SHRI. CHIRAG RAJENDRA SHAH,MUMBAI vs. ITO 31 (1)(3), MUMBAI

Shri Vimal Punmiya appearing on behalf of the assessee submitted that the assessee is engaged in the business of trading of ferrous and non-ferrous metals. The assessment for assessment year 2010-11 in the case of assessee was reopened on the ground that the assessee has obtained accommodation entries aggregating to Rs.2,32,34,839/- from dealers declared as hawala operators by the Sales Tax Department, Government of Maharashtra. The assessee has furnished various documents before the Assessing Officer to substantiate genuineness of purchases, however, the Assessing Officer made addition of Rs.18,58,787/- by estimating G.P on alleged bogus purchases at 8%. The assessee carried the issue in appeal before the CIT(A). The CIT(A) without appreciating facts and documents on record dismissed the appeal of assessee. The ld.Authorized Representative of the assessee submitted that the assessee has declared G.P of 3.86% during the relevant period. The ld.Authorized Representative of the assessee pointed that in assessee’s own case for assessment year 2009-10 the Tribunal in decided on 07/12/2019 has directed to restrict the addition on bogus purchases at the same rate as that of other genuine purchases. The ld.Authorized Representative of the assessee submitted that in the assessment year under appeal similar directions may be given.

On the other hand, Ms. Smita Verma representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld.Departmental Representative submitted that during assessment proceedings the assessee failed to discharge his onus in proving genuineness of the dealers and purchases made from them. The notices issued to the dealers under section 133(6) of the Income Tax Act,1961 ( in short 'the Act') were returned back unserved. No documentary evidence was filed by the assessee to prove trail of goods.

Both sides heard, orders of authorities below examined. Undisputedly, assessee failed to discharge his onus in proving genuineness of the dealers and the purchases made from suspicious dealers. The assessee is a trader in ferrous and non-ferrous metals. Generally, the G.P in trading of ferrous and non-ferrous metals ranges between 5% to 8%. The assessee has declared G.P at 3.86%. Taking note of entire facts, in my considered view ends of justice would be met if the addition is restricted to 5% of the bogus purchases. The ground No.1 raised in the appeal is partly allowed in the terms aforesaid.

No submissions were made by the ld.Authorized Representative of the assessee on other grounds raised in ground No. 2 to 6 of the appeal, therefore, the same are dismissed.

In the result, appeal of the assessee is partly allowed.