ITO WD- 2(4), THANE vs. PARTH TRADERS, MUMBAI

O R D E R Per Pawan Singh, Judicial Member: 1. This appeal by revenue is directed against the order of ld. CIT(A)-2, Nasik dated 02.07.2018 for Assessment Year 2009-10. The revenue has raised the following grounds of appeal:

1. ''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 un verifiable/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 Jaw 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 could not substantiate its claim of purchases from non-existent vendors by means

2 ITA 5399/Mum/2018 of relevant supporting documents related to movement and delivery of goods, stock register, etc, to arrive at disallowance at 12.5% 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?”

3 ITA 5399/Mum/2018 recorded were supplied to the assessee. The Assessing Officer after serving notice under section 143(2) dated 21.07.2014 proceeded for re-assessment. During the assessment, the Assessing Officer noted that the assessee has shown purchases from the following parties, which was declared as hawala dealers by the Sale Tax Department, Government of Maharashtra.

Name of the parties Bill amount (Rs.) 1 M/s Adijin Enterprises Rs.72,314 2 M/s Shah Industries Rs.5,98,218 3 M/s Payal Enterprises 7,29,052 4. Smartlink Tradex Pvt Ltd 26,71,336 Total 40,70,920 3. In order to verify the transaction the assessing officer issued notice under section 133(6) to all the parties. The notices sent to the parties were returned back by the postal authorities with the remark ‘left or not known’. The assessee was asked to substantiate the purchases and issued show-cause notice as to why the aforesaid transaction should not be treated as non-genuine. The assessee filed its explanation and furnished the copy of ledger account and proof of payment through cheques. The Assessing Officer not accepted the explanation furnished by assessee and noted that the assessee has not produced Lorry Receipt, Transportation details and Octroi challan etc. The Assessing Officer on the basis of the material

4 ITA 5399/Mum/2018 before him and after referring the report of the investigation of Sales Tax authorities added the entire amount of alleged bogus purchases to the total income amounting to Rs.40,70,920. On appeal, the ld. CIT(A), relying upon a plethora of judgements, restricted the addition to the extent of 12.5% of the alleged bogus purchases. Aggrieved by the order of ld. CIT(A), the revenue has filed the present appeal before us.

Order pronounced in the open court on 14-10-2019.