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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: VIKAS AWASTHY & SHRI N.K.PRADHANShri Laxmikant Asubhai Gala,
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Thane ( in short ‘the CIT(A)’) dated 06/06/2019 for the assessment year 2009-10.
Ms.Ruchi Rathod appearing on behalf of the assessee submitted that the assessee is engaged in manufacturing of labels and stickers. The assessment year 2009-10 was reopened on the basis of information received by the DGIT (Inv),
2 आअसं. 5203/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)
Mumbai from the Sale Tax Department, Government of Maharashtra. In the reopened proceedings, the Assessing Officer held that the assessee has obtained bogus purchase bills aggregating to Rs.2,75,713/- from suspicious dealers. The assessee was never served with notice during the assessment proceedings.. The Assessing Officer in ex-part proceedings made addition of the entire alleged bogus purchases. Aggrieved by the assessment order dated 06/02/2015 passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A). The assessee filed evidences in the form of ledger accounts of the suppliers before the CIT(A) to prove genuineness of the purchases. However, the same was rejected by the CIT(A). Hence, the present appeal by the assessee. The ld.Authorized Representative of the assessee submitted that the sales declared by the assessee has been accepted, therefore, the entire alleged bogus purchases cannot be added. Although the purchases made by assessee are genuine and addition should be deleted in entirety, however, without prejudice to the primary contention, the addition may be restricted to the G.P declared by the assessee or any reasonable rate.
Per contra, Shri Sanjay J. Sethi, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. The ld.Departmental Representative submitted that the assessee did not co-operate in assessment proceedings. Despite repeated notices the assessee failed to appear before the Assessing Officer, hence, the Assessing Officer was constrained to pass assessment order under section 144 of the Act. No documentary evidence was produced by the assessee either before the Assessing Officer or before the CIT(A) to substantiate genuineness of the purchases/suppliers. Since, the assessee failed to discharge his onus, the authorities below have rightly made addition of the entire bogus purchases.
3 आअसं. 5203/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)
We have heard the submissions made by rival sides and have examined the orders of authorities below. A perusal of the assessment order shows that the assessee has failed to appear before the Assessing Officer despite several notices. Since, no evidence was filed by the assessee before the Assessing Officer to prove genuineness of the purchases and the suppliers, the Assessing Officer made addition of the entire alleged bogus purchases. It is relevant to mention here that the Assessing Officer accepted the sales turnover declared by the assessee. Thus, in such circumstances the entire alleged bogus purchases cannot be added. Without purchases there cannot be sales. The assessee might have procured goods from grey market and thereafter, obtained matching bogus purchase bills from hawala operators. It is only the profit element embedded in such bogus purchases that has to be brought to tax. Taking into consideration entirety of facts, we propose to restrict the addition at 12.5% of the alleged bogus purchases. The ld.Authorized Representative of the assessee has agreed for the addition @12.5% on the alleged bogus purchases. The addition is restricted to Rs.34,465/- i.e. 12.5% of the total bogus purchases. The impugned order is modified, accordingly and the appeal by the assessee is partly allowed, in the terms aforesaid.
In the result, appeal by assessee is partly allowed.
Order pronounced in the open court on Monday the 08th day of March, 2021.