ITO-20(20)(3), MUMBAI, MUMBAI vs. SHRI PRAKASH CHANDULLA VORA, MUMBAI

Deepali Enterprises Rs. 1,69,026/- 2. Rekha Trading Co. Rs. 4,75,332/- Total Rs. 6,44,358/- Since, the assessee failed to discharge his onus in proving genuineness of the aforesaid dealers and purchases made from them, the AO estimated suppressed profit margin on bogus purchase to 12.5% and made addition of Rs. 80,545/-. Against the assessment order dated 24.02.2016 passed under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), the assessee filed appeal before the CIT(A). The CIT(A) granted part relief to the assessee by reducing suppressed profit margin to 8% of the alleged bogus purchases. Against the relief granted by the CIT(A), the Revenue is in appeal before the Tribunal.

Sh. Sanjay J. Sethi representing the Department submitted that the CIT(A) has erred in granting relief to the assessee by reducing estimated GP rate from 12.5% to 8% on bogus purchases. The ld. DR submitted that the assessee could neither produce the parties from whom alleged purchases were made, nor any documentary evidence was filed by the assessee to show that the goods were actually transported. Thus, the assessee failed to discharge his onus in proving authenticity of the dealers and the purchases made from them during the period relevant to AY under appeal. The ld. DR prayed for reversing the findings of CIT(A) and restoring the addition made by AO.

Submissions made by ld. DR heard, orders of the authorities below examined. The only issue raised in appeal by the Revenue is the relief of 4.5% granted by the CIT(A) in respect of alleged bogus purchases by the assessee. A perusal of the impugned order shows that during First Appellate proceedings, the assessee made primary submissions to delete the entire addition, without prejudice to the first prayer the assessee in alternate prayed for restricting the addition on bogus purchases to 6% i.e. difference between G.P estimated by AO and the G.P offered by the assessee. As against 6% the CIT(A) made addition of 8%.

Taking into consideration entirety of facts and the nature of assessee’s business, I am of considered view that addition @ 12.5% on alleged bogus purchases is on higher side. I find no reason to interfere with the findings of CIT(A) in restricting the addition to 8% on alleged bogus purchases. The impugned order is upheld and the appeal of Revenue is dismissed, sans merit. Order pronounced in the open court on Tuesday, the 24th day of August, 2021. Sd/- (VIKAS AWASTHY) �याियक सद�य / JUDICIAL MEMBER मुंबई/Mumbai, �दनांक/Dated: 24/08/2021 SK, PS �ितिल�प अ�े�षतCopy of the Order forwarded to : अपीलाथ�/The Appellant , 1. �ितवाद�/ The Respondent. 2. आयकर आयु�(अ)/ The CIT(A)- 3.