INCOME TAX OFFICER-15(2)(4), MUMBAI vs. M/S. PRECISE CONCHEM PVT. LTD, MUMBAI

Ms. Smita Verma representing the department submitted that during the period relevant to AY under appeal, the assessee had obtained bogus purchase bills amounting to Rs.15,00,085/- from M/s Sivamani Traders Private Limited, a declared hawala operator by the M/s Precise Conchem P. Ltd.; AY 11-12 Sales Tax Department, Government of Maharashtra. The assessee failed to discharge its onus in proving genuineness of the purchase and the supplier. Since, the assessee is engaged in the manufacturing process, therefore, one to one relation with the purchase and sales could not be established. Therefore, the AO made addition of the entire bogus purchases. The assessee filed appeal against the said addition. The CIT(A) following the decision rendered in the case of CIT Vs. Simit P. Sheth (2013) 356 ITR 451 (Guj), restricted the addition to 12.5% of the bogus purchases. The learned Departmental Representative submitted that the decision in Simit P. Sheth (supra) is in respect of trading of goods and in the present case, the assessee is a manufacturer, therefore, the ratio laid down in the said decision would not apply in the facts of the present case. The learned DR prayed for restoring 100% disallowance of bogus purchases. To buttress her contention, placed reliance on the decision of Hon’ble Supreme Court of India in the case of NK Proteins Ltd vs. DCIT (2017) 292 CTR 354 (SC).