ITO.26(2)(3), MUMBAI vs. NEELAM VEDPRAKASH GUPTA, MUMBAI

The brief facts of the case as emanating from the records are : The assessee is engaged in trading of TMT Bars, steel, etc. On the basis of information received from Investigation Wing, the Assessing Officer reopened the assessment. In re-assessment proceedings the Assessing Officer observed that assessee has made bogus purchases to the tune of Rs.1,02,24,183/- from various hawala dealers. The Assessing Officer made addition of 12.5% of the alleged bogus purchases i.e. Rs.12,78,023/-. Aggrieved against the assessment order dated 25/11/2016, the assessee filed appeal before the CIT(A). The CIT(A) after considering various case laws on the issue granted part relief to the assessee by restricting the addition to 10.5% of the alleged bps. In other words, the CIT(A) restricted disallowance of bogus purchases to Rs.10,73,539/-. Still aggrieved, the assessee is in second appeal before the Tribunal assailing the addition confirmed by the CIT(A). The revenue is also in appeal against the relief granted by the CIT(A).

A perusal of the appeal file shows that notice of hearing of the appeal was issued to the assessee through RPAD. The acknowledgement card available on record indicates that the notice was duly served on the assessee. Despite service of notice neither the assessee nor any Authorized Representative of the assessee is present in the court today. No request for adjournment has been received either. It seems that the assessee is not keen to pursue his appeal. Under such circumstances, we are constrained to decide the appeal with the assistance of ld.Departmental Representative and material available on record.

Shri Dharam Veer Singh, representing the Department submitted that the Assessing Officer considering entire facts and has estimated profit element embedded in bogus purchases to 12.5%. The Assessing Officer had done a fair and justified estimation of GP. The further relief granted by the CIT(A) is without any implication. The ld.Departmental Representative prayed for restoring the finding of Assessing Officer and setting aside the order of the CIT(A).

We have heard the submissions made by ld.Departmental Representative and have examined the order of authorities below. The assessee is engaged in trading of steel bars, etc. The Assessing Officer estimated G.P @ 12.5% on alleged bogus purchases. The CIT(A) has granted relief by restricting the G.P on bogus purchases to 10.5% after taking into consideration the GP declared by assessee at 1.59%. The CIT(A) has reduced the GP declared by the assessee from GP estimated by the Assessing Officer. After taking into consideration entirety of facts, the nature of assessee’s business, the turnover declared by the assessee and the GP offered, we are of considered view that ends of justice would meet if the GP on bogus purchases is restricted to 8%. We hold and direct accordingly.

In the result, appeal of assessee is partly allowed and appeal of revenue is dismissed.