INCOME TAX OFFICER -20 (1) (5), MUMBAI, MUMBAI vs. SHRI IMTIYAZ A CHAUDHARY, MUMBAI

This appeal by the revenue is against the order of Commissioner of Income Tax (Appeals) -55, Mumbai [in short ‘the CIT(A)’] dated 28/06/2019 for the assessment year 2010-11.

Shri Sushil Kumar Mishra representing the Department submitted that during the period relevant to assessment year under appeal the assessee has indulged in obtaining bogus purchase bills aggregating to Rs.24,87,488/- from (A.Y 2010-11) various (5) hawala dealers. During the assessment proceedings the assessee could neither prove bona-fide of the dealers nor purchases made from them. No reply to the notices issued under section 133(6) of the Income Tax Act,1961 ( in short 'the Act') to the suspicious dealers were received. The Assessing Officer estimated profit margin on bogus purchase transactions at 12.5% and made addition of Rs.3,10,936/- The CIT(A) restricted the addition to 8% on bogus purchases. The ld.Departmental Representative submitted that estimation of profit margin by Assessing Officer is reasonable and fair, therefore, the same should be sustained. The ld.Departmental Representative prayed for reversing the finding of CIT(A).

On the other hand, Shri Pramod Kumar Parida appearing on behalf of the assessee vehemently supported the impugned order. The ld.Authorized Representative of the assessee submitted that the assessee is trader in iron and steel. The Assessing Officer made 12.5% disallowance of bogus purchases, which is very much on the higher side. The disallowance made by CIT(A) at 8% is fair and reasoanble. 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. Undisputedly, the assessee failed to discharge his onus in proving genuineness of suspicious dealers and purchases made from them. The CIT(A) has upheld the finding of Assessing Officer to the extent that the assessee has made bogus purchases from hawala dealers. The Assessing Officer estimated gross profit margin at (A.Y 2010-11) 12.5% on bogus purchases. Generally, G.P in trading of iron and steel ranges between 5% to 8%. In my considered view estimation of profit margin by the Assessing Officer is on the 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.