INCOME TAX OFFICER WARD-3(1)(1), MUMBAI vs. M/S. AMAN MARKETING SERVICES PVT. LTD., MUMBAI

The only effective issue involved in this appeal is whether the ld. CIT(A) was justified in restricting the disallowance made on account of bogus purchases to 12.5% of value thereof in the facts and circumstances of the case.

None appeared on behalf of the assessee. We have heard the ld. DR and perused the materials available on record. We find that assessee is a private limited company engaged in the retail trading of various gift items. It is not in dispute that assessee had made certain purchases to the tune of Rs.64,20,454/- from ten parties listed in pages 1 & 2 of the assessment order whose names appear to be tainted dealers in the Sales Tax department website of Government of Maharashtra. Accordingly, the ld. AO sought to add the peak value of the purchases thereon and made an addition of Rs.11,54,999/- as unverifiable purchases while completing the assessment. It is not in dispute that the sales made out of the corresponding purchases are not disputed by the Revenue before us.

3.1. Apart from above, the ld. AO added gross profit @4% on the alleged purchase transactions to the tune of Rs.2,56,818/-. The ld. AO further added the commission for arranging such bogus purchase bills at 1% to the tune of Rs.64,204/- while completing the assessment.

We find that sales made out of purchases have not been disputed by the Revenue before us. Hence, the profit element alone could be brought to tax which was reasonably estimated at 12.5% on the alleged bogus purchases of Rs. 64,20,454/- by the ld. CIT(A) by placing due reliance on the decision of the Hon’ble Gujarat High Court in the case of Simit P Sheth reported in 356 ITR 451. Once the profit

In the result, appeal of the Revenue is dismissed.