ITO, WARD 3(4), KALYAN vs. SMT SUNITA C KHANDELWAL, MUMBAI

We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee is engaged in the business of reseller in iron and steel under the proprietary concern of M/s Amita Steel Corporation. The Assessing Officer during the course of assessment proceedings noted that the Department has received information from DDIT Investigation Wing 2(3), Mumbai that the assessee is beneficiary of bogus accommodation bills/ entries received from M/s Amita Steel Corporation amount to ₹32,99,671/-. According to Assessing Officer, the assessee has neither produced one Shri. Jignesh Kantilal Desai for cross verification nor given any conformation from him. Accordingly, the Assessing Officer treated the entire purchases as bogus or non-variable and added under section 69C of the Act. Aggrieved, assessee preferred the appeal before CIT(A), who restricted the disallowance at 12.5% by observing in Para 7 to 7.3 as under:-

“7. I have considered the facts of the case and the submissions of the appellant. As the relevant purchases have been debited to the P&L Account and claimed as deduction in computing the profits of the business chargeable to tax, the onus was on the appellant to prove the genuineness of the purchases with satisfactory 7.1 During the course of appellate proceedings the appellant stated that the Hon'ble ITAT, 'B' Bench, Mumbai, in the case of Magnum Steels v/s ACIT, for AY 2010-11, vide dated 28.02.2017, confirmed the disallowance to the extent of 12.5% of bogus purchases. The AR requested that the business of the appellant being same to that of Magnum Steels i.e. trading in iron & steel, the disallowance be restricted to 12.5% of bogus purchases. The relevant part of the order Is reproduced here as under:-