INCOME TAX OFFICER 32(1) (2), MUMBAI vs. SHRI ASHISH ASHWINBHAI MEHTA, MUMBAI

On the other hand, Shri Manish J. Seth appearing on behalf of the assessee vehemently supported the impugned order. The ld.Authorized Representative of the assessee submitted that the assessee is a wholesale dealer in chemicals. The ld. Authorized Representative of the assessee submitted that in assessment proceedings the assessee furnished various documents viz. purchase invoices, sales invoices, delivery challans, quantitative details of all purchases and corresponding sales, bank statement, tax audit report, etc. to substantiate genuineness of purchase transactions. The Assessing Officer without examining the documents furnished by the assessee rejected the books of assessee under section 145(3) of the Act and made addition by estimating G.P on alleged bogus purchases @ 12.5%. The assessee has declared G.P of 1.5% during the relevant period. The only reason for making addition by the Assessing Officer was that the assessee has failed to produce dealers from whom alleged bogus purchases were made. The ld.Authorized Representative of the assessee submitted that the assessee has accepted the disallowance made by CIT(A) at 8% to end litigation. The ld.Authorized Representative of the assessee prayed for dismissing appeal of the Revenue and upholding the order of CIT(A).

Both sides heard, orders of authorities below examined. The assessee has purportedly indulged in obtaining bogus purchase bills from declared hawala operators. The CIT(A) has upheld the finding of Assessing Officer that the assessee has made bogus purchases from hawala dealers. However, the CIT(A) has restricted the addition to 8% of the bogus purchases. Taking into consideration entirety of facts, I am of the considered view that estimation of profit margin by the Assessing Officer is on higher side. I find the order of CIT(A) fair and reasonable, hence, warrants no interference. The impugned order is upheld and appeal by the Revenue is dismissed, being devoid of merit.