INCOME TAX OFFICER 19(2)(4), MUMBAI vs. MR. NARENDRA CHOWDHARY, MUMBIA

Shri Sanjay J. Sethi representing the Department submitted that the assessee has indulged in obtaining bogus purchase bills aggregating to Rs.95,69,998/- from various (3) hawala operators. Since, the assessee failed to discharge his onus in proving genuineness of the purchases and the dealers, the Assessing Officer held that the purchases are bogus and made addition of Rs.11,96,250/- by estimating G.P @ 12.5% of the total bogus purchases. The Assessing Officer made aforesaid addition in accordance with the decision rendered in the case of Simith P. Sheth, 356 ITR 451(Guj). In first appeal, the CIT(A) reduced the G.P declared by the assessee (5.05%) from the estimated addition of 12.5% made by Assessing Officer. Thus, the effective rate of addition sustained by CIT(A) was 7.45%

We have heard the submissions made by ld.Departmental Representative and have examined the orders of authorities below. The assessee is engaged in trading of ferrous and non-ferrous metals. The assessee allegedly made purchases from dealers declared as hawala operators by the Sales Tax Department, Government of Maharastra. In the absence of any cogent evidences produced by assessee to prove genuineness of the purchases and the dealers, the Assessing Officer estimated profit on bogus purchases at 12.5% and made addition of Rs.11,96,250/-. In first appellate proceedings, the assessee furnished details of G.P ratio in the impugned assessment year and preceding four assessment years. The CIT(A) following the order of Tribunal in assessee’s own case in for assessment year 2010-11 reduced the G.P declared by assessee from G.P estimated by the Assessing Officer i.e. 12.5% - 5.05% = 7.45%. We do not find any infirmity in the impugned order. The same is upheld and appeal by the Revenue is dismissed being devoid of merit.