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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY
These appeals by the assessee for assessment years 2009-10 and 2010- 11 are directed against order of the Commissioner of Income Tax (Appeals)-1, (in short ‘the CIT(A) ), Thane dated 14/09/2018 common for both aforesaid assessment years. Since the issue raised in both the appeals are identical, these appeals are taken up together for adjudication and are disposed of by this composite order.
The brief facts as emanating from the records are:
The assessee is a civil contractor. Information was received by the Assessing Officer from Sales Tax Department, Maharashtra that the (A.Y.2009-10) ITA NO. 6938/MUM/2018(A.Y.2010-11) assessee has obtained bogus bills from hawala operators. Accordingly, assessment for assessment years 2009-10 and 2010-11 were reopened. In assessment year 2009-10 the Assessing Officer vide order dated 16/09/2014 passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’) observed that the assessee had procured bogus purchase bills amounting to Rs.48,951/- from hawala operators. Similarly, for the assessment year 2010-11 the Assessing Officer vide order dated 16/09/2014 concluded that the assessee obtained bogus purchase bills amounting to Rs.1,06,496/- from hawala operators. The Assessing Officer made addition of the entire such bogus purchases in the respective assessment years. Aggrieved against assessment orders for the respective assessment years, the assessee filed appeals before the CIT(A). The first appellate authority vide impugned order upheld the addition on account of bogus purchases in assessment years 2009-10 and 2010-11. Hence, the present appeals by the assessee.
Shri. Rajesh S. Shah appearing on behalf of the assessee submitted that the assessee is a civil contractor and is executing civil work contracts for Government and other agencies. The assessee had furnished details; such as bank statements, copy of return of income, audit reports under section 44AB of the Act, etc. during re-assessment proceedings. The assessee had also furnished details of party wise purchase and sales to the authorities below. The additions have been made only for the reasons that the assessee could not produce the parties before the Assessing Officer. The assessee made payments to the said parties through cheques and had furnished copies of invoice of bills. The contracting jobs performed by the assessee were not disputed by the Government agencies for whom the jobs were performed. The ld. Authorized
(A.Y.2009-10) ITA NO. 6938/MUM/2018(A.Y.2010-11)
Representative of the assessee submitted that the assessee had declared net profit of 8.02% for the financial 2008-09 and 8.08% for the financial year 2009- 10. The additions if at all are to be made the entire alleged bogus purchases cannot be added.
On the other hand, Shri R. Bhoopathi representing the Department vehemently defended the impugned order. The ld. Departmental Representative submitted that the assessee has failed to produce transport receipts, octroi receipts, etc. The assessee was asked to produce the parties to substantiate genuineness of the transactions. However, the assessee failed to produce the parties. Thus, the assessee failed to discharge his onus in proving the genuineness of the purchase transaction.
Both sides heard, orders of authorities below were perused. The addition has been made in assessment years 2009-10 and 2010-11 on account of assessee obtaining bogus purchase bills from the following parties:-
S.No. Name of Hawala Dealers Asstt. Year Àsstt.Year 2009-10 2010-11 1. M/s. Ankit Enterprises Rs. 30,615 - 2. M/s.Sheetal Trading Co. Rs. 18,336 - 3. M/s. Harsh Corporation - Rs. 51,584/- 4. M/s.Mahavir Enterprises - Rs. 54,912/- Total Rs. 48,951 Rs.1,06,496/- The Assessing Officerhas made addition of the entire alleged bogus purchases in both assessment years. The CIT(A) has upheld the addition made by the Assessing Officer. It is an undisputed fact that the contract work performed by the assessee has not been disputed either by the Income Tax Department or the Government Departments/ other agencies for whom the assessee has been (A.Y.2009-10) ITA NO. 6938/MUM/2018(A.Y.2010-11) doing contract jobs. Taking into consideration entirety of facts, I am of considered view that entire alleged bogus purchases cannot be added back. Apparently, assessee has purchased goods from grey market and has obtained bills from hawala operators. Under such circumstances, addition only to the extent undisclosed profit element can be made. To meet the ends of justice it would be just and proper to restrict the addition to 8% of the alleged bogus purchases over and above the gross profit declared by the assessee. I hold and direct accordingly.
The impugned order is modified and the appeals of the assessee are partly allowed in the terms aforesaid.
Order pronounced in the open court on Monday, the 06th day of January,2020.