ACIT 32(2), MUMBAI vs. SHRI. KEYUR S SHAH, MUMBAI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-46, Mumbai (in short ‘the CIT(A)’) dated 12/02/2019 for the assessment year 2009-10.

The brief facts of the case as emanating from records are : The assessee is engaged in trading of gift items. On the basis of an information received by DGIT(Inv), Mumbai from Sales Tax Department, Government of Maharashtra that the assessee has obtained bogus purchase bills amounting to Rs.47,79,660/- from declared hawala dealers, assessment for assessment year 2009-10 in the case of assessee was reopened. The Assessing Officer after making detailed investigation concluded that the assessee has obtained bogus purchase bills from suspicious dealers to match the purchases made from grey market. The Assessing Officer estimated GP @16% on bogus purchases and made addition of Rs.7,64,746/-. Aggrieved by the assessment order dated 26/02/2015 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) in principle upheld the findings of Assessing Officer, however, granted part relief to the assessee by restricting the GP @ 12.5% of bogus purchases. Against the part relief granted by the CIT(A), the Revenue is in appeal before the Tribunal.

Ms. Smita Verma, representing the Department submitted that though the appeal of Revenue is below the monetary limit specified vide CBDT Circular No. 17/2019, dated 08-08-2019 but the case of assessee falls under exception 10(e) of Circular no. 03 of 2018 dated 20-08.2018 . The ld. Departmental Representative submitted that during the assessment proceedings the assessee could neither produce the suppliers of the goods nor the documents to prove trail of goods such as, delivery challans, transportation bills, octroi receipts, etc. The Assessing Officer in a fair manner has estimated GP @16% on bogus purchases. The CIT(A) without appreciating the facts has reduced it to 12.5%. The ld. Departmental Representative prayed for restoring the findings of Assessing Officer.

Submissions made by ld. Departmental Representative heard and orders of authorities below examined. The assessee has allegedly obtained bogus purchase bills amounting to Rs.47,79,660/- from nine suspicious dealers. The Assessing Officer estimated GP @ 16% on the alleged bogus purchases. In the first appellate proceedings the CIT(A) modified the assessment order by restricting the GP to 12.5% of bogus purchases. I am of the considered view that GP estimated by Assessing Officer on bogus purchases was on a higher side. The CIT(A) was, therefore, justified in reducing it to 12.5%. I concur with the order of CIT(A), hence, the same is upheld. The appeal of the Revenue is dismissed sans-merit.

The Registry was directed to report if any appeal has been filed by the assessee against the impugned order of CIT(A). As per report no appeal/cross objections has been filed by the assessee assailing the order of CIT(A) for assessment year 2009-10. In case at later point of time it is found that there is an appeal/cross objections of the assessee against the impugned order, then this order may be recalled and the appeal of Revenue and appeal/cross objections of the assessee may be heard together.

In the result, appeal of the Revenue is dismissed.