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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: S/Shri Saktijit Dey & Nabin Kumar Pradhan
Date of Hearing :28.11.2019 Date of Pronouncement : .12.2019 O R D E R
Per Saktijit Dey, Judicial Member:
The aforesaid appeals by the Revenue arise out of two separate orders, both dated 30.08.2018, of learned Commissioner of Income Tax (Appeals)- 53, Mumbai, pertaining to assessment years 2010-11 and 2011-12.
The only common dispute in the present appeals relates to the decision of learned CIT(A) in restricting the disallowance on account of non-genuine purchases to 12.5% as against the disallowance of 25% made by the Assessing Officer.
2 ITA 6192 & 6193/Mum2018 Dharmesh Narendra Bhagat
Briefly, facts are the assessee- an individual, is engaged in the business of trading in gift items. For the assessment year 2010-11, the assessee filed his return of income on 18.09.2010 declaring income of Rs 6,14,130. Similarly, for assessment year 2011-12, the assessee filed his return of income on 26.09.2011 declaring income of Rs 7,34,437. Subsequently, on the basis of information received from DGIT (Investigation) Mumbai, and Sales Tax Department, Government of Maharashtra that purchases worth Rs 5,21,916 in assessment year 2010-11 and Rs 15,60,122 in assessment year 2011-12, are non-genuine, as, said purchases claimed to have been made during the relevant assessment years were from parties who have been identified as hawala operators providing accommodation bills, the Assessing Officer re-opened the assessments u/s.147 of the Act. During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases by furnishing certain documentary evidences, such as, bank statements, purchase bills, stock register, quantitative details of purchases and sales, delivery challans, lorry receipts, octroi receipts etc. Further, to ascertain the genuineness of said purchases independently, the Assessing Officer issued notices u/s. 133(6) of the Act to the selling dealers. However, such notices returned back unserved by the postal authorities due to absence of the parties in the given address. Ultimately, the Assessing Officer alleging that the assessee was unable to prove the genuineness of purchases held them to be bogus. However, looking at the corresponding
3 ITA 6192 & 6193/Mum2018 Dharmesh Narendra Bhagat sales affected by the assessee, the Assessing Officer observed that the assessee must have purchased the goods from undisclosed sources. Noticing that the assessee has declared gross profit @ 22.13% in assessment year 2010-11, he disallowed 25% out of the alleged non-genuine purchases made during the year. Similarly, for assessment year 2011-12, the Assessing Officer noticing that the assessee had declared gross profit @ 27.94% disallowed 30% out of non-genuine purchases. Being aggrieved with the disallowances made by the Assessing Officer, assessee preferred appeals before learned Commissioner (Appeals).
After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) restricted the disallowance to 12.5% of the non-genuine purchases in both the assessment years under dispute.
We have considered the rival submissions and perused material on record. It is evident, in course of assessment proceedings, the Assessing Officer had called upon the assessee to furnish certain documentary evidences to prove the genuineness of purchases claimed to have been made during the assessment years under dispute. Though, the assessee furnished some evidences to prove the genuineness of purchases, however, they were not to the satisfaction of the Assessing Officer. Therefore, the Assessing Officer was of the view that purchases made were not genuine. However,
4 ITA 6192 & 6193/Mum2018 Dharmesh Narendra Bhagat considering the fact that the assessee has furnished quantitative details and stock register to show purchases and corresponding sales, the Assessing Officer had estimated the profit element embedded in such purchases looking at the gross profit rate declared by the assessee and restricted the addition to that extent of 25% in assessment year 2010-11 and 30% in assessment year 2011-12. Learned Commissioner (Appeals) has however, reduced the addition to 12.5% of non-genuine purchases in both the assessment years. Thus, as could be seen from the aforesaid facts, the dispute is only with regard to the profit element embedded in the non-genuine purchases, which can be considered for addition. After considering the overall facts and circumstances of the case, the nature of business carried on by the assessee and other relevant facts, we are of the considered opinion that the decision of learned Commissioner (Appeals) in restricting the addition to 12.5% of the non-genuine purchases is just and reasonable, hence, does not require any interference from us.
Accordingly, grounds raised are dismissed.
In the result, both the appeals are dismissed. Order pronounced in the open court on this 26th day of December, 2019.