ASSISTANT COMMISSIONER OF INCOME TAX 15(3)(1), MUMBAI vs. TEN CONSTRUCTIONS (INDIA) PRIVATE LIMITED, MUMBAI

The brief facts of the case are that the assessee is engaged in the business of construction activities, filed its return of income for AY 2010-11 on 26/09/2010, declaring total income of Rs. 81,06,573/- Thereafter, the case has been reopened u/s 147, on the basis of information received from DGIT, investigation, Mumbai, as per which Sales Tax Authorities of Government of Maharashtra had taken actions against number of Hawala dealers, who had issued bogus purchase bills to various parties in Mumbai. As per list of beneficiaries, the assessee is one of the beneficiary, who had taken accommodation bills of bogus purchases from 14 parties as listed by the AO in para 2 of assessment order amounting to Rs. 1,40,64,522/-. The case was selected for scrutiny and the assessment has been completed u/s. 143(3).r.w.s. 147 of the I.T.Act, 1961 on 30/03/2016 and determined total income of Rs. 2,21,71,095/, after making 100% additions towards alleged bogus purchases from those parties and made additions of Rs. 1,40,64,522/-.

Aggrieved by the assessment order, the assesee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assesse has filed elaborate written submissions, on the issue, which has been reproduced at Para 2.3.1 on pages 5 to 15 of Ld.CIT(A) order. The sum and substance of arguments of the assessee before the Ld.CIT(A) are that purchase from the above parties are genuine, which are supported by necessary evidences. Therefore, no additions could be made on the basis of information received from third party. The Ld.CIT(A), after considering relevant submission of the assessee and also by following certain judicial prouncements including the decision of ITAT, Mumbai in case of Vinod.S Deora vs. DCIT in deleted addition made by the AO towards alleged bogus purchases.

None appeared for the assessee. We have heard the Ld. DR, perused the material available on record and gone through orders of the authorities below. We find that the Ld. AO has made additions towards alleged bogus purchases @ 100% of such purchases, on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers. According to the Ld. AO, although assesee has filed certain basic evidences, but failed to file further evidence in the backdrop of clear finding by the Sales Tax Department, Govt. of Maharashtra that those parties are involved in providing accommodation entries without actual delivery of goods. The Ld. AO had also taken support from the investigation conducted during the course of assessment proceedings to come to the conclusion that purchase from the said parties is bogus in nature. It is the contentions of the assessee before the lower authorities that purchases from the above parties are supported by necessary evidences. It has furnished all possible evidences, including books of accounts, stock details and bank statement to prove that payment against said purchases have been made through proper banking channels.

Therefore, considering facts and circumstances of this case and also consistent with view taken by the Co-ordinate Bench in number of cases, we direct the AO to reduce addition made towards alleged bogus purchase to 12.50% profit such purchases.

In the result, appeal filed by the revenue is partly allowed.