JCIT (OSD) CIRCLE- 10(2)(2), MUMBAI vs. M/S ME INFRA PROJECTS PVT LTD., MUMBAI

Briefly the facts are, the assessee, a resident company, is engaged in the business of civil contractor and manufacturer of RMC. For the impugned assessment years assessee had filed its returns of income in regular course and assessments were also completed under section 143(3) of the Act with enhancement of the declared income to some extent. After completion of the assessments as aforesaid, the assessing officer reopened the assessment under section 147 of the Act for assessment year 2009-10 and an order was passed under section 143(3) r.w.s.147 of the Act on 16-02-2015 further enhancing the income of the assessee on account of alleged non genuine purchases. Subsequently, the assessing officer received information from the Sales-tax department, Government of Maharashtra through DGIT (Inv), Mumbai that in the assessment years under dispute, the assessee is a beneficiary of bogus purchase bills issued by entities identified as hawala operators. Therefore, he called upon the assessee to explain the genuineness of such purchases. Though, the assessee furnished some documentary evidences to establish the genuineness of the purchases; however, the assessing officer was not convinced and ultimately treated purchases of Rs.38,95,315/- and Rs.2,05,989/- in assessment years 2009- 10 and 2012-13, respectively. Additionally, he added back an amount of Rs.9,738/- and Rs.516/- in the respective assessment years towards alleged commission paid for arranging the bogus purchase bills. Contesting the additions made, assessee filed appeals before learned Commissioner (Appeals). After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) restricted the addition to 12.5% of the alleged non genuine purchases. Being of the view that such disallowance takes

We have considered rival submissions and perused materials on record. As could be seen from the facts on record, based on information received from Sales-tax authorities that certain entities from whom the assessee claimed to have purchased goods are hawala operators, the assessing officer disallowed the entire purchases. However, the assessing officer has not doubted the sales effected by the assessee. That being the case, it would be logical to conclude that in absence of the purchased goods, the assessee could not have effected the corresponding sales. In the aforesaid scenario, one can presume that the assessee must have purchased the goods from unverified sources by suppressing a part of its profit element. Therefore, in such circumstances, only the profit element embedded in the alleged non genuine purchases can be considered for disallowance. Learned Commissioner of Income-tax (Appeals) has exactly done that. Further, the profit rate of 12.5% applied by learned Commissioner (Appeals), in our view, is reasonable. Therefore, we do not find any infirmity in the decision of learned Commissioner (Appeals). Accordingly, grounds are dismissed.

In the result, appeals are dismissed. Order pronounced on 14/09/2021.