ITO-31(1)(4), MUMBAI vs. SHRI DEVINDERPAL VIDYASAGAR SOOD, MUMBAI

The brief facts of the case as emanating from records are : The assessee is engaged in manufacturing of transformers. On the basis of information received by DGIT(Invn) from the Sales Tax Department, Government of Maharashtra, the assessment in the case of assessee for assessment year 2010—11 and 2011-12 were reopened. As per the information received, the assessee had obtained bogus purchase bills aggregating to Rs.5,16,756/- in assessment year 2010-11 and Rs.6,02,086/- in assessment year 2011-12 from the dealers declared as hawala operators by the Sales Tax Department. The Assessing Officer held that the assessee has failed to prove genuineness of the purchases and the suppliers, and thus, made addition of Rs.1,03,351/- in any 2010-11 and Rs.1,20,417/- in 2011-12 by estimating GP @ 20% on bogus purchases. Aggreived by the assessment orders, the assessee filed appeal before the CIT(A) for the respective assessment years. The CIT(A) after examining the facts of the case and submissions of the assessee restricted the G.P addition on bogus purchases to 5%. Hence, the present appeal by the Revenue.

Ms. Smita Verma representing the Department submitted that the assessee has failed to discharge his onus in proving bona-fide of the dealers. No confirmations were filed by the assessee from the dealers. Even the notices sent under section 133(6) of the Income Tax Act, 1961 ( in short ‘the Act’), by the Assessing Officer on the address furnished by the assessee were received back unserved with the remarks ‘not known/left/refused’. The ld. Departmental Representative further contended that the assessee failed to substantiate from the documents that the goods were actually received by him. The ld. Departmental Representative vehemently supporting the assessment order submitted that the estimation of G.P on bogus purchases by the Assessing Officer is fair and reasonable, hence, prayed for sustaining the same. (A.Y.2010-11) ITA NO.5235/MUM/2019(A.Y.2011-12) 4. On the contrary, Shri Manish Chulawala appearing on behalf of the assessee supported the order of CIT(A). The ld. Authorized Representative for the assessee submitted that the assessee had furnished relevant documents viz. Copies of invoices, delivery challans, transport bills/lorry receipts, quantitative details, opening stock, consumption, purchase and closing stock to show that the goods were in fact received by the assessee and were duly recorded in books. Further, the assessee furnished bank statements evidencing payments made to the suppliers through banking channels.. The ld. Authorized Representative for the assessee further contended that the assessee had made total purchase of . Rs.54,00,000/- in assessment year 2010-11 and Rs.74,75,000/- during the period relevant to assessment year 2011-12. Substantial purchases were accepted by the Assessing Officer and only a minuscule part of the purchases i.e. Rs.5,00,000/- (approx) in assessment year 2010-11 and Rs.6,00,000/- (approx) in assessment year 2011-12 were disputed. The ld. Authorized Representative for the assessee vehemently contended that though no addition in the impugned assessment year should have been made in light of documentary evidences filed by the assessee to prove trail of goods, however, the assessee accepted the order of CIT(A) to buy peace of mind.

Both sides heard, orders of authorities below examined. The addition in the impugned assessment years were made on account of assessee’s involvement in obtaining alleged bogus purchase bills. A perusal of the impugned order reveals that the assessee has furnished various documents to prove trail of goods. However, the assessee failed to furnish confirmations from the dealers. Even the addresses furnished by the assessee of such dealers were found to be in correct. The notices issued under section 133(6) of the Act could not be served on the said addresses. Thus, the assessee failed to discharge his onus in proving authenticity of the dealers.

In the result, both the appeals by Revenue are dismissed.