ITO 22 (1)(5), MUMBAI vs. M/S GOLD COIN FASHION, MUMBAI

The assessee is a manufacturer and trader of readymade garments. The assessment for assessment year 2011-12 in the case of assessee was reopened on the ground that the assessee has indulged in obtaining bogus purchase bills amounting to Rs.21,956/- from M/s. Somnath International, a declared hawala operator by the Sales Tax Department, Government of Maharashtra. The Assessing Officer made estimated disallowance of 25% on alleged bogus purchases. The assessee carried the issue in appeal before CIT(A). The CIT(A) restricted the disallowance on bogus purchases to 12.5%, hence, the present appeal by the Revenue.

Ms. Smita Verma representing the Department submitted that the assessee has failed to establish genuineness of purchases made from hawala dealer. The Assessing Officer was quite considerate in disallowing 25% of the bogus purchases. The CIT(A) erred in reducing the addition to 12.5%. The ld.Departmental Representative prayed for restoring the findings of Assessing Officer.

Submissions made by ld.Departmental Representative heard, orders of authorities below examined. Taking into consideration entirety of facts I am of considered view that estimation of 25% profit margin on bogus purchases by the Assessing Officer is on higher side. I find no infirmity in the impugned order. Hence, the same is upheld and appeal of the Revenue is dismissed, sans merit.