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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
आयकरअपीलीयअधिकरण“SMC” न्यायपीठम ुंबईमें। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI श्री महावीर स िंह, न्याययक दस्य एविं श्री जी. मिंजुनाथ, लेखा दस्य के मक्ष। BEFORE SRI MAHAVIR SINGH, JM AND SRI G MANJUNATHA, AM Aayakr ApIla saM./ ITA No. 5490/MUM/2018 (inaQa-arNa baYa- / Assessment Year:2009-10) The Income Tax Officer Shri Mukund J Ghorpade Ward 27(2)(3) A/25/28 Ambika Siddhi Golibar vs. Mumbai Road Jagdusha Nagar Ghatkopar (W), Mumbai (p`%yaqaaI-/ Respondent) . ApIlaaqaI- / Appellant) स्थायीलेखा िं./PAN No. ACEPG8685R अपीलाथी की ओर े/ Appellant by : Shri Akhtar H Ansari, DR प्रत्यथी की ओर े/ Respondent by : Shri Jayant Bhatt, AR ुनवाई की तारीख/ Date of hearing: 16-10-2019 घोषणा की तारीख/ Date of pronouncement : 16-10-2019 AadoSa/ O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal of the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-25, Mumbai [in short CIT(A)], in Appeal No CIT(A)-25/IT-464/2015-16 vide order dated 03.07.2018. The Assessment was framed by the Income Tax Officer, Ward-27(2)(3) Mumbai (in short ‘ITO/ AO’) for the A.Y. 2009-10 vide order dated 18.03.2015 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2 | P a g e ITA No.5490/MUM/2018 2. The only issue on merits, in this appeal of assessee is against the order of CIT(A) restricting the addition of the AO in estimating the profit rate at 12.5% of the bogus purchases. 3. Briefly stated facts are that the assessee engaged in the business of printing of advertising materials. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to Rs.12,69,638/- as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: -
S.No. Name of the seller Amount 1. Nageshwar 2,49,518/- 2. Manav Impex 3,57,924/- 3. Meeti 1,71,066/- 4. Monil Impex 1,74,887/- 5. Kalyan Kirti 1,06,163/- 6. Prakash 2,10,080/- Total 12,69,638/- 4. The AO issued noticed under section 133(6) to the parties which returned back with the remark as “left” and assessee failed to produce these parties. According to information received the name of this party was appearing in the list of hawala entry operators as supplied by sales Tax Department of Maharashtra. The hawala traders admitting before the sales tax authorities in their deposition that they were providing only accommodation purchase bills on commission basis without being actual purchase/ sale of goods. The AO during the
3 | P a g e ITA No.5490/MUM/2018 course of scrutiny assessment proceedings required the assessee to file the details of purchase. The assessee filed copies of purchase bills from the above said parties, copies of ledger extract and copies of bank statements to prove the payments by cheque. The AO required the assessee to produce these parties for verification but assessee expressed his inability to do so. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of whole amount as unproved purchase at Rs.12,69,638/- to the return income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who sustained the disallowance at 12.5% of the bogus purchases by observing in para 5.3.7 as under: -
“5.3.7 In view of the above discussed factual matrix and precedents, I am of the view that estimation of 12.5% as profit embedded in impugned purchases shown from the alleged hawala party and adding the same to the total income returned, would meet the ends of justice. Therefore, I direct the AO to estimate profit @ 12.5% of the alleged bogus purchases, which works out to Rs. 1,58,705/- (@12.5% of Rs. 12,69,638/-) and restrict the addition to Rs. 1,58,705/-. The appellant gets a relief for the balance amount of Rs. 11,10,933/-.
4 | P a g e ITA No.5490/MUM/2018 Thus, the ground of appeal No. 2 of the appellant is partly allowed.” 5. We have considered the issue and gone through the facts and circumstances of the case. We find that the CIT(A) has rightly applied the profit rate at the rate of 12.5% for the reason that the sales are not doubted by the revenue. Further even the assessee has paid VAT on these sales made out of these purchases. Hence, we confirm the same. This issue of Revenue’s appeal is dismissed. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 16th October, 2019.
Sd/- Sd/- (महावीरस िंह /MAHAVIR SINGH) (जी. मंजुनाथ /G MANJUNATHA) (लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददनािंक/ Mumbai, Dated:16-10-2019. स दीप सरकार,व.निजी सधिव / Sudip Sarkar, Sr.PS आदेशकीप्रनिललपपअग्रेपिि/Copy of the Order forwarded to : अपीलाथी/ The Appellant 1. प्रत्यथी/ The Respondent. 2. आयकरआयुक्त(अपील) / The CIT(A) 3. आयकरआयुक्त/ CIT 4. ववभागीयप्रयतयनधि,आयकरअपीलीयअधिकरण, मुिंबई/ DR, ITAT, Mumbai 5. गार्डफाईल / Guard file. 6. आदेशाि सार/BY ORDER, त्यावपतप्रयत //True Copy// उप/सहायकपुंजीकार (Asstt.Registrar) आयकरअपीलीयअधिकरण, मुिंबई / ITAT, Mumbai