DCIT, NEW DELHI vs. SH. SANDEEP AGGARWAL,, DELHI

This appeal by the Revenue and cross objection by the assessee are preferred against the order of the CIT(A)- 25, New Delhi dated 04.02.2015 pertaining to A.Y 2007-08.

None appeared on behalf of the assessee, though on 05.11.2018, the counsel was aware of the date of hearing. We decide to proceed ex parte. We heard the ld. DR at length and have carefully perused the orders of the authorities below.

Briefly stated, the facts of the case are that a search and seizure operation was conducted by the INV Wing on 26.04.2010 in M/s Pilot Group of cases. The assessee’s premises were also covered u/s 132(1) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act']. During the course of search and seizure operation in the case of Shri Rakesh Gutpa, Shri Vishesh Gupta, Shri Vaibhav Jain and Shri Navneet Jain, it was found that these persons are engaged in the business of providing accommodation entries through bogus purchase bills from the firms owned and controlled by them.

In their respective submissions, these persons gave names of the firms which were engaged in providing accommodation bills in respect of bogus purchases.

The Assessing Officer found that the assessee had made purchases of Rs. 1,62,26,036/- from Shree Goverdhan International which was engaged in providing accommodation bills in respect of bogus purchases. Taking a leaf out of the statement recorded during the course of search and seizure operation, the Assessing Officer came to the conclusion that the purchases of Rs. 1,62,26,036/- are bogus and, accordingly, made addition of the same.

The assessee carried the matter before the CIT(A) and vehemently stated that the copies of statements from which the Assessing Officer drew conclusion were never supplied to the assessee nor any opportunity of cross examination was given. It was pointed out to the CIT(A) that the assessee has submitted complete quantitative details of opening stock, purchases, sales and closing stock. It was brought to the notice of the CIT(A) that the books of account of the assessee have been audited and the same has not been rejected by the Assessing Officer.

After considering the facts and submissions and factual details brought on record and drawing support from various judicial decisions, the CIT(A) was of the opinion that the Assessing Officer was not justified in disallowing the purchases of Rs. 1,62,26,036/-. The CIT(A) was of the firm belief that the profit @ 5% on the alleged bogus purchase would meet the ends of justice and accordingly, directed the Assessing Officer to restrict the addition to Rs. 5,92,279/-.

Aggrieved by this, the Revenue is before us. The ld. DR strongly supported the findings of the Assessing Officer and read the relevant observations of the Assessing Officer.

The details of purchases and their corresponding sales can be understood from the following chart:

The undisputed fact is that sales of Rs. 1,63,36,558/- was accepted by the Assessing Officer. Assuming, yet not accepting, the purchases of Rs. 1,62,26,035/- are bogus purchases, then we fail to understand how the assessee has booked sales of Rs. 1,63,36,558/- since no adverse inference has been drawn by the Assessing Officer in so far as sales are concerned.

There are definitely movement of goods and, therefore, in our considered opinion, entire purchases cannot be treated as income of the assessee. Profit of 5% taken by the CIT(A) in this line of trade should meet the ends of justice. The CIT(A) has rightly restricted the addition to Rs. 5,92,279/- and, therefore, no interference is called for.

In the result, the appeal of the Revenue in CO No. 319/DEL/2015 are dismissed.