INCOME TAX OFFICER WARD 2(4), MUMBAI vs. VINOD D VAGASIA, MUMBAI

Appellant by Ms. Samatha Mullamudh (DR) Respondent by None Date of hearing 15-10-2019 Date of pronouncement 23-10-2019 O R D E R

Per Pawan Singh, JM :

Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in not appreciating the law correctly that once the purchases are unverifiable/not genuine/bogus, the same should have been disallowed in entirety?

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by not appreciating the fact that the assessee could not establish the genuineness of the purchases from the non-existent vendors? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by not appreciating the fact that the onus to justify the claim of expenses is on the assessee and the same has failed to discharge it in relation to the purchases made from the non-existent vendors? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by ignoring, the fact that the assessee

ITA 6162/Mum/2018 Vinod D Vagasia could not substantiate its claim of purchases from non-existent vendors by means of relevant supporting documents related to movement and delivery of goods, stock register, etc. to arrive at disallowance at 25% of the purchases from the non-existent vendors? 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in not appreciating the law correctly that once the purchases are unverifiable / not genuine / bogus, the same should have been disallowed in entirety, particularly in view of the ratio of the decision of the Hon'ble Gujarat High Court in Tax Appeal No. 242 of 2003 dated 20/06/2016 in the case of N. K. Proteins Ltd. against which the SLP was dismissed by the Hon'ble Apex Court and also decision of Hon'ble Supreme Court in case of Kanchwala Gems V/s JCIT 288 ITR 10 (SC)?”

The assessing officer, therefore, held that assessee has not purchased any material amounting to Rs.5,19,550/- including VAT of Rs.5,144/- from M/s Sun Diam and in fact obtained bogus purchase bills and 3

ITA 6162/Mum/2018 Vinod D Vagasia debited expenses to the P&L account. Therefore, he disallowed the amount of Rs.5,19,550/- u/s 69C of the Act and added the same to the total income.

Before, ld CIT(A) the assessee urged that the purchases made by the assessee are genuine and furnished the copy of the bank statement showing that the payment of the materials was made through banking channel. The ld CIT(A) himself conducted the inquiry to find out the veracity of the purchases. The ld CIT(A) asked the assessee to provide 4

ITA 6162/Mum/2018 Vinod D Vagasia the details of the purchases and the sale of the material on the format, which is reproduced by him in para 6.1 of his order. And after considering the information and the evidences furnished by the assessee the books of account of assessee was rejected. After rejecting the books of accounts the ld CIT(A) estimated the profit on the alleged bogus purchases and also took account of the Gross Profit declared by the assessee in earlier assessment years. The ld CIT(A) concluded that the assessee has suppressed the profit by showing the purchases from hawala dealers and mainly relying upon the decision of Ahmedabad Tribunal in the case of Vijay Proteins Ltd vs ACIT 58 ITD 428 (Ahd) which has been upheld by the Hon’ble Supreme Court, restricted the disallowance @25% out of bogus purchases as reasonable. The Ld. DR before us, could not show any material so as to arrive at a different conclusion than the one arrived at by the Ld. CIT(A). Therefore, we do not see any infirmity in the order of CIT (A). We uphold the same and dismiss the appeal filed by the revenue.

Order pronounced in the open court on 23-10-2019.