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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY
आदेश/ ORDER
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-40, Mumbai ( in short ‘the CIT(A)’) dated 25/03/2019 for the assessment year 2010-11.
The brief facts of the case as emanating from records are: The assessee is engaged in manufacturing and trading of school bags. On the basis of (A.Y.2010-11) information received from Sales Tax Department, Government of Maharashtra, the assessment for assessment year 2010-11 in the case of the assessee was reopened. As per the information received, the assessee had obtained bogus purchase bills amounting to Rs.1,47,656/- from Shree Yamuna Impex, a declared hawala operator. In reassessment proceedings, the Assessing Officer made addition of the entire alleged bogus purchases. Aggrieved by the assessment order dated 15/02/2016 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) following the decision rendered in the case of CIT vs.Simit P. Sheth, 356 ITR 451(Guj). restricted the addition to 12.5% 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 defended the assessment order and prayed for reversing the finding of CIT(A). The ld.Departmental Representative submitted that the assessee has failed to prove genuineness of the purchases. In response to notice issued under section 133(6) of the Ac, the supplier of the goods has stated that he has no business relation with the assessee. The ld.Departmental Representative prayed for upholding the assessment order.
Shri Sanjay R. Shah, the assessee appeared in person and prayed for upholding the order of CIT(A). He stated that he has accepted the findings of CIT(A) and has paid taxes thereon. He is not filing any further appeal.
Both sides heard, orders of authorities below examined. The assessment in the case of assessee was reopened on the basis of information that the assessee has indulged in obtaining accommodation entries through hawala operator. The assessee allegedly obtained bogus purchase bills
(A.Y.2010-11) amounting to Rs.1,47,656/-. The Assessing Officer made addition of the entire such bogus purchases. Undisputedly, the Assessing Officer has accepted the sales declared by the assessee. Without purchases there cannot be sales. Therefore, the entire alleged bogus purchases cannot be added. It is only profit element embedded in alleged bogus transactions that has to be brought to tax. The CIT(A) restricted the addition to 12.5% of such bogus purchases. I concur with the order of CIT(A). The impugned order is upheld and the appeal by the Revenue is dismissed.
In the result, appeal by the Revenue is dismissed.
Order pronounced in the open court on Thursday the 3rd day of December, 2020.