ACIT 28 (2), MUMBAI vs. MILIND V DESHMUKH, MUMBAI

The issue raised in the present appeal relates to partial relief granted by learned Commissioner (Appeals) in respect of addition made on account of non–genuine purchases.

Brief facts are, the assessee is an individual. For the assessment year under consideration, the assessee filed his return of income in the regular course. Subsequently, on the basis of information received from the Sales Tax authorities through the Investigation Wing of the Department indicating that the assessee is a beneficiary of accommodation entries provided by hawala operators through bogus purchase bills, the Assessing Officer re–opened the assessment under section 147 of the Income Tax Act, 1961 (for short "the Act"). During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases worth ` 14,21,595, claimed to have been made during the year from few parties. Further, to independently verify the genuineness of such purchases, the Assessing Officer issued notices under section 133(6) of the Act to the selling dealers calling for certain information. However, all such notices returned back unserved. Further, the Assessing Officer was not satisfied with the evidences furnished by the assessee to establish the genuineness of purchases. Thus, ultimately, the Assessing Officer disallowed the entire amount of ` 14,21,595, and added it to the income of the assessee.

After considering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals)

The learned Departmental Authorities submitted that the learned Commissioner (Appeals) was not justified in directing the Assessing Officer to restrict the addition or bogus purchase to 12.5% as against 100% addition made by the Assessing Officer on account of bogus purchase without appreciating the fact that the parties from whom these purchases were made proven accommodation entry providers as concluded by the Sales Tax Authorities pursuant to the investigation carried out by them. He submitted that the learned Commissioner (Appeals) has not considered the decision of the Hon'ble Jurisdictional High Court in N.K. Proteins Ltd. v/s DCIT, 769/2017, judgment dated 16th January 2017, wherein the Hon'ble Supreme Court has confirmed 100% addition made on account of bogus purchase.

The learned Counsel for the assessee relied upon the observations of the learned Commissioner (Appeals).

Considered the rival submissions and perused the material on record including the decision relied upon by the Revenue. We find that, though, the assessee may not have been able to prove the genuineness of purchases from the declared source, however, it is a fact on record that the Assessing Officer has not disputed the sales

In the result, Revenue’s appeal stands dismissed. Order pronounced in the open Court on 02.06.2021