INCOME TAX OFFICER 19(3)(1), MUMBAI vs. RAJESH M. CHAUHAN, MUMBAI

This appeal filed by the Revenue is directed against order of the Ld. CIT (A)-30, Mumbai, dated 12/10/2018 and it pertains to the A.Y 2009-10.

The Revenue has raised the following grounds of appeal:

The brief facts of the case are that the assessee is engaged in the business of Manufacturers of Lighting Poles and High Mass accessories in the name and style of M/s Krishna Enterprises, filed his return of income for AY 2009-10 on 26/09/2009, declaring the total income at Rs. 3,49,198/- and said return was processed u/s 143(1) of the I.T.Act, 1961. The case has been subsequently reopened u/s 147 of the Act, on the basis of information received from DGIT, investigation, Mumbai, as per which, Sales Tax Authorities of Government of Maharashtra had taken actions against number of Hawala dealers, who had issued bogus purchase bills to various parties in Mumbai and other places. As per list of beneficiaries, the assessee is one of the beneficiary, who had taken accommodation bills of bogus purchases from various parties as listed by the AO in para 2 of his assessment order amounting to Rs. 30,22,473/-. The case was selected for scrutiny and the assessment has been completed u/s. 143(3).r.w.s. 147 of the I.T.Act, 1961 on 23/03/2015 and etermined total income of Rs. 33,71,670/-, after making 100% additions towards alleged bogus purchase from those parties and made additions of Rs. 30,22,473/-.

Aggrieved by the assessment order, the assesee preferred an appeal before the Ld.CIT (A). Before the Ld.CIT (A), the assesse has filed elobarate written submission on the issue which has been reproduced at para 4 on pages 3 to 8 of the ld. CIT(A) order. The sum and substance of arguments of the assessee before the Ld.CIT (A) are that purchase from the above party is genuine, which is supported by necessary evidences. Therefore, no additions could be made on the basis of information received from third party. The Ld.CIT(A), after considering relevant submission of the assessee and also, by following the decision of Hon’ble Gujarat High Court, in the case of CIT vs. Simith P. Sheth (356 ITR 451) has scaled down addition made by the AO towards alleged bogus purchases to 12.50% gross profit on total purchases from those parties.

None appeared for the assessee. We have heard the Ld. DR, perused the material available on record and gone through orders of the authorities below. We find that the Ld. AO has made 100% addition on alleged bogus purchases on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers. According to the Ld. AO, although assesee has filed certain basic evidences, but failed to file further evidence in the backdrop of clear finding by the Sales Tax Department, Maharashtra that those parties are involved in providing accommodation entries without actual delivery of goods. The Ld. AO had also taken support from the investigation conducted during the course of assessment proceedings, as per which notice issued u/s 531/Mum/2019. Rajesh M. Chauhan. - 4 - 133(6) to the parties were returned un-served by the postal authorities. Therefore, he came to the conclusion that purchases from the said parties are bogus in nature. It is the contentions of the assessee before the lower authorities that purchases from the above party are supported by necessary evidences. It has furnished all possible evidences, including books of accounts; stock details and bank statement to prove that payment against said purchases have been made through proper banking channels.