ACIT- 27 (3), MUMBAI vs. RAJESH RUPO JAGASIA, MUMBAI

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-25, Mumbai [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)- 25/IT-325/2015-16/178 dated 12/07/2018 on following grounds of appeal: - Rajesh Rupo Jagasia Assessment Year-2010-11 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.11,97,512/- made by the Assessing Officer on account of bogus purchases, without appreciating the fact that the assessee had failed to produce bills, vouchers and other documentary evidences in support of his claim and without considering the latest Apex Court decision in the case of N.K.Proteins Ltd. wherein it is held that once it is proved that the purchases are bogus then additions should be made on entire purchases and no on profit element embedded in such purchases.

The assessee’s representative sought adjournment in the matter which was declined. Therefore, the matter was proceeded with ex-parte qua the assessee after perusal of material on record and after considering the arguments advanced by the revenue. 2.1 Facts on record would reveal that the assessee being resident individual stated to be engaged as paint contractor and dealer in hardware items under proprietorship concern namely M/s Krishraj, was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 25/03/2015 wherein the income of the assessee was determined at Rs.35.64 Lacs, after sole addition of alleged bogus purchases for Rs.13.68 Lacs as against returned income of Rs.21.96 Lacs filed by the assessee on 15/10/2010 which was processed u/s.143(1). 2.2 Pursuant to receipt of certain information from Sales Tax Department, Govt. of Maharashtra, it transpired that the assessee obtained bogus purchases bills amounting to Rs.13.68 Lacs from an entity namely M/s Universal Suppliers. Accordingly, the case was reopened as per due Rajesh Rupo Jagasia Assessment Year-2010-11 process of law vide issuance of notice u/s 148 on 24/03/2014 which was followed by statutory notices u/s 143(2) and 142(1) wherein the assessee was directed to substantiate the purchase transactions.

Rajesh Rupo Jagasia Assessment Year-2010-11 5. After careful consideration of orders of lower authorities and after appreciating the arguments advanced by revenue, we are of the considered opinion that there could be no sale without actual purchase of material keeping in view the assessee’s nature of business. Undisputedly the assessee was in possession of primary purchase documents and the payments to the suppliers were through banking channels. The sales turnover achieved by the assessee has not been disputed / disturbed by the revenue. However, at the same time, the assessee miserably failed to substantiate the delivery of material during assessment as well as appellate proceedings. The assessee failed to produce the stated supplier to confirm the transactions and the onus casted upon assessee, in this regard, remained undischarged. Therefore, on the given facts and circumstances, disallowance of entire purchases, in our opinion, would not be justified rather the additions which could be sustained, would be to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which learned first appellate authority has rightly done so. Therefore, finding no infirmity in the impugned order, we dismiss the appeal.