INCOME TAX OFFICER 32(1) (4), MUMBAI vs. SHRI DALARAM P PATEL, MUMBAI

आअसं. 5789/मुं/2019 (िन.व.2010-11) (A.Y.2010-11) 2. Sh. Sanjay J. Sethi representing the Department submitted that during the course of assessment proceedings, the AO found that assessee has obtained bogus purchase bills amounting to Rs. 62,39,443/- from five dealers, declared as hawala operators by the Sales Tax Department, Government of Maharashtra. The AO issued notice to the said dealers under section 133(6) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’]. The said notices were received back unserved from the postal authorities with remarks “Not known/Left”. During assessment proceedings, the assessee could neither file confirmations nor produce the dealers, no documentary evidences viz. Octroi receipts, stock register, Lorry receipts, etc. was furnished by the assessee to prove trail of goods. The AO estimated GP @ 25% and made addition of Rs. 15,59,861/-. Against the assessment order, the assessee filed appeal before the CIT(A), the CIT(A) restricted the disallowance on bogus purchases to 12.5%. The ld. DR vehemently defending the assessment order and prayed for restoring the GP estimated by the AO.

Submissions made by ld. DR heard, orders of the authorities below examined. The assessee is engaged in trading of building material etc. Undisputedly, the assessee failed to discharge his onus in proving authenticity of the five dealers as mentioned in the assessment order and the purchases made from said dealers. Since, the AO accepted sales turnover declared by the assessee, the AO estimated GP on alleged purchases at 25%. In First Appellate proceedings, the CIT(A) upheld the findings of AO to the extent of assessee’s involvement in obtaining bogus purchase bills. The CIT(A) following the order of Tribunal in assessee’s own case in for AY 2011-12 decided on 09.08.2017 restricted the estimated GP on alleged bogus purchases