ITO 27(1)(5), MUMBAI vs. M/S JITENDRA D SHAH HUF, MUMBAI

Shri Sanjay J. Sethi representing the department submitted that during the period relevant to the assessment year under appeal the assessee has obtained bogus purchase bills amounting to Rs.43,89,518/- from two dealers declared as hawala operators by the Sales Tax Department, Government of Maharashtra. During assessment proceedings, the assessee failed to prove genuineness of purchases and आअसं. 4457/मुं/2019 (�न.व.2011-12) (A.Y.2011-12)

The submissions made by ld. Departmental Representative heard and orders of authorities below examined. The assessee is a trader of iron and steel. During the period relevant to assessment year under appeal the assessee allegedly obtained bogus purchase bills aggregating to Rs.43,89,518/-. Undisputedly, the assessee failed to discharge its onus in proving genuineness of purchases and authenticity of the dealers. The Hon'ble Jurisdictional High Court in the case PCIT vs Pramashakti Distributors Pvt. Ltd. in Income Tax Appeal 413 of 2017 decided on 15/7/2019 has held that only the profit element embedded in bogus purchases can be taxed. The G.P. estimated by Assessing Officer on bogus purchases is on higher side. Generally, the profit margin in trading of ferrous and non-ferrous metals range from 5% to 8%. I find no error in estimation of profit at 8% by the CIT(A). The impugned order is upheld and the appeal by Revenue is dismissed, sans-merit.

In the result, appeal by the Revenue is dismissed.