SHRI MOHAMMED MOBIN M. H. CHOUDHARY,MUMBAI vs. ITO 26 (2)(3), MUMBAI

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-38, Mumbai ( in short ‘the CIT(A)’) dated 31/12/2018 for the assessment year 2010-11.

The brief facts of the case as emanating from records are : The assessee is a trader of MS Scrap Steel and Wire. On the basis of information received from Sales Tax Department, Government of Maharashtra by the Director General of Income Tax (Investigation), Mumbai the assessment in the case of assessee for 2010-11 was reopened on the ground that assessee had obtained bogus purchase bills amounting to Rs.1,03,71,766/- from various hawala operators during the period relevant to the assessment year under appeal. The Assessing Officer made addition of Rs.25,92,941/- i.e 25% of total non-genuine purchases. Aggrieved by the assessment order dated 12/02/2016 passed under section 143(3) r.w.s 147 of the Act, the assessee filed appeal before CIT(A). The CIT(A) dismissed the appeal of assessee and upheld the assessment order. Hence, present appeal by the assessee.

Shri Ajay Pratap Singh, representing the Department vehemently defended the impugned order. The ld.Departmental Representative submitted that assessee had indulged in obtaining bogus purchase bills from hawala operators. The Assessing Officer and CIT(A) were fair and justified in making addition on account of bogus purchases to 25% of such total purchases.

Submissions made by ld.Departmental Representative heard, orders of authorities below examined. The assessee in the present appeal had assailed the finding of CIT(A) in confirming the addition made by Assessing Officer by estimating suppressed profit @ 25% on alleged bogus purchases. Taking into consideration the nature of assessee’s business, I am of the considered view that estimation of 25% profits on bogus purchases is on the higher side. The assessee has not disclosed G.P on regular purchases, either before the Assessing Officer or the CIT(A). Therefore, I deem it appropriate to restore this issue back to the file of Assessing Officer to decide the same afresh in line with the decision of Hon'ble Bombay High Court in the case of PCIT vs. Mohamed Haji Adam in Income Tax Appeal No.1004 of 2016 decided on 11/02/2019.

Consequently, the impugned order is set-aside and the appeal of assessee is partly allowed for statistical purpose in the terms aforesaid.