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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: HON’BLE SHRI AMARJIT SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
Per Bench 1.1 Aforesaid appeals by revenue for Assessment Years [in short referred to as ‘AY’] 2009-10 & 2012-13 contest common order of Ld.
-16/Mum/2018 Mafaram J. Choudhary Assessment Years:2009-10 & 2012-13 Commissioner of Income-Tax (Appeals)-30, Mumbai, [in short referred to as ‘CIT(A)’], order dated 16/07/2018. The grounds raised for AY 2009-10 read as under: - 1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the net addition on account of bogus purchases to the extent of 12.5% of the addition made by AO on account of bogus purchases? 2. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not considering the order of Hon’ble Supreme Court in the case of N.K.Protein Ltd. Dated 16-01-2017, which is on the similar issue of bogus purchases and when the apex court order was already the law of the land when the Ld.CIT(A) has pronounced its order on 09-07-2018?"
3. The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the AO be restored.
1.2 None has appeared for assessee and no valid adjournment application is on record. Left with no option, the appeals were proceeded with ex-parte qua the assessee in view of the fact that the sole subject matter of appeal was estimated additions on account of alleged bogus purchases. 1.3 We have carefully heard arguments advanced by Ld. DR who pleaded for confirmation of full additions as made by Ld. AO. After considering the same, our adjudication to the appeals would be as given in the succeeding paragraphs. 2.1 Facts as emanating from case records for AY 2009-10 are that the assessee being resident individual stated to be engaged in trading of metals under proprietorship concern namely M/s Guru Steel Engg. Co. was assessed for year under consideration u/s 143(3) r.w.s. 147 on 24/03/2015 wherein the income of the assessee was determined at Rs.79.28 Lacs after sole addition of Rs.74.80 Lacs on account of alleged -16/Mum/2018 Mafaram J. Choudhary Assessment Years:2009-10 & 2012-13 bogus purchases as against assessed income of Rs.4.48 Lacs u/s 143(3). 2.2 Pursuant to receipt of certain information from DGIT (Inv.) / Sales Tax Department, Maharashtra, it transpired that the assessee availed accommodation bills aggregating to Rs.74.80 Lacs from 7 entities, the details of which have already been extracted in para-2 of quantum assessment order. Accordingly, the case was reopened as per due process of law vide issuance of notice u/s 148 on 13/03/2014 which was followed by statutory notices wherein the assessee was directed to file requisite details and substantiate purchase transactions. 2.3 To verify the transactions, notices u/s 133(6) were issued to these suppliers, however, in most of the cases, the notices were returned back undelivered by postal authorities. The assessee failed to produce any of the suppliers to confirm the transactions. However, in defense, the assessee produced ledger extracts, copies of purchase bills and bank statements evidencing payment through banking channels. Therefore, finding that the assessee failed to discharge the primary onus of proving the purchase transactions, Ld. AO disallowed the said purchases and added the same to the income of the assessee.
Before Ld. CIT(A), the assessee, inter-alia, submitted that the purchases were genuine since corresponding sales were accepted. It was also submitted that gross profit rate on disputed purchases was much higher than overall gross profit rate reflected by the assessee. The Ld. CIT(A), after considering factual matrix as well assessee’s submissions in the light of various judicial pronouncements, estimated the addition of 12.5% against these purchases. Reliance was placed on -16/Mum/2018 Mafaram J. Choudhary Assessment Years:2009-10 & 2012-13 the decision of Hon’ble Gujarat High Court in CIT V/s Simit P.Sheth (356 ITR 451) while making such addition. Aggrieved, the revenue is under further appeal before us.
Upon due consideration, we are of the opinion that there could be no sale without actual purchase of material particularly when the assessee was into trading activities. The sales turnover has not been disputed / disturbed by the revenue. The assessee was in possession of primary purchase documents and the payments to the suppliers were through banking channels. However, at the same time, the assessee failed to produce any of the suppliers to confirm the transactions. Notices issued u/s 133(6) did not elicit satisfactory response and the assessee failed to discharge the primary onus of substantiating the purchase transactions. The stated factual matrix, in our considered opinion, would make it a fit case to make estimated additions to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey / unorganized market and undue benefit of VAT against such bogus purchases, which lower authorities have rightly done so. Therefore, finding the estimation of 12.5% to be quite fair and reasonable, we decline to interfere in the impugned order. The appeal stands dismissed.
Facts are pari-materia the same in this year. The assessee was similarly saddled with additions of non-genuine purchases aggregating to Rs.179.74 Lacs. The Ld. CIT(A), following its decision in AY 2009-10, estimated the additions @12.5%. The impugned order is common order -16/Mum/2018 Mafaram J. Choudhary Assessment Years:2009-10 & 2012-13 for both the years. Aggrieved, the revenue is under further appeal before us.
Since facts are pari-materia the same, our decision for AY 2009-10 shall mutatis-mutandis apply to this year also. Resultantly, the grounds raised
by revenue, in this regard, stand dismissed. Conclusion
7. Both the appeal stands dismissed. Order pronounced in the open court on 11th February, 2020.
Sd/- Sd/- (Amarjit Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 11/02/2020 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.