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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: HON’BLE SHRI SAKTIJIT DEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
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’] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-30, Mumbai [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-
Mohammed A.Kathawala Assessment Year-2009-10 30/19(2)(3)/10652/2017-18 dated 06/07/2018 on following grounds of appeal: -
1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition @ 12.5% instead of 100% made by the AO as addition made in the case was on the basis of information received from external sources in the nature of law enforcement.
2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in not considering the order of Hon’ble Supreme Court in the case of N.K.Proteins Ltd. dated 16-01-2017, which is on the similar issue of bogus purchases and when the apex court order was already the law of the land when the Ld. CIT(A) has pronounced its order on 06-07-2018.
None has appeared for assessee and no valid adjournment application is on record. Left with no option, the matter is proceeded with ex-parte qua the assessee on the basis of material on record and after considering the submissions of the revenue. 2.1 Facts on record would reveal that the assessee being resident individual earning business income, was assessed for impugned AY u/s. 144 r.w.s. 147 on 05/03/2015 wherein the income of the assessee was determined at Rs.5.81 Lacs, after sole addition of alleged bogus purchases for Rs.2.40 Lacs as against returned income of Rs.3.41 Lacs filed by the assessee on 27/09/2009 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.2.40 Lacs from an entity namely M/s Sunrise Enterprises. Accordingly, the case was reopened as per due process of law vide issuance of notice u/s 148 on 07/03/2014 which was Mohammed A.Kathawala Assessment Year-2009-10 followed by statutory notices u/s 143(2) and 142(1) wherein the assessee was directed to substantiate the purchase transactions.
The failure on the part of the assessee to file requisite details led the Ld. AO to frame assessment on best judgment basis u/s 144. During assessment proceedings, notice issued u/s 133(6) to the said supplier remained un-responded to. The factual matrix led the Ld. AO to form an opinion that the purchases were not genuine and accordingly, the same were added to the income of the assessee as unproved purchases / unexplained expenditure.
Before learned first appellate authority, the assessee agitated the addition by way of an elaborate submissions. It was submitted that notice u/s 148 was never received by the assessee and therefore, the requisite details could not be filed. The assessee, inter-alia, pleaded for reasonable estimation against disputed purchases. The learned first appellate authority, after due consideration of factual matrix and assessee’s submissions, estimated the additions @12.5% relying upon the decision of Hon’ble Gujarat High Court rendered in CIT V/s Simit P.Sheth 356 ITR 451. Aggrieved, the revenue is in further appeal before us.
After careful consideration of impugned order in the light of submissions 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. 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 supply the requisite Mohammed A.Kathawala Assessment Year-2009-10 information / documentary evidences to substantiate the purchase transactions. 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. Therefore, finding no infirmity in the impugned order, we dismiss the appeal.
So far as the decision of Hon’ble Gujarat High Court rendered in N.K. Industries Ltd. Vs DCIT [72 Taxmann.com 289] is concerned, we find that the facts of that case has already been distinguished by Hon’ble Bombay High Court in Pr.CIT Vs. M/s Mohommad Haji Adam & Co. [ITA No.1004 & others of 2016, dated 11/02/2019] wherein Hon’ble Court has approved the estimation, on similar factual matrix, based on Gross Profit Rate. Therefore, concurring with the approach of Ld. CIT(A), we dismiss the appeal.
Finally, the appeal stands dismissed. Order pronounced in the open court on 10th October, 2019.