HARAKCHAND T. SANGHVI,HUF,MUMBAI vs. ITO 19 (1)(5), MUMBAI

The brief facts of the case as emanating from records are: The assessee is engaged in manufacturing of Air Conditioner condensers and cooling coils. The assessment in the case of assessee for assessment year 2009-10 was reopened on the ground that the assessee has indulged in obtaining bogus purchase bills from suspicious dealers. During the course of assessment proceedings the Assessing Officer found that the assessee has obtained accommodation bills aggregating to Rs.38,61,834/- from the following dealers:

Ms. Smita Verma representing the Department vehemently defended the impugned order prayed for dismissing the appeal of assessee. The ld.Departmental Representative submitted that the assessee has failed to discharge his onus in proving authenticity of suspicious dealers and genuineness of purchases made from them. The Assessing Officer / CIT(A) in a fair and reasonable manner has estimated Gross Profit on bogus purchases at 12.5%. The ld.Departmental Representative prayed for upholding the impugned order.

Submissions made by ld.Departmental Representative heard, orders of authorities below examined. The assessee in ground No.1 & 2 of appeal has assailed reopening of assessment. Similar ground was raised before the CIT(A). The CIT(A) after examining the same as upheld validity of reopening. No contrary material is available on record, therefore, I find no reason to interfere with the findings of CIT(A) on this issue. Consequently, ground No.1 and 2 of appeal are dismissed.

In ground No.3 of appeal, the assessee has challenged rejection of books of account. Undisputedly, the assessee failed to discharge his onus in proving genuineness of suspicious dealers and purchases made from them. The Assessing Officer has rejected the books of assessee and thereafter estimated G.P on bogus purchases. It would be relevant to mention here that the Assessing Officer while estimating G.P on unproved purchases has neither disturbed the G.P declared by the assessee on regular purchases nor sales turnover declared by the assessee. Therefore, no prejudice is caused to the assessee in so far regular/undisputed purchases . The ground No.3 of appeal is without any merit hence, dismissed.

In ground No.4 of appeal, the assessee has assailed addition made on estimations in respect of bogus purchases. The assessee has declared over all G.P of 6.24%. The Assessing Officer has estimated G.P on bogus purchases at 12.5%. The CIT(A) has upheld the same. In my considered opinion estimation of G.P at 12.5% is on higher side. To meet the ends of justice suppressed profit margin on bogus purchases is restricted to 7%. The ground No.4 of appeal is partly allowed.

The ground No.5 and 6 are general in nature, hence, require no adjudication.

In the result, appeal by assessee is partly allowed in the terms aforesaid. Order pronounced in the open Court on Friday, the 16th day of July, 2021