ITO - 32(1)(8), MUMBAI vs. SHIR SANDEEP BABURAV BIRJE, MUMBAI

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 being any transportation of materials and the assessee might have made purchases in the gray market. Assessing Officer observed that the notices

Inspite of issue of notice none appeared nor any adjournment was sought. Therefore, I proceed to dispose of this appeal on hearing Ld.DR on merits.

Ld. DR vehemently supported the orders of the Assessing Officer.

Heard Ld.DR, perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), I find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of (A.Y. 2009-10) Shri Sandeep Baburav Birje the assessee and the averments in the Assessment Order and following decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Sheth [356 ITR 451] restricted the addition to 12.5% of the non-genuine purchases. While holding so, the Ld.CIT(A) observed as under: - “5. Ground Nos. 3 to 9 raised by the appellant relate to the addition of Rs.16,51,406 being 15% of the purchases as non-genuine purchases. The AO has mentioned in the order that as per the information from the Sales tax department purchases were made by the assessee from the various suspicious dealers which are mentioned in Para 2 of the assessment order. During the course of assessment proceedings the assessee contended that the purchases were genuine. In order to ascertain the genuineness, the AO asked the assessee to furnish all the relevant evidence to establish that goods were actually supplied, to discharge the onus. In reply, the assessee did not file any reply nor did anyone attend the hearing. In view of the same, the AO held that the assessee failed to produce any documentary proof of purchases made from the alleged bogus parties. However considering that the assessee was in possession of goods allegedly purchased from specious dealers, the' AO held Rs.16,51,406 being 15% of the purchases made from the said parties as bogus and not genuine and added to the income returned. 5.1 I have perused the assessment order and the grounds of appeal as well as SOF of the assessee. The AO held in the assessment order that the appellant did not produce any details with regard to purchases and sale made. In the present case from the facts available on records, it is observed that the AO has neither disbelieved the purchases nor the corresponding sales made. The AO has held that the impugned purchases were not made from above referred dealers/parties but from somewhere else/grey market. The facts and circumstances of the present case are similar to that of facts adjudicated by the Hon'ble Gujarat High Court and Hon'ble ITAT, Mumbai in the case of CIT vs. Simit P Sheth, 356 ITR 451, where the court estimated at 12.5% of bogus purchases as additional profit. The estimation made by the AO at 15% is on higher side and more than the percentage determined by the courts in the above referred cases. Therefore, the profit is restricted to 12.5% of (A.Y. 2009-10) Shri Sandeep Baburav Birje the bogus alleged purchases. The AO is directed add 12.5% of Rs.1,10,09,376 working out to Rs.13,76,172 and modify the addition accordingly. Appellant gets part relief. These grounds are partly allowed”

In the result, appeal of the Revenue is dismissed.