ITO 33 (2)(4), MUMBAI vs. NILESH D. GANDHI, MUMBAI

आअसं. 6205/मुं/2019 (िन.व.2010-11 ) (A.Y. 2010-11) promotional gift items. The assessment for Assessment Year (AY) 2010-11 in the case of assessee was re-opened on the basis of information received from the Sales Tax Department, Government of Maharashtra. As per the information received, the assessee had obtained bogus purchase bills from three dealers declared as hawala operators as under: 1. M/s Shah Industries Rs. 1,45,600/- 2. Riddhi Siddhi Corporation Rs. 12,45,400/- 3. H.R. Sales Pvt. Ltd. Rs. 13,63,554/- Total Rs. 27,54,554 3. During assessment proceedings, the Assessing Officer (AO) issued notice under section 133(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) to the aforesaid parties. The said notices were returned back unserved by the postal authorities with remarks “Not Known/Left”. The assessee vide letter dated 28.09.2015 pointed to the AO that the assessee is having some dispute with M/s Shah Industries, therefore, the goods purchased from said vendor are still lying in the godown of the assessee, the goods are neither returned nor any payment in respect of the goods purchased from the said vendor has been made. The AO added back entire purchases made by assessee from M/s Shah Industries and in respect of purchases from other two dealers, the AO disallowed 12.5% of such purchases. Aggrieved by the assessment order dated 12.02.2016, the assessee filed appeal before the CIT(A). The CIT(A) after considering submissions of the assessee and documents on record restricted disallowance on entire unproved आअसं. 6205/मुं/2019 (िन.व.2010-11 ) (A.Y. 2010-11) purchases to 5%. Now, the Revenue is in appeal against the relief allowed by the CIT(A).

Sh. Sanjay J. Sethi representing the Department vehemently supported the assessment order and prayed for reversing the findings of CIT(A). The ld. DR submitted that the AO has disallowed 12.5% of the bogus purchases from two dealers and in respect of the 3rd dealer, the AO has added back entire purchases, as the assessee has himself admitted before the AO that no payment has been made to the said dealer.

Submissions made by ld. DR heard, orders of the authorities below examined. Undisputedly, the assessee failed to discharge his onus in proving genuineness of the dealers and the purchases made from them. The AO made disallowance of 12.5% of unproved purchases from two parties, however, in respect of the 3rd vendor, entire amount has been disallowed. In my considered view, the estimation of suppressed profit margin on unproved purchases by the AO is on higher side. The CIT(A) after considering the facts of the case in fair and justified manner has restricted the disallowance to 5%. I find no infirmity in the view taken by the CIT(A), accordingly, the impugned order is upheld and the appeal by Revenue is dismissed, sans merit. Order pronounced in the open court on Monday, the 20th day of September, 2021. Sd/- (VIKAS AWASTHY) �याियक सद�य / JUDICIAL MEMBER मुंबई/Mumbai, �दनांक/Dated: 20/09/2021 SK, PS