGIT (Investigation), Mumbai. As per the information received, the assessee has obtained bogus purchase bills aggregating to Rs.1,73,97,000/- from following dealers, declared as hawala operators by the Sales Tax Department, Government of Maharashtra. Name Amount Purab Enterprises 80,89,875/- Bhakti Enterprises 93,07,125/- Total 1,73,97,000/- During the course of assessment proceedings, the assessee failed to prove genuineness of aforesaid dealers and purchases made from them during the period relevant to assessment year under appeal. The Assessing Officer estimated suppressed profit margin on bogus purchases @ 12.50% and made addition of Rs.21,74,625/-. Against the assessment order dated 28/10/2016 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). In the first appellate proceedings, the CIT(A) after examining the facts and considering submissions of the assessee restricted profit rate on bogus purchases to the extent of differential percentage as declared on the bogus purchases and as declared on regular purchases. Now, the Revenue is in appeal against the part relief granted by the CIT(A).

Shri Sanjay J. Sethi, representing the Department vehemently defended the assessment order and prayed for restoring the addition on bogus purchases as per assessment order. The ld. Departmental Representative submitted that the assessee could not discharge her onus in proving genuineness of the purchases from the dealers declared as hawala operators. The Assessing Officer in a fair and reasonable manner has estimated suppressed profit margin on bogus purchases at 12.5%. The CIT(A) has erred in disturbing the same and granting relief to the assessee. The ld.Departmental Representative prayed for reversing the finding of CIT(A) and upholding the assessment order.

Submissions made by ld.Departmental Representative heard, orders of authorities below examined. Undisputedly, the assessee failed to discharge her onus in proving genuineness of the dealers and purchases made from them. The Assessing Officer has estimated suppressed profit margin on bogus purchases at 12.5%. In the First Appellate proceedings the CIT(A) has restricted the addition to the extent of differential percentage as declared on bogus purchases and as declared on regular purchases. The approach adopted by the CIT(A) is one of the possible views. The impugned order warrants no interference, hence, the same is upheld and the appeal by Revenue is dismissed sans-merit.

In the result, appeal by the Revenue is dismissed. Order pronounced in the open Court on Monday the 04th day of October, 2021