AJAY P VADHAR,MUMBAI vs. ITO (22)(1)(1), MUMBAI

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ITA 617/MUM/2019Status: DisposedITAT Mumbai02 March 2020AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while the AO had grounds to suspect bogus purchases, the assessee's sales were not disputed and their books of account were not rejected. Therefore, a 100% addition was not justified.

What were the facts?

The Assessing Officer (AO) added 100% of alleged bogus purchases to the assessee's income after notices to suppliers were returned unserved. The CIT(A) confirmed this addition ex parte, as the assessee failed to appear despite multiple opportunities.

What were the issues?

Whether the addition of 100% of alleged bogus purchases was justified when the assessee's sales were not disputed and books were not rejected. The issue also concerns the validity of an ex parte order by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”, BENCH

Before: SHRI R.C.SHARMA

For Respondent: Shri R.K. Gubgotra (JCIT-DR)
Hearing: 05/02/2020Pronounced: 02/03/2020

Assessee by Paras Sarla. Revenue by Shri R.K. Gubgotra (JCIT-DR) Date of Hearing 05/02/2020 Date of Pronouncement 02/03/2020 आदेश / O R D E R PER: R.C. SHARMA, A.M. This appeal by the assessee is directed against the ex parte order dated 02/11/2018 of ld. CIT(A)-25, Mumbai for the A.Y. 2009-10 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).

2.

I have gone through the orders of the authorities below and found that the assessee is engaged in the business of sun glasses. The A.O. got information that the assessee has taken bogus purchase bills.

After making enquiry by issuing notice U/s 133(6) of the Act to find out the genuineness of the purchases, the A.O. found that all the notices were returned unserved with remark “left”. Accordingly, the A.O. added

Ajay V Vadhar Vs ITO 100% of the alleged bogus purchases in assessee’s income. By the impugned order, the ld. CIT(A) has confirmed the action of the A.O., against which the assessee is in further appeal before the ITAT.

3.

It was argued by the ld AR of the assessee that the assessee had already shown G.P. of 8.5% which is very reasonable to the nature of trade the assessee was carrying i.e. trading in sun glasses. Accordingly, it was prayed that the addition of 100% was not justified.

4.

On the other hand, the ld DR has relied on the orders of the authorities below.

5.

I found that after making enquiry U/s 133(6) of the Act, the A.O. found that the goods were purchased from Hawala dealers in so far as the notices served by the A.O. were returned unserved with the remarks “left”. The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) given 3-4 opportunities to the assessee to appear and substantiate its claim of genuineness of purchases. However, as per the order of the ld. CIT(A), no body appeared and therefore, the ld. CIT(A) passed ex parte order and confirmed the additions.

6.

In this case, the assessee is engaged in trading of sun glasses.

The A.O. has made addition on the basis of information from the Sales Tax Department, however, the corresponding sales made by the assessee was not disputed by the A.O. nor the books of the account of Ajay V Vadhar Vs ITO the assessee was rejected, therefore, keeping in view the various judicial pronouncements as cited by the ld AR, I deem it fit to uphold addition only to the extent of 10% of the alleged bogus purchases. I direct accordingly.

7.

In the result, appeal of the assessee is allowed in part.

Order pronounced in the open court on 02nd March, 2020.

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