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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: VIKAS AWASTHY & SHRI N.K.PRADHAN
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-32, Mumbai (in short ‘the CIT(A)’) dated 31/05/2019 for the assessment year 2009-10.
The brief facts of the case as emanating from the records are: The assessee is a dealer in ferrous and non-ferrous metals. The assessment in the case of assessee for assessment year 2009-10 was reopened on the basis of information received by 2 आअसं. 5213/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)
the DGIT (Inv), Mumbai from Sale Tax Department, Government of Maharashtra, that the assessee has obtained bogus purchase entries aggregating to Rs.82,73,833/- from two hawala operators. Since, the assessee failed to substantiate genuineness of the purchases and the suppliers, the Assessing Officer following the decision in the case of Simit P. Sheth, 356 ITR 451(Guj) made an estimated addition of 12.5% of total bogus purchases. Aggrieved by the assessment order dated 30/03/2015, the assessee filed appeal before the CIT(A). The CIT(A) after considering the submissions of the assessee and the G.P declared by assessee, modified the assessment order and restricted the addition to 5% of the bogus purchases. Against the findings of CIT(A), the Revenue is in appeal before the Tribunal.
Shri Sanjay J. Sethi, representing the Department vehemently supporting the assessment order submitted that Assessing Officer had estimated G.P at 12.5% on bogus purchases in line with the decision of Hon'ble Gujarat High Court in the case of Simit P. Sheth (supra). The CIT(A) has further reduced the G.P rate on bogus purchases to 5% which is very much on the lower side. The ld. Departmental Representative submitted that the assessee has failed to discharge his onus in proving the genuineness of purchases and hence, deserves no leniency. 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 exceptions specified in para 10(e) of Circular No. 03 of 2018 dated 11/07/2018 and amended on 20/08/2018.
The notice of hearing of appeal for today was sent to the assessee through RPAD. The notice has been duly served as is evident from the acknowledgment card placed on the file. Despite service of notice, neither the assessee nor any 3 आअसं. 5213/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)
Authorized Representative of the assessee has appeared. It seems, the assessee is not interested in pursuing the appeal. Hence, this appeal is taken up for hearing with the assistance of ld. Departmental Representative and material available on record.
We have heard the submissions made by ld. Departmental Representative and have examined the orders of authorities below. Undisputedly , the assessee has indulged in obtaining bogus purchase bills from suspicious dealers. Since, the Revenue has accepted the turnover declared by the assessee, the Assessing Officer has estimated the profit embedded in bogus purchase transactions. The Assessing Officer has estimated profit @ 12.5%. The CIT(A) considering the nature of assessee’s business has reduced the addition to 5% of bogus purchases. In trading of ferrous and non-ferrous metals, average G.P is between 5.0% to 7.5%. As per audit report the assessee has declared G.P of 5.25%. We find that the order of CIT(A) is fair and reasonable, hence, warrants no interference. The appeal of the Revenue is without any merit, ergo, the same is dismissed and the impugned order is upheld.
In the result, appeal by the Revenue is dismissed.
Order pronounced in the open court on Monday the 08th day of March, 2021.