ITO 20 (1)(1), MUMBAI vs. SHRI. ABDUL HALIM KIFAITULLA KHAN, MUMBAI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals) Mumba-32 [in short 'the CIT(A)] dated 26/06/2019 for the assessment year 2009-10.

Shri Vimal Punmiya appearing on behalf of the assessee submitted that the assessee is a trader in MS Pipes and Tubes. The assessment in the case of assessee for assessment year 2009-10 was reopened on the basis of information received from the Sales Tax Department, Government of Maharashtra. As per information, the assessee had allegedly obtained bogus purchase bills aggregating to Rs.56,36,627/- from four dealers. The assessee furnished relevant documents to prove genuineness of purchases, however, the Assessing Officer rejected the same and disallowed 12.5% of alleged bogus purchases and thus, made addition of Rs.7,04,578/-. The assessee filed appeal against assessment order dated 18/02/2015. The CIT(A) restricted the addition to 5% of such purchases. The G.P. ratio declared by the assessee during the relevant period is 4.10%. The assessee has accepted the addition made by CIT(A). The ld. Authorized Representative of assessee prayed for upholding the impugned order and prayed for dismissing the appeal of Revenue.

On the other hand, Shri Sushil Kumar Mishra representing the Department strongly supported the assessment order and prayed for reversing the findings of CIT(A) and upholding addition made by the Assessing Officer. The ld. Departmental Representative submitted that the assessee failed to discharge his onus in proving genuineness of purchases and the dealers.

Both sides heard, orders of authorities below examined. Undisputedly, the assessee failed to substantiate genuineness of purchases made from dealers, declared as hawala operators by the Sales Tax Department, Government of Maharashtra. The G.P declared by assessee on regular transactions is 4.10% and the same has been accepted by the Revenue. Taking into consideration entirety of facts, estimated addition of 12.5% by the Assessing Officer is on higher side. I concur with the findings of CIT(A) in restricting addition on bogus purchases to 5%. The appeal of Revenue is without any merit, hence, dismissed.