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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI R.C. SHARMA & SHRI PAWAN SINGH
O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER
This is an appeal filed by the revenue against the order of CIT(A)-1, Mumbai dated 08/10/2018 for A.Y.2009-10 in the matter of order passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961.
Nobody appeared on behalf of the assessee inspite of issuance of service of notice. Even no adjournment petition was filed by the assessee, accordingly, bench decided to dispose the appeal after considering the argument of ld. AR and the material placed on record.
We have gone through the orders of the authorities below and found that assessee is a dealer in chemical items. AO got information from Sales Tax department regarding assessee taking bogus purchase
Shri Hansraj Khiyashi Bhanushali bill, accordingly, he added 100% of such purchases in assessee’s income by treating the same as bogus.
By the impugned order, CIT(A) restricted addition to the extent of 25% after having the following observation:-
6.9. Considering the above facts and in view of the decision of the Hon. Delhi High Court in the case of CIT Vs. Jansampark Advertising and Marketing (p) Ltd, it is also an obligation on the part of the first appellate authority to ensure that the effective enquiry is carried out, to arrive at logical conclusion. Therefore, to understand the impact of booking of hawala purchases on the profit of the year, the appellant was required to furnish the comparative details of GP/NP and GP/NP rates for hawala years, preceding two years and subsequent two years. In compliance, the appellant has submitted the details, as under:- A.Yr. 2007-08 2008-09 2009-10 2010-11 2011-12 Sales 83,74,108 97,80,321 49,34,296 53,02,899 47,12,843 GP 9,62,753 11,88,848 7,51,365 7,70,430 7,22,152 GP Rate 11.50% 12.16% 15.23% 14.53% 15.32% GP After add. - - 10,87,729 — - Of BP GP - - 22.04% - — Rate NP 2,64,693 3,10,422 2,90,768 3,03,792 2,50,477 NP Rate 3.16% 3.17% 5.89% 5.73% 5.31% NP After add. 2,64,693 3,10,422 6,27,132 - — Of BP NP 3.16% 3.17% 12.71% ~ Rate
6.10 From the above details it is seen that in the year under appeal i.e. A.Y. 2009-10, the appellant had declared GP of 15.23%. The disallowances of hawala purchases will lead to abnormal GP @ 22.04%, which is much higher than that of non-hawala years. Considering the facts in entirety, in my considered view, this is not a case where the entire amount has been siphoned off by booking hawala purchases. Keeping in mind the ratio laid: down in the case of M/s Vijay Proteins, by the Hon'ble Gujarat High Court and also upheld by the Hon'ble S. C., in this case the disallowance @25% of Hawala purchases will be reasonable. Accordingly the disallowance to the extent of 25% i.e. Rs. 84,091/- out of total disallowance of Rs.3,36,364/- made by the AO, is Shri Hansraj Khiyashi Bhanushali hereby sustained and the balance amount of Rs.2,52,273/- (Rs.3,36,364 – Rs.84,091/- ) is deleted. The grounds of appeal
, raised as above, are partly allowed. In result, the appeal is partly allowed.”
4. It is clear from the order of CIT(A) that he has dealt with the issue threadbare and after considering the earlier assessment year, sales, GP, NP rate shown by the assessee confirmed addition to the extent of 25%. The detailed finding so recorded by CIT(A) has not been controverted by the ld. DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of CIT(A) for restricting the addition on account of bogus purchases to the extent of 25%.
In the result, appeal of the revenue is dismissed.