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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI R.C.SHARMA & SHRI VIKAS AWASTHY
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-1, Mumbai (in short ‘the CIT(A)’) dated 06/08/2018 for the assessment year 2010-11.
Brief facts of the case as emanating from records are : The assessee is engaged in business of supply of engineering goods. On the basis of information received from Sales Tax Department that the assessee has indulged in procuring bogus purchase bills aggregating to Rs.14,13,332/- from hawala dealers the Assessing Officer reopened the assessment. In reassessment proceedings, the Assessing Officer held that the assessee has made bogus purchases from following parties:-
Name of Hawala dealer Amount (In Rs.) Ami Traders 60,187 Kotsons Impex Pvt. Ltd. 3,28,356 Diddhi Enterprises 3,51,720 Jai Mata Di Trading 3,09,710 Saileea Trading Pvt. Ltd. 87,859 Shah Enterprises 2,75,500 Total 14,13,332 The Assessing Officer observed that the assessee has failed to produce the parties and documentary evidence such as octroi receipts, lorry receipts, etc. and hence, the assessee has failed to establish genuineness of the purchases. The Assessing Officer made addition of the entire such bogus purchases. Aggrieved by the assessment order dated 9/2/2015 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’), the assessee filed appeal before CIT(A). The first appellate authority after considering the facts of the case, the gross profit/net profit of the assessee in the preceding and succeeding assessment years and various decisions on this issue restricted the addition to 25% of the bogus purchases. Against the finding of the CIT(A), the Revenue is in appeal before the Tribunal.
Shri Kumar Padmapani Bora representing the Department vehemently supported the findings of Assessing Officer and prayed for reversing the findings of the CIT(A). The ld.Departmental Representative submitted that the assessee has failed to furnish documentary evidence and has also failed to produce the bills from whom purchases were made to substantiate genuineness of the purchases under question.
Shri N.A.Kulkarni appearing on behalf of the assessee supported the findings of CIT(A) and prayed for dismissing the appeal of Revenue.
We have heard the submissions made by rival sides and have perused the orders of authorities below. It is an undisputed fact that the Revenue has not raised any doubt over the sales made by the assessee. Without purchases there cannot be sales. Apparently, the assessee has made purchases from grey market and, thereafter, procured bills from the hawala dealers. Under such circumstances, the addition only to the extent of undisclosed profits from alleged bogus purchases can be brought to tax. We find that the order of CIT(A) restricting disallowance to 25% of the alleged bogus purchases is reasonable and justified. The impugned order warrants no interference, hence, the same is upheld and the appeal of Revenue is dismissed being devoid of merit.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on Wednesday , the 15th day of January, 2020.