MEENU JAIN,PANIPAT vs. ITO WARD-02, PANIPAT

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals], Karnal dated 23.01.2019 pertaining to assessment year 2010-11.

The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in upholding the addition of Rs. 11.10 crores on account of purchases made from M/s Ganpati Enterprises. The assessee has also challenged the reopening of the assessment.

At the very outset, the ld. counsel for the assessee stated that he is not pressing the grounds challenging the reopening of the assessment and hence the same is dismissed as not pressed.

Facts on record show that on the basis of information received from the office of the DDIT, INV, Panipat, the Assessing Officer came to know that there are some bogus firms in Panipat who do not purchase anything and who do not deposit any VAT. One of such firms was M/s Ganpati Enterprises. The Assessing Officer found that the assessee has made purchases from M/s Ganpati Enterprises amounting to Rs. 11,10,818/-. The Assessing Officer treated the same as bogus purchases and made the addition.

The assessee carried the matter before the ld. CIT(A) but without any success.

Before me, the ld. counsel for the assessee drew my attention to the order of the first appellate authority for A.Y 2011-12 and pointed out that the very same first appellate authority has made the addition by estimating the profit @ 8% on bogus purchases. The ld. counsel for the assessee further drew my attention to the order of the same first appellate authority in the case of Sanjay Goyal wherein purchases from the same party i.e. M/s Ganpati Enterprises, were treated as bogus and addition has been estimated @ 10%. It is the say of the ld. counsel for the assessee that on identical facts, the same first appellate authority has taken divergent views.

I have carefully perused the order of the authorities below and the order of the first appellate authority referred to hereinabove. I find force in the contention of the ld. counsel for the assessee.

On identical set of facts and on identical purchases which were treated as bogus, the first appellate authority has estimated the addition @ 8% and 10% on bogus purchases which means that the entire purchases have not been added but only the profit margin has been added. In this view of the matter, I deem it fit to estimate the profit @ 9% for the year under consideration. I accordingly, direct the Assessing Officer to add 9% of the bogus purchases as income of the assessee.

In the result, the appeal filed by the assessee in is partly allowed.