ACIT -CIRCLE- 3, KALYAN vs. MAHENDRA NANDKISHORE SHAH , MUMBAI

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeals by revenue for Assessment Years [in short referred to as AY] 2010-11and 2011-12 contest common order of Ld. Commissioner of Income-Tax (Appeals)-1, Thane, [in short referred to as CIT(A)], Appeal

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by not appreciating the fact that the assessee could not establish the genuineness of the purchases from the non-existent vendors?

3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law by not appreciating the fact that the onus to justify the claim of expenses is on the assessee and the same has failed to discharge it in relation to the purchases made from the non-existent vendors?

4. Whether on the facts and in the circumstances of the case and in law, the Ld. C1T(A) has erred in law by ignoring, the fact that the assessee could not substantiate its claim of purchases from non-existent vendors by means of relevant supporting documents related to movement and delivery of goods, stock register, etc. to arrive at disallowance at 25% of the purchases from the non-existent vendors?

5. Whether on the facts and in the circumstances of the case and in law, the Ld. C1T(A) has was justified in not appreciating the law correctly that once the purchases are unverifiable / not genuine / bogus, the same should have disallowed in entirety, particularly in view of the ratio of the decision of the Hon'ble Gujarat High Court in Tax Appeal No. 242 of 2003 dated 20/06/2016 in the case of N. K. Proteins Ltd. against which the SLP was dismissed by the Hon'ble Apex Court?.

6. The order of the CIT(A) may be vacated and that of the assessing officer may be restored.”

We have heard and considered the arguments advanced by both the representatives. 2.1 Facts for AY 2010-11 in brief, are that the assessee being resident individual stated to be engaged as civil contractor under proprietorship concern namely M/s Shah Engineers, was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 11/06/2014 wherein the income of the assessee was determined at Rs.35.97 Lacs, after sole addition of alleged bogus -97/Mum/2018 Mahendra Nandkishore Shah Assessment Years 2010-11 & 2011-12 purchases for Rs.16.99 Lacs as against returned income of Rs.18.97 Lacs e-filed by the assessee on 21/09/2010 which was processed u/s.143(1). 2.2 Pursuant to receipt of certain information from investigation wing / Sales tax Department, Govt. of Maharashtra, it transpired that the assessee stood beneficiary of alleged bogus purchases to the tune of Rs.16.99 Lacs from 5 entities, the details of which have already been extracted in the quantum assessment order. Accordingly, as per due process of law, re- assessment proceedings were initiated against the assessee u/s 147 by issuance of notice u/s 148 on 10/05/2013 followed by statutory notices u/s 143(2) & 142(1) wherein the assessee was directed to substantiate the purchase transactions. 2.3 Although, the assessee defended the purchases, however, failed to produce any of the supplier to confirm the transactions. Finally, not satisfied with assessee’s explanations, Ld.AO disallowed the stated purchases. 2.4 The Ld. CIT(A), after considering assessee’s submissions, various judicial pronouncements, material on record and after appreciating the Gross Profit / Net Profit Trends for various years, restricted the additions to 25% of alleged bogus purchases. Aggrieved, the revenue is in further appeal before us. It appears that the assessee has not preferred any further appeal.