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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE, JM:
This appeal is filed by the revenue against the separate order of the Commissioner of Income Tax (Appeals) - 33 Mumbai, passed u/s. 143(3) and 250 of the Income Tax Act, 1961. The Revenue has raised the following grounds of appeal “i. On the facts and circumstances of the case the Ld. CIT(A) has erred in ignoring the latest decision of SC in the case of Ms. NK Proteins Ltd Vs. CIT, wherein the Supreme Court has decided the issue of bogus purchases with a M/s. Ramniklal Gosalia & Co. direction of making addition amounting to entire bogus purchases as assessee income.
2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in estimating the profit element embedded in the amount represented by bogus purchase recorded in the books of accounts at 12.5% of the total bogus purchase without appreciating the fact that any expenditure not found to be incurred at all that the same is also not laid out or expended wholly and exclusively for the purpose of business is not admissible in terms of the provisions of Sec. 37 of the Act.
3. On the facts and in the circumstances of the case and in law, the CIT(A) failed to appreciate the fact that onus is on the assessee to explain and substantiate the genuineness and true nature of purchase transactions.
4. The appellant prays that the order of the CIT(A) on the above ground be reversed and that of the AO be resorted.
5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
2. The Brief facts of the case are that the assessee is engaged in the business as a civil contractor and filed the return of income for the A.Y 2009-10 on 30.08.2010 with the total income of Rs.20,63,35,060/-, the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and the notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued. In compliance, the Ld AR of the assessee appeared from time to time and furnished the details and the case was discussed. On perusal of M/s. Ramniklal Gosalia & Co. the financial statements the A.O found (i) the assessee has income from house property and the annual value of the property was not considered and hence made an addition of Rs.1,93,200/.-(ii)the assessee has made payments in cash for conference expenses and there is contravention of provisions u/sec 40A(3) of the Act Rs.33,866/-(iii)disallowance of commission and brokerage expenses u/sec 40(a)(ia) of the Act for non deduction of TDS of Rs. 4,140/-.(iv) disallowance of depreciation on intangible assets of Rs.7,41,577/-(v) excess claim of depreciation on recalculation of depreciation on wind mills of Rs. 3,94,556/-.(vi)The A.O. has received the information from Sales Tax Department, Maharashtra, Mumbai that the assessee has obtained bogus purchase bills from M/s. Aryan Sales Corporation of Rs. 14,72,640/- and the A.O. has called for the details u/s 142(1) of the Act. Whereas, the assessee has filed a letter dated 22.01.2013 mentioning the facts and the details of purchase transactions. The A.O found that the assessee has obtained the bogus purchase bills and made addition applying the ratio of judicial decision and estimating the income @ 25% on non genuine purchases which works out to Rs.3,68,160/-(vii) Difference in receipts as per Form 26AS and could not be reconciled of Rs2,33,609/- and (viii) disallowance of excess claim of M/s. Ramniklal Gosalia & Co. deduction u/s 80IA of the Act of Rs. 3,94,556/-.Finally the A.O. has assessed the total income of Rs. 20,79,09,610/- and passed the order u/s 143(3) dated 15.03.2013.
Aggrieved by the order, the assessee has filed an appeal with the CIT(A).The Ld.CIT(A) considered the grounds of appeal, findings of the A.O. and submissions. The CIT(A) on the disputed issue of estimation of income on purchases has restricted the addition @12.5% as against @25% and in other issues has granted relief and partly allowed the appeal. Aggrieved by the CIT(A) order, the revenue has filed the appeal with the Honble Tribunal.
4.At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in passing the order without considering the facts that the genuineness of the purchases were not proved and supported the orders of the A.O. Contra Ld.AR supported the order of the CIT(A).
We heard the rival submissions and perused the material on record. The sole crux of the disputed issue as M/s. Ramniklal Gosalia & Co. envisaged by the ld. DR is that the CIT(A) has restricted the addition to the extent @12.5% of the bogus purchases considering the GP ratio and profit element embedded. We found that the CIT(A) has dealt on the facts and G.P rate for the Asst year 2010-11 and relied on the ratio of ITAT decisions and estimated the GP rate @ 12.5% . The Ld.DR could not controvert the observations of the Ld. CIT(A) with any new cogent evidence and material but relied only the A.O order. We are of the opinion that the CIT(A) dealt on the facts and considered the profit element in the bogus purchases and the A.O has not disputed the sales. Accordingly, we do not find any infirmity in the order of the CIT(A) on this disputed issue and uphold the same and dismiss the grounds of appeal raised by the revenue.
In the result, the appeal filed by the revenue is dismissed.