ITO WARD- 32 (1)(4), MUMBAI vs. DEVENDRA P.SHETH, MUMBAI

This appeal in A.Y.2010-11 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-45, Mumbai in appeal No.CIT(A)-45/ITO-33(1)(4)/ITA-324/2015-16 dated 25/07/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 17/02/2016 by the ld. Income Tax Officer 33(1)(4), Mumbai (hereinafter referred to as ld. AO).

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the disallowance made on account of bogus purchases to 8% of value of purchases as against 12.5% added by the ld. AO in the assessment.

None appeared on behalf of the assessee. We have heard rival submissions and perused the materials available on record. We find that assessee is an individual engaged in the business of trading in Iron and Steel. It is not in dispute that assessee had made purchases of Rs.60,55,355/- from certain parties whose names apparently appeared in the list of hawala dealers prepared by the Maharashtra Sales Tax Department, which information was passed on to Investigation Wing of Income Tax Department which ultimately triggered the reopening of assessment. It is not in dispute that the goods so purchased from the alleged suppliers have been sold by the assessee. Based on this, the ld. AO categorically gave a finding that assessee could have made purchases from grey market and accordingly, brought to tax the profit element embedded in the value of such purchases at 12.5% and completed the assessment. The ld. CIT(A) considering the industry in which the assessee is involved i.e. trading in Iron and Steel, reduced the addition made towards profit element to 8% from 12.5%.

In the result, appeal of the revenue is dismissed.