ITO,W-27(2)(1), MUMBAI, MUMBAI vs. SHRI KRISHNAKANT TULSIDAS MEHTA (HUF), MUMBAI

Ms. Smita Verma representing the Department submitted that the assessee is engaged in trading of rubber and chemicals. The assessment in the case of assessee for assessment year 2010-11 was reopened on the ground that the assessee has obtained bogus purchase bills amounting to Rs.4,57,100/- from M/s. Giriraj Enterprises during the period relevant to the assessment year under appeal. During assessment proceedings the assessee could neither prove genuineness of the (A.Y 2010-11) dealers nor purchases made from the said dealer. Thus, the Assessing Officer made addition of entire bogus purchases. In first appellate proceedings the CIT(A) restricted the addition to Rs.57,137/- by estimating profit at 12.5% on bogus purchases. The ld.Departmental Representative placing reliance on the decision rendered by Hon’ble Supreme Court in the case of N.K. Proteins Vs. DCIT in SLP No.(C) 769 of 2017 decided on 16/01/2017 prayed for disallowing entire bogus purchases.

Submissions made by ld.Departmental Representative heard, orders of authorities below examined. Undisputedly, the assessee failed to discharge his onus in proving genuineness of the dealer and the purchases made from him. At the same time it is observed that the Assessing Officer has not disputed the sales turnover declared by the assessee. Without purchases there cannot be sales, hence, the entire alleged bogus purchases cannot be disallowed. It is only the profit element embedded in such transactions that can be brought to tax. The CIT(A) has estimated profit margin of 12.5% on unproved purchases. I concur with the findings of CIT(A). Hence, the impugned order warrants no interference, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit.

In the result, appeal by the Revenue is dismissed.