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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI C. N. PRASAD, JM & SHRI S. RIFAUR RAHMAN, AM
Vijay R. Doshi HUF ITO-30(3)(5), Flat No. 11, 1st floor, R. No. 605, 6th floor, C- बिधम/ Rustomjee Adarsh 13, Pratyakshkar Bhavan, Residency, Dughalay Vs. BKC, Bandra(east), Marve Road, Malad, Mumbai-400 051 Mumbai-400 064 स्थायीलेखासं./जीआइआरसं./PAN No. AADHV5915Q (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant Shri Kiran Unavekar, DR : by प्रत्यथीकीओरसे/Respondentby : None सुनवाईकीतारीख/ : 25.02.2020 Date of Hearing घोषणाकीतारीख / : 20.05.2020 Date of Pronouncement आदेश / O R D E R
Per S. Rifaur Rahman, Accountant Member:
The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) - 5 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 28.09.18 for Assessment Year (in short AY) 2010-11.
At the outset, it is noticed that none appeared on behalf of assessee in spite of calls and even no application for adjournment was moved. On the other hand, Ld. DR is present in the court and is ready with arguments. Therefore, we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.
The brief facts of the case are that assessee filed its return of income on 24.09.10 declaring total income of Rs. 3,15,303/-. The return was processed u/s 143(1) of the Act. Subsequently, information was received from the sales tax Department that assessee has indulged in bogus purchases. The Assessment was accordingly reopened. The assessing officer in this case has made addition @ 100% on account of bogus purchases.
Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee, Ld. CIT(A) agreed with the AO that this purchases were not genuine and does not mean that purchases made from these parties are genuine. The courts have held that payment made by cheque itself is not sacrosanct so as to prove the genuineness of the purchases when the surrounding circumstances are suspect. However, the assessee has shown onwards sales which has not been doubted by the AO. By relying on the decision of Hon’ble Gujrat High Court in the case of CIT vrs. Smith P. Sheth 356 ITR 451 (Guj), he reduced the disallowance @ 12.5% of bogus purchases and partly allowed the appeal of the assessee.
Now before us, the revenue has preferred appeal by raising the grounds of appeal as under:-
1. "On the facts and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition of Rs. 3,22,138/- being 100% to Rs. 40,267/- being 12.50% of the purchases from hawala parties ignoring the fact that the assessee has failed to produce the parties."
2. "On the facts and in the circumstances of the case the Ld. CIT(A) has erred in restricting the addition of Rs. 3,22,138/- being 100% of bogus purchase to Rs. 40,267/- being 12.50% in view of the decision of the Hon'ble Supreme Court in the case of N.K. Proteins, wherein the Apex Court has dismissed the SLP filed against the High Court's decision of upholding 100% addition made by the AO on account of bogus purchase."
3. "The appellant prays that the Order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored."
4. "The appellant craves leave to amend or to alter any ground or add a new ground, which may be necessary."
6. Considered the submission of Ld. DR and material placed on record. We are of the considered view that no doubt the purchases made from the suspected parties are not genuine. However, the purchases itself cannot be doubted as rightly adjudicated by Ld. CIT(A) that AO has not doubted sales declared by the assessee, only he suspects the purchases. By respectfully following the decision of Hon’ble Gujrat High Court in the case of CIT vrs. Smith P. Sheth (supra), we are inclined to agree with the findings of Ld. CIT(A). Therefore, grounds raised by the revenue are dismissed.