ACIT- 17(1), MUMBAI vs. BAJRANGLAL BHIKARAM MITTAL, MUMBAI

Revenue by Shri Kumar Padmapani Bora (DR) Assessee by Shri Y.P. Trivedi & Ms. Usha Dalal (ARs) Date of Hearing 12/12/2019 Date of Pronouncement 12/12/2019 आदेश / O R D E R PER: R.C. SHARMA, A.M. The appeal filed by the revenue and cross objection filed by the assessee are directed against the order of the ld. CIT(A)-55, Mumbai dated 21/09/2018 for the A.Y. 2011-12 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).

CO 252/Mum/2019 ACIT Vs. Bajranglal B Mittal 2. In this appeal, the revenue is aggrieved by the action of the ld.

CIT(A) for restricting the addition on account of bogus purchases to the extent of 8% against the addition made by the A.O. at 12.5% of bogus purchases. The assessee is aggrieved for upholding the part of the addition so upheld by the ld. CIT(A).

“7. After hearing both the parties and perusing the material on record, we observe that undisputedly the assessee was beneficiary of hawala purchase transactions to the tune of Rs.2,75,72,165/-. During the course of assessment proceedings the assessee has filed necessary evidences in the form of purchase bills of the supplier, sales bills of the customer to whom the goods were sold, stock tally, receipt/proof of transportation of material, receipt of weighing bridge etc. alongwith bank statements evidencing the payment to the supplier and receipt of payments from the customer against the sales. It is also undisputed that assessee is a dealer in iron and steel wherein the margin of profit is very meager and application of 12.5% rate to assess the bogus purchases appears to be unrealistic. Therefore the order of Ld. CIT(A) whereby the order of AO has CO 252/Mum/2019 ACIT Vs. Bajranglal B Mittal been upheld cannot be sustained. It is undisputed that the notices under section 133(6) were either not served or where served were not responded by the suppliers. In such type of scenario the only possible presumption under the present facts and circumstances is that the assessee might have purchased the goods from the grey market thereby making savings in the form of non payment of VAT and other incidental levies. The Ld. A.R. also filed a chart showing a comparative GP over the years and we notice therefrom that GP during the year is 3.11% which is showing an increasing/upward trend over the earlier years/preceding previous years. The co- ordinate benches of the Tribunal in the similar circumstances have taken a view that the GP addition ranging from 4% to 7% would be reasonable depending upon the facts of the case. Under the present facts, we are of the view that it would be reasonable if the addition is made @ 4% of the bogus purchases to assessee the various savings made by the assessee. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to assess the purchases @ 4% of the bogus purchases instead of 12.5% by CIT(A).”

CO 252/Mum/2019 ACIT Vs. Bajranglal B Mittal 5. In the result, appeal of the revenue is dismissed whereas C.O. of the assessee is allowed in part.

Order pronounced in the open court on 12th December, 2019.