INCOME TAX OFFICER 23(3)(4), MUMBAI vs. SHRI SURESH HARJI PATEL, MUMBAI

Revenue by Shri Kumar Padmapani Bora (Sr.DR) Assessee by None Date of Hearing 05/12/2019 Date of Pronouncement 06/12/2019 आदेश / O R D E R PER: R.C. SHARMA, A.M. This is the appeal filed by the revenue against the order of the ld. CIT(A)-34, Mumbai dated 21/08/2018 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).

After making enquiry, the A.O. added 25% of such bogus purchases in assessee’s income.

“6.6 In view of the above, it is an admitted fact that DGIT(Inv.) has given information with regard to certain hawala dealers who are engaged in accommodation entries without actually supplying the goods The appellant is one of the beneficiary and has received such accommodation bills from nine of the hawala operator totaling to Rs16,50,801/.. The A.O. attempted to verify such party by making independent enquiries u/s. 133(6) of the IT Act, 1961 which was returned back unserved. The onus shifted on the appellant particularly in the background of finding of DGIT(INV), Mumbai. The appellant filed certain details such as purchase bills, ledger account, bank statement etc. However, some of the specific details required to establish the genuineness of purchase such as evidence of transportation of goods, entry of goods in the stock register, one to one consumption pattern of alleged purchase items, confirmation from the parties concerned etc could not be submitted before the A.O.. Nor the Principle Officer of these concerns were produced before the AO for examination. However, it is also a fact that the AO has not questioned the total sale component and if there is a sale, there should be ITO Vs Shri Suresh Harji Patel purchase. As evident from catena of judgments on bogus purchases only the benefit derived by using such accommodation entries has to be brought to tax. The advantages from using such bogus bills are in the form of saving VAT, saving of transportation charges and various taxes etc. The A.O. has disallowed 25% of the purchases claimed from such hawala dealers relying on the decision in the case of M/s. Vijay Proteins (1996 58 lTD 428 Ahd.). However, the appellant had already offered the existing GP as income for the year for the purchases made which comes to around 18% Thus, the disallowance made by the A.O. is upheld in principle.. However, the percentage is restricted from 25% to 18%. The ground of appeal filed by the appellant on this issue is therefore, partly allowed.”

5. I have gone through the orders of the authorities below and found that the A.O. has made addition after getting information from the Sales Tax Department regarding the assessee taking accommodation bill in respect of purchases without taking physical delivery of the goods. By the impugned order, the ld. CIT(A) after recording a finding to the effect that the total sales made by the assessee has not been disputed by the A.O. and after considering the various judicial pronouncements, he restricted the addition to the extent of 18%. Nothing was brought on record by the ld DR so as to persuade me to deviate from the findings of the ld. CIT(A) for restricting the addition to the extent of 18%. Accordingly, I do not ITO Vs Shri Suresh Harji Patel find any infirmity in the order of the ld. CIT(A) in restricting the addition to the extent of 18%. I uphold the same.

Order pronounced in the open court on 06th December, 2019.