ITO-24(2)(2), MUMBAI vs. M/S JANARDAN ENGINEERING INDUSTRIES, MUMBAI

Shri Sanjay J. Sethi representing the Department submitted that the assessee is engaged in the business of foundry and machine shop. On the basis of 2 आअसं. 5322/मुं/2019 (�न.व. 2009-10) ITA NO.5322/MUM/2019(A.Y.2009-10 information received from the Sales Tax Department, Government of Maharashtra by the DGIT(Investigation), Mumbai, assessment for assessment year 2009-10 in the case of assessee was reopened. As per the information received, the assessee has obtained bogus purchase bills amounting to Rs.3,70,429/- from M/s. Jan Kushal Metal Corp. Since, the assessee failed to discharge its onus in proving genuineness of the purchases and the supplier, the Assessing Officer made addition by estimating profit @ 24.8% on the bogus purchases. Aggrieved by the assessment order dated 28/12/2015 passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A). The CIT(A) reduced the profit to 12.5% of the bogus purchases. The ld. Departmental Representative submitted that since, the assessee failed to prove genuineness of the purchases and the seller the Assessing Officer made a reasonable estimation of 24.8% on profit embedded in bogus purchases. The ld. Departmental Representative further contended that though the tax effect involved in the appeal is less than the monetary limit specified vide CBDT Circular No. 17/2019, dated 08-08-2019 but the case of assessee falls under exception specified in para 10(e) of Circular No. 03 of 2018 dated 11/07/2018 and amended on 20/08/2018.

We have heard the submissions made by ld. Departmental Representative and have examined the orders of abuthorities below. The assessee made purchases to the tune of Rs.3,70,429/- from M/s. Jan Kushal Metal Corp. Since, the assessee failed to substantiate the trail of goods and genuineness of the seller, the transaction was held to be bogus by the Assessing Officer. Even notices sent to the suppliers by the Assessing Officer under section 133(6) of the Act were received back unserved with the postal remark, ‘left’. Since, the sales declared by the assessee were accepted by the Revenue, the Assessing Officer estimated profit embedded in the bogus transaction. The Assessing Officer made addition of Rs.92,607/- by estimating profit @ 24.8% of the total bogus purchases. The CIT(A) upheld the findings of Assessing

In the result, appeal by the Revenue is dismissed.