ITO-32(3)(1), MUMBAI, MUMBAI vs. SHRI RAHUL M. PATEL, MUMBAI, MUMBAI

The brief facts of the case as emanating from records are: The assessee is engaged in manufacturing of kitchenware and steel products. On the basis of information received from the Sales Tax Department, Government of Maharashtra, the assessment for AY 2009-10 in the case of assessee was re- opened. As per information received, the assessee had obtained bogus purchases bills amounting to Rs. 90,750/- from three dealers, declared as hawala operators by the Sales Tax Department, Government of Maharashtra. The Assessing Officer (AO) made addition of the entire alleged bogus purchases. The assessee carried the issue in appeal before the CIT(A). The CIT(A) after considering the Gross Profit (GP) declared by the assessee, escapement of Value Added Tax (VAT) and average industry margin restricted the addition to 10.5% on alleged bogus purchases. Now, the Revenue is in appeal against the relief granted by the CIT(A).

Ms. Smita Verma representing the Department vehemently defended the assessment order. The Departmental Representative (DR) submitted that the assessee has failed to produce the dealers or confirmations from them. The assessee has not furnished any document such as delivery challans, lorry receipts, stock register etc. to prove trail of goods. The ld. DR prayed for restoring the addition as per the assessment order.

Submissions made by ld. DR heard, orders of the authorities below examined. Undisputedly, the assessee failed to discharge his onus in proving authenticity of the dealers and the purchase made from them. At the same time, it is observed that the AO has not disputed the sales turnover declared by the assessee. Without purchases, there cannot be sales, therefore, it is only