INCOME TAX OFFICER 32 (1) (2) , MUMBAI vs. SHRI ASHISH ASHWINBHAI MEHTA, MUMBAI

आअसं. 5792/मुं/2019 (िन.व.2010-11) (A.Y.2010-11) 2. The solitary issue raised in this appeal by the Revenue is against restricting of disallowance on account of bogus purchases to 8% by the CIT(A) as against disallowance of 12.5% made by the Assessing Officer (AO).

The assessment for 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 and DGIT (Investigation), Mumbai. As per the information received, the assessee had obtained bogus bills amounting to Rs. 1,22,77,912/- from various dealers declared as hawala operators by the Maharashtra Sales Tax Department. During the course of assessment proceeding, the AO issued notices under section 133(6) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] to the suspicious dealers on the addresses furnished by the assessee. The notices were received back unserved from the postal authorities with remarks “Left/Not Known”. No documentary evidence was furnished by the assessee in the form of Inward Register, Stock Register, Lorry receipts, etc., to prove trail of goods. The AO estimated Gross Profit (GP) on bogus purchases at 12.5% and made addition of Rs. 15,34,739/-.

Now, the Revenue is in appeal before the Tribunal assailing the findings of CIT(A) in restricting disallowance to 8%.

Submissions made by ld. Departmental Representative heard. Orders of authorities below and the documents on record examined. The Authorized Representative of the assessee has filed written submissions and Paper Book containing Balance-Sheet and Profit & Loss Account for the financial year ended on 31.03.2010 and some case laws. The same are considered.

Undisputedly, the assessee failed to discharge his onus in proving genuineness of suspicious dealers and purchases made from them. Since, the AO accepted sales turnover declared by the assessee, the AO estimated GP on bogus purchases at 12.5%. The assessee is engaged in wholesale trading of chemicals. The estimation of GP by AO at 12.5% is on higher side. We find no infirmity in the order of CIT(A) in estimating suppressed profit margin on unproved purchases at 8%. The impugned order is upheld and appeal of the Revenue is dismissed, sans merit.