OMPRAKASH KANARAM PATEL,MUMBAI vs. ITO 32(2)(4), MUMBAI

This appeal by the assessee is directed against the order of Commissioner of Income-Tax (Appeals)-46, Mumbai [in short ‘CIT(A)’] dated 27.02.2019 for the Assessment Year 2011-12.

The brief facts of the case as emanating from the records are: The assessee is a trader in building material. The assessment for Assessment Year 2011-12 in the case of assessee was re-opened on the basis of information received by DGIT (Investigation) from Maharashtra Sales Tax Department that the assessee has indulged in obtaining bogus purchase bills aggregating to Rs. 1,36,88,928/- from various hawala dealers. The Assessing Officer estimated Gross Profit on non-genuine purchase at 12.5%. and made addition of Rs. 17,11,116/-. Aggrieved against the assessment order dated 18.12.2015 passed under section 143(3) r.w.sec. 147 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’), the assessee filed appeal before the CIT(A). The CIT(A) vide impugned order upheld the findings of the Assessing Officer and dismissed the appeal of assessee in toto. Hence, the present appeal by the assessee.

Shri Ajay Pratap Singh representing the department vehemently defended the impugned order and prayed for dismissing the appeal of assessee.

Submissions made by Departmental Representative (DR) heard and orders of authorities below examined. The assessee has purportedly obtained bogus purchase bills to the tune of Rs. 1,36,88,928/- from various hawala dealers. The assessee failed to prove trail of goods, though the payments were made against alleged bogus bills through banking channel.

Admittedly, the department never raised any doubt over the sales declared by the assessee. The Assessing Officer held that the assessee has made purchases from the grey market and had obtained corresponding bogus bills from hawala operators. The Assessing Officer estimated Gross Profit on bogus purchase @ 12.5% and thus made addition of Rs. 17,11,116/-. In First Appellate Proceedings, the findings of the Assessing Officer were confirmed by the CIT(A). Taking into consideration entirety of facts, I am of considered view that Gross Profit estimated by Assessing Officer/CIT(A) is on the higher side. In my considered view the ends of justice would meet, if the gross profit is estimated @ 8% of the bogus purchases. The appeal of the assessee is partly allowed in the term aforesaid.

In the result, appeal of the assessee is partly allowed.