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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHYShri V.C. Chandran Pillai
अपीलाथ) -ारा/ Appellant by : Sh. Sushil Kumar Mishra *ितवाद, -ारा/Respondent by : Sh. Ankit Shah सुनवाई क. ितिथ/ Date of hearing : 30/03/2021 घोषणा क. ितिथ/ Date of pronouncement : 10/06/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-26, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 10.06.2019 for the Assessment Year (AY) 2011-12.
आअसं. 5652/मुं/2019 (िन.व.2011-12) (A.Y.2011-12)
Shri Ankit Shah appeared on behalf of the assessee and submitted that the assessee is a Civil Contractor. The assessment for AY 2011-12 in the case of assessee was reopened on the premise that the assessee has obtained accommodation entries amounting to Rs. 8,52,783/- from M/s Ghatalia Sales/Divine Enterprises. During assessment proceedings, the assessee furnished various documents viz. statement of contract receipts, copy of bank statements, copy of purchase bills along with delivery challans and weigh bridge receipts, etc. to prove genuineness of the sales. However, the AO was not convinced with the documentary evidences furnished by the assessee and made addition of the entire purchases from the aforesaid dealers treating it to be suspicious purchases.
Aggrieved by the assessment order dated 09.12.2016, the assessee filed appeal before the CIT(A). The CIT(A) after considering the documents furnished by the assessee and the GP declared @ 10%, restricted the addition on account of bogus purchases to 12.5%. Now, the Revenue is in appeal against the order of CIT(A) granting part relief to the assessee.
2.1. The assessee in support of his contentions placed reliance on the following decisions:
(1) PCIT v/s Md. Haji Adam & Co. in decided on 11.02.2019 by Hon’ble Bombay High Court. (2) PCIT v/s Rishabhdev Techno Cable Ltd. in ITA No. 1330/2017 decided on 10.02.2020 by Hon’ble Bombay High Court.
आअसं. 5652/मुं/2019 (िन.व.2011-12) (A.Y.2011-12)
(3) PCIT v/s Pinaki D. Panani in decided on 08.01.2020 by Hon’ble Bombay High Court.
On the other hand, Shri Sushil Kumar Mishra representing the Department vehemently defended the assessment order and prayed for 100% addition of bogus purchases. In support of his contentions, the ld. DR placed reliance on the decision of Hon’ble Supreme Court of India in the case of N.K. Proteins Ltd. v/s DCIT.
Both sides heard, orders of authorities below examined. The assessee has allegedly obtained bogus purchases bills from hawala operators. The AO disallowed entire alleged bogus purchases. At the same time, the AO accepted sales turnover declared by the assessee. In such circumstances, it is only the profit element embedded in such purchases that has to be brought to tax. The entire alleged bogus purchases cannot be disallowed. (Re: PCIT vs. Paramshakti Distributors Pvt. Ltd. in of 2017 decided on 15.07.2019). The CIT(A) has estimated GP on bogus purchases at 12.5%. I find no infirmity in the impugned orders, therefore, the same is upheld and appeal of the Revenue is dismissed, sans merit.