ITO 25 (2)95), MUMBAI vs. SHRI. PRAGARAM G PRAJAPATI, MUMBAI

Aforesaid appeal by revenue for Assessment year [AY in short] 2010- 11 contest the order of Ld. Commissioner of Income Tax (Appeals)-32, Mumbai [in short CIT(A) ] dated 23/10/2019 which has provided certain relief to the assessee on account of alleged bogus purchases.

Though none appeared for assessee, however, material on record was sufficient for disposal of the appeal. The Ld. DR pleaded for restoration of assessment framed by Ld. AO. 3.1 The material facts are that the assessee being resident individual stated to be engaged in trading of metals under proprietorship concern namely M/s Gopal Forge Industries was assessed for the year under consideration u/s 143(3) r.w.s. 147 on 11/02/2016. The original return filed by assessee was processed u/s 143(1). However, pursuant to receipt of certain information from DGIT (Inv.) / Sales Tax Department, Mumbai, it transpired that the assessee made alleged bogus purchases of Rs.55.48 Lacs from seven entities as detailed in the assessment order. Accordingly, the case was reopened as per due process of law and the assessee was required to file requisite details to substantiate these purchases. 3.2 In support of purchases, the assessee furnished certain documents like copies of invoices, ledger extracts and bank statements evidencing payment to the suppliers through banking channels. However, notices issued u/s 133(6) to all these suppliers did not elicit any satisfactory response which led Ld. AO to disbelieve the genuineness of these purchases. Finally, Ld. AO estimated an addition of 12.5% against these purchases. 4. The Ld. CIT(A), considering the nature of assessee’s business as well as documentary evidences, restricted the additions to 5%. Aggrieved, the revenue is in further appeal before us. 5. Going by the factual matrix as enumerated in the orders of lower authorities, we find that assessee’s Sales Turnover was not in doubt and the assessee was in possession of primary purchase documents. The payment to the suppliers was through banking channels. There could be no sale without actual purchase of material keeping in view the assessee’s nature of business. The facts of the case made it a fit case to estimate the profit element embedded in these transactions. The Ld. CIT(A), after due consideration of assessee’s submissions as well as material on record, estimated the additions @5% which is more than enough to take care of the leakage of revenue. Therefore, the estimation could not be termed as unjustified, in any manner. Finding no reason to interfere in the impugned order, we dismiss the appeal. The appeal stands dismissed. 6. Order pronounced on 08th June, 2021.