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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the Revenue against the order dated 26.06.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12 challenging the deletion of addition to the extent of Rs. 74,460/- as against addition of Rs. 3,63,815/- made by the Assessing Officer towards bogus purchases.
The facts in brief are that the assessee in the return of income on 31.08.2011 declaring income of Rs.4,68,060/- which 2 Shri Tarun Punshi Gosar HUF was processed under section 143(1). Subsequently, the AO received the information from Sales Tax Department, Government of Maharashtra that assessee is beneficiary of hawala purchase entries from two parties namely M/s. Deepali Enterprises Rs.2,16,710/- and M/s. Rekha Trading Company Rs.1,47,105/- aggregating to Rs.3,63,815/-. The AO after recording the reason to believe issued notice under section 148 of the Act on 10.05.2013 and thus reopened the assessment of the assessee. During the course of assessment proceedings the information and details were called for from the assessee. The assessee submitted during the course of assessment proceedings that the GP in the current year is 8.06% vis-à-vis GP in the earlier year 9.05%. The assessee also filed copies of bills, vouchers and payment details. However, assessee could not produce the parties as directed by the AO. Moreover, the notices issued under section 133(6) of the Act could not served. The inspector, Income Tax reported that no such parties existed on the given addresses. Finally, the AO treating the entire purchases as bogus, added the same to the income of the assessee.
In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition to the extent of Rs.2,14,895/- while deleting the addition to the tune of Rs.74,460/- which was calculated by the Ld. CIT(A) by comparing the current year GP which was 8.06% to the previous year it was 9.86% and the difference of 1.8% was added to the income of the assessee resulting into the partial sustenance of addition to the tune of Rs.2,14,895/-. Now the Revenue is in appeal before us challenging the order of Ld. CIT(A).
3 Shri Tarun Punshi Gosar HUF 4. After hearing both the parties and perusing the material on record, we observe that in this case the addition for bogus purchase was made to the tune of Rs.3,63,815/- whereas Ld. CIT(A) sustained addition to the tune of Rs.2,14,895/- which means that addition of 59% approximately was sustained by Ld. CIT(A) which is quite high . In view of these facts, we do not find any reason to interfere in the order of Ld. CIT(A) as substantial addition has been sustained by applying the differential GP by taking the current year GP vis-à-vis the earlier GP. Accordingly, we are inclined to dismiss the appeal of the Revenue by upholding the order of Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 22.10.2019.