JCIT (OSD) CIRCLE-15(1)(1), MUMBAI vs. M/S ESP (ASIA) PVT LTD., MUMBAI

By way of this appeal for Assessment Year (AY) 2011-12, the department challenges the order of Ld. Commissioner of Income Tax (Appeals)-24, Mumbai [CIT(A)], Appeal No.CIT(A)-24/DCIT-15(1)/IT- 682/2016-17 dated 25/03/2019 which has restricted the addition on account of alleged bogus purchases to 12.5%.

None appeared for assessee at the time of hearing and no valid adjournment application was on record. However, the material on record 2 Assessment Year: 2011-12 was sufficient for disposal of the appeal. The Ld. DR pleaded for restoration of addition as made by Ld. AO. 3. The assessee was subjected to reassessment proceedings for the year under consideration pursuant to receipt of certain information from Sales Tax Department, Maharashtra which indicated that the assessee availed bogus purchase bills aggregating to Rs.14.38 Lacs from two entities. The detail of the same has already been extracted in para-5.1 of the assessment order dated 28/12/2016. The assessee failed to produce any of the suppliers to confirm the transactions. However, in defense, the assessee submitted invoices, ledger accounts along with copies of bank statement evidencing payment through banking channels. Finding that the assessee failed to discharge the onus of establishing the genuineness of the purchases so made, Ld. AO disallowed entire purchases and added the same to the income of the assessee u/s 69C. The assessee is stated to be engaged in providing repairing and maintenance services. 4. Before Ld. first appellate authority, the assessee reiterated that the purchases were genuine. The Ld. CIT(A) primarily going by the decision of Hon’ble Gujarat High Court in Simit P.Sheth V/s CIT 356 ITR 451 restricted the additions to 12.5% of these purchases. Aggrieved, the revenue is in further appeal before us. 5. Upon due consideration of factual matrix as enumerated in preceding paragraphs, we find no infirmity in the action of Ld. CIT(A) in estimating the additions @12.5% since the assessee was in possession of primary purchase documents and the payment to the suppliers were through banking channels. The assessee’s nature of business would require actual purchase of material. At the same time, the assessee 3 Assessment Year: 2011-12 failed to conclusively prove the purchase transactions. In such a case, there would be no option but to estimate the additions against these purchases which Ld. CIT(A) has rightly done so. Concurring with the same, we dismiss the appeal. 6. The appeal stands dismissed. Order pronounced on 26th November, 2020. (Saktijit Dey) (Manoj Kumar Aggarwal) "ाियक सद" / Judicial Member लेखा सद" / Accountant Member मुंबई Mumbai; िदनांकDated : 26/11/2020 Sr.PS:-Jaisy Varghese आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : अपीलाथ"/ The Appellant 1. ""थ"/ The Respondent 2. आयकरआयु"(अपील) / The CIT(A) 3. आयकरआयु"/ CIT– concerned 4. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड"फाईल / Guard File 6. आदेशानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.