ITO 9 (3)(1), MUMBAI vs. M/S DHARIA SWITCHGEAR & CONTROLS PVT LTD., MUMBAI

Aforesaid appeal by revenue for Assessment year [AY in short] 2011-12 contest the order of Ld. Commissioner of Income Tax (Appeals)-16, Mumbai [in short CIT(A) ] dated 30/09/2019 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 corporate assessee stated to be engaged in manufacturing of electric panel etc. was assessed for the year under consideration u/s 143(3) r.w.s. 147 on 30/12/2016. 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.23.84 Lacs from two 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 the purchases. 3.2 In support of purchases, the assessee furnished copies of purchase bills and bank statements evidencing payment through banking channels. However, Ld.AO disallowed these purchases and added the same to the income of the assessee. 4. Before Ld. CIT(A), the assessee relied on the documentary evidences furnished in support of the purchase transactions but it failed to produce any of the suppliers for confirmation of transactions. The Ld. CIT(A), inter-alia, considering catena of judicial decisions including the decision of Hon’ble Gujarat High Court in Simit P.Sheth V/s CIT (2012; 356 ITR 451), restricted the additions to 12.5% and granted partial relief. 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 the 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 @12.5% 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. 6. The appeal stands dismissed.