ASST. CIT 23 (3), MUMBAI vs. SUNIL BADRIPRASAD BADSIWAL, MUMBAI

These two appeals by the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-34, Mumbai [in short 'the CIT(A)’] dated 07/05/2019, common for assessment years 2010-11 and 2011-12. Since, the facts in these appeals and the grounds raised by the Revenue are identical, these appeals are taken up together for adjudication and are decided by this common order.

Shri Sushil Kumar Mishra representing the Department narrating the facts submitted that the assessee is a contractor. The assessments in the case of assessee for Assessment Year 2010-11 and 2011-12 were reopened on the basis of information received from DGIT(Investigation), Mumbai that the assessee is one of the beneficiaries of accommodation entries provided by Shri Padmachandan Enterprises, a declared hawala operator. The ld. Departmental Representative submitted that the assessee obtained bogus purchase bills from Shri Padmachandan Enterprises amounting to Rs.30,44,157/- during the period relevant to assessment year 2010-11 and amounting to Rs.3,45,560/- during the period relevant to assessment year 2011-12. In assessment proceedings, the assessee failed to prove genuineness of purchases and the dealer. The Assessing Officer disallowed 25% of total bogus purchases and made addition of Rs.7,61,040/- in assessment year 2010- 11 and Rs.1,15,044/- in any assessment year 2011-12. In First Appellate proceedings, the CIT(A) restricted the addition to 12.5% of bogus purchases. The ld. Departmental Representative submitted that the Assessing Officer after examining the facts was very fair and reasonable in making addition of 25% of bogus purchases. The ld. Departmental Representative prayed for reversing the findings of CIT(A) and upholding the addition made in assessment order.

Submissions made by ld. Departmental Representative heard, orders of authorities below examined. Undisputedly, the assessee failed to discharges his onus in proving genuineness of purchases from hawala operator. The CIT(A) has upheld the findings of Assessing Officer in treating purchases made from hawala operator as bogus, however, the CIT(A) has restricted the addition to 12.5% of such purchases. After examining the facts, I am of considered view that estimation of profit margin by the Assessing Officer on bogus purchases is on higher side. I concur with the findings of CIT(A) in restricting the addition to 12.5% of bogus purchases. The impugned order warrants no interference, hence, the same is upheld and appeal of the (A.Y 2010-11) (A.Y 2011-12)