ITO 26 (1)(6), MUMBAI vs. DEEPAK K SALOT, MUMBAI

2 Shri Dinesh B. Shah 2. Since all these appeals by the Revenue pertain to the same assessee involving common issues, except variation in figures, arising out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. However, in order to understand the implication, it would be necessary to take note of the facts of one appeal. We are, accordingly, narrating the facts, as they appear in the appeal being ITA no.339/Mum./2020, for assessment year 2009–10, the result of which will be equally applicable to the other appeals for the A.Y. 20010–11 and 2011–12 as well.

3 Shri Dinesh B. Shah purchase bills without supplying any goods, the Assessing Officer re– opened the assessment under section 147 of the Income Tax Act, 1961 (for short "the Act"). During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases worth ` 55,85,089, claimed to have been made during the year from four parties. Further, to independently verify the genuineness of such purchases, the Assessing Officer issued notices under section 133(6) of the Act to the selling dealers calling for certain information. However, all such notices returned back un–served. Further, the Assessing Officer was not satisfied with the evidences furnished by the assessee to establish the genuineness of purchases. Thus, ultimately, the Assessing Officer rejected the books of account of the assessee under section 145(3) of the Act and held that the purchases aggregating to ` 55,85,089, from the four parties were merely accommodation entries and such purchases were made to inflate the purchases / expenses and hence disallowed ` 55,85,089 which was added back to the total income of the assessee. The assessee being not satisfied with the order of the Assessing Officer, filed appeal before the first appellate authority to contest the addition.

4 Shri Dinesh B. Shah 6. Considered the rival submissions and perused the material on record. we find that, though, the assessee may not have been able to prove the genuineness of purchases from the declared source, however, it is a fact on record that the Assessing Officer has not disputed the sales effected by the assessee. Therefore, it goes to prove that the assessee must have purchased goods from some other undisclosed source. In such circumstances, it is the settled legal position that the entire purchases cannot be disallowed, but only the profit element embedded in such purchases can be considered for addition. Therefore, keeping in view the decisions of the Tribunal in identical nature of cases, the decision of the learned CIT(A) to restrict the disallowance to 12.5% of the non–genuine purchase is fair and reasonable requiring no interference from this forum. Accordingly, we uphold the impugned order passed by the learned CIT(A) by dismissing the grounds raised by the Revenue.

5 Shri Dinesh B. Shah identical to the issue decided by us vide Para–6 above, raised by the Revenue in its appeal being ITA no.339/Mum./2020, for the assessment year 2009–10, wherein we have upheld the order of the learned CIT(A) by dismissing the grounds raised by the Revenue for the A.Y. 2009–10. Consequent upon the decision taken by us on this issue as aforesaid, while maintaining the consistency with the view taken therein, we do not find any infirmity with the order of the learned CIT(A) which is upheld on this issue by dismissing the grounds raised by the Revenue for A.Y. 2009–10 to 2011–12.