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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
आयकर अपीलीय अधिकरण “SMC” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI श्री महावीर स िंह, न्याययक दस्य BEFORE SRI MAHAVIR SINGH, JUDICIAL MEMBER आयकर अपील सुं./ (यिर्ाारण वर्ा / Assessment Year 2009-10) Income Tax Officer-19(2)(2) Shri Kheemaram K Choudhary Room No. 214, 2nd Floor, Office No.16, 1st Floor, Haji बनाम/ Matru Mandir, Tardeo Road, Kasam Bldg. No.8, Durgadevi Mumbai-400 007 Street, Khumbharwada, Vs. Mumbai-400 004 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा सुं./PAN No. AFMPC7661N अपीलार्थी की ओर े / Appellant by : Shri Akhtar H. Ansari, DR प्रत्यर्थी की ओर े / Respondent by : None ुिवाई की तारीख / Date of hearing: 18.12.2019 घोर्णा की तारीख / Date of pronouncement : 18.12.2019 आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)]-54, Mumbai [in short 2 | P a g e Shri Kheemaram K Choudhary CIT(A)], in Appeal No. CIT(A)-30/IT-522/ITO-19(2)(2)/15-16 order dated 28.09.2018. The Assessment was framed by the Income Tax Officer, Ward-19(2)(2), Mumbai (in short ITO / AO) for the A.Y. 2009-10 vide order dated 13.03.2015, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of Revenue is against the order of CIT(A) confirming the action of the AO by applying the profit rate at 12.5% of the bogus purchase. For this assessee has raised following grounds: - “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to allow set off of the Gross Profit already shown by the assessee from the net addition @12.5% on account of bogus purchases confirmed the Ld. CIT(A)?
2. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored.”
Briefly stated facts are that the assessee engaged in the business of Trading-Others. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by 3 | P a g e Shri Kheemaram K Choudhary the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to ₹1,41,63,825/- as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: - “Sl Name of party Amount No. 1. Paras Steel India 62,050 2. Roopam Impex 6,91,594 3. Shivam Metal Industries 17,75,992 4. Rohan Steel Impex 19,71,192 5. Tirupati Metals 32,01,419 6. Suryadev Metal (India) 76,800 7. Hans Enterprises 2,80,612 8. Aman Impex 20,91,149 9. New Everest Steel 20,11,195 10. Shri Sai sales Corporation 77,272 11. Navpad Steel (India) 1,21,197 12. Dinesh Steel (India) 1,42,440 13. Shree Gururaj Metal 1,52,892 14. Texmo Metal Trading Pvt. Ltd. 15,08,825 Total 1,41,63,825 4. During the course of assessment proceedings and during appellate proceedings, the assessee submitted all the documentary evidences such as inward register, stock register, payment received against such sales, receipt of material purchases, account payee cheque. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition as unproved purchases at 12.5% to Rs. 17,70,478/- to the return income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who 4 | P a g e Shri Kheemaram K Choudhary confirmed the disallowance made by the AO by observing in para 6.10 as under: - “6.10 The AO has estimated this profit at 12.5%. As the purchases could not be established as genuine, the estimation made by the AO of 12.5% of the alleged bogus purchases is confirmed. However, the AO is directed to allow the GP already declared by the assessee on these alleged bogus purchases. These grounds of appeal are partly allowed.”
5. I have considered the issue and gone through the facts and circumstances of the case. I noted the facts from the assessment order and also from CIT(A)’s that the assessee submitted the ledger accounts of the above parties and bank statements extracts evidencing the payments through bank cheque. I noted that facts of this case are similar to the case of Hon'ble High Court of Gujarat in the case of Simit P Seth V CIT (2013) 356 ITR 451(Guj) wherein it had on occasion to deliver its judgment by confirming the decision of the ITAT which has estimated the disallowance at 12.5% of the disputed bogus purchases to meet the end of Justice. Even now before me also revenue could not dislodge the factual aspects noted by CIT(A). I find that the CIT(A) has rightly applied the profit rate at the 5 | P a g e Shri Kheemaram K Choudhary rate of 12.5% and I confirm the same. This issue of Revenue’s appeal is dismissed.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 18.12.2019. (महावीर स िंह /MAHAVIR SINGH) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददिािंक/ Mumbai, Dated: 18.12.2019 स दीप सरकार, व.यनजी सधिव / Sudip Sarkar, Sr.PS