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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: Shri Pawan Singh (JM) & Shri S Rifaur Rahman (AM) Shri Jitendra Dalichand Shah
O R D E R PER PAWAN SINGH, JM : 1. This appeal by revenue is directed against the order of learned CIT(A)-25, Mumbai dated 05-07-2018 which arises from assessment order passed u/s 14(3) r.w.s. 147 dated 08-12-2015 for assessment year 2010-11. The revenue has raised the following grounds of appeal:-
“1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.6,22,737/- 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 addition should be made on entire purchases and not on profit element embedded in such purchases.
On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in estimating the profit from Hawala purchases by disallowing only
2 ITA 5661/Mum/2018 Jitendra D Shah HUF Rs.11,07,088/- being 8% of the bogus purchases as even the basic onus of producing transport bills, delivery challans etc. were not fulfilled by the assessee.” 2. Brief facts of the case are that assessee, HUF and is a proprietor of namely M/s K.J. Enterprises, dealing in iron & steel, filed its return of income for AY 2010-11 on 14-09-2010 declaring income of Rs.4,91,839/-.
Subsequently, on the basis of information received from sales-tax department, Government of Maharashtra, which referred the list of hawala dealers and the beneficiary to the DGIT (Investigation), Mumbai. The name of assessee appeared in the list of beneficiaries. The assessee allegedly made the purchases of Rs.1,38,38,601/- from the following hawala dealers. On the basis of such information, the AO issued notice u/s 148 on 19-03-2015. The assessee, vide letter dated 19-03-2015 stated that the return filed on 143-09-2010 may be treated as return filed in response to notice u/s 148. Subsequently, the Assessing Officer issued notices u/s 143(2) and 142(1) alongwith a questionnaire and served upon the assessee.
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 Om Corporation 1,43,270 2 Siddhivinayak Trading Company 1,02,742 3 Deepali Enterprises 7,46,084 4 National Trading Co 9,12,731
3 ITA 5661/Mum/2018 Jitendra D Shah HUF 5 Rekha Trading Co 5,70,831 6 Renuka Sales Corporation 9,10,018 7 Atlantic Traders 3,78,114 8 Daksha Enterprises 3,09,088 9 Bright Corporatin 4,75,774 10 Shree Jalaram Enterprises 5,21,831 11 Amar Enterprises 5,22,237 12 Mercury Enterprises 5,55,989 13 Prayosha Trading Co 15,50,616 14 Adinath Trading Company 10,78,813 15 Vaishali Enterprises 72,858 16 Sai Enterprises 5,85,250 17 SS Enterprises 6,13,239 18 Zenith Enterprises 8,25,604 19 Hitech Impex 2,31,244 20 Suraj Sales Corporation 8,53,622 21 Matoshree Traders 6,39,9073 22 Mahavir Enterprises 12,824 23 Balaji Trading Company 5,74,329 24 Swayam International 6,51,520 Total 1,38,38,601 3. The assessee was asked to substantiate the purchases. The assessee furnished various details like bank statement, copy of bills to support the purchases. The assessing officer, however, did not accepted with the details and evidences as sufficient which were filed by the assessee; he observed that it is settled law that onus lies on the assessee to prove the genuineness of any expenditure which is claimed as deduction in computing its taxable income and that no serious efforts were made by the assessee to discharge such burden of proving the genuineness of transactions with the above parties. However, he, applying the ratio of decision of ITAT in the case of M/s Sanket Steel Traders Vs ITO in ITA
4 ITA 5661/Mum/2018 Jitendra D Shah HUF No.2801/Ahd/2008 dated 20-05-2011, where the Tribunal, applying the ratio of decision in the case of Shri Anubhai Shivlal sustained addition of 12.5% of the non-genuine purchases, added 12.5% addition of the non- genuine purchases. On appeal, the Ld. CIT (A) following the decision of Tribunal in assessee’s individual case for AY 2009-10 in restricted the addition to 8%. Aggrieved, the revenue has filed the present appeal.
We have heard the submissions of the learned authorised representative (ld. AR) for assessee and the learned departmental representative (ld DR) for the revenue and examined the record. The Ld.AR of the assessee, at the outset submitted that the issue is squarely covered in favour of the assessee’s individual case for AY 2009-10 in ITA No.759/Mum/2018, where the Tribunal restricted the addition to the extent of 8% of the alleged bogus purchases.
Per contra the Ld. DR for the revenue submitted that the assessing officer relying upon the decision of Ahmedabad Bench of the Tribunal in Anubhai Shivlal made the disallowance at 12.5%. However, the ld DR submits that in similar case of assessee’s individual case the tribunal restricted the additions of bogus purchases to the extent of 8% of the similar purchases.
6. We have considered the rival submissions and perused the material placed before us. We find that the assessing officer, by following the decision of 5 ITA 5661/Mum/2018 Jitendra D Shah HUF Ahmedabad Bench of the Tribunal in Anubhai Shivlal made the addition at 12.5% of the non genuine purchases. However, on appeal the Ld.CIT(A), by following the decision of the Tribunal in assessee’s individual case for AY 2009-10 has restricted the addition to 8% of the non genuine purchases. Since the Ld. CIT(A) has followed the decision of the Tribunal in assessee’s individual case for AY 2009-10 restricted the addition to 8% of the non genuine purchases. No contrary fact or law is brought to our notice to take other view, thus, we do find any infirmity in the order of the Ld. CIT(A). Therefore, we uphold the order of Ld. CIT(A).
In the result, appeal filed by the revenue is dismissed.
Order pronounced in the open court on 18-12-2019.