ITO 24 (3)(5), MUMBAI vs. RAVI RAMNIKLAL KOTHARI, MUMBAI

The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) – 36 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 29.06.18 for Assessment Year (in short AY) 2011-12. Shri Ravi Ramniklal Kothari,

At the very outset, it was noticed that none has appeared on behalf of assessee in spite of calls. Therefore, we have no other option except to proceed the assessee ex-parte. On the other hand Ld. DR present in the court is ready with arguments. Hence, we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.

The brief facts of the case are that assessee is the proprietor of M/s Ramniklal & sons and M/s Ravi Kothari & Co. and filed its return of income on 30.09.2011 declaring total income of Rs. 12,75,190/-. The return of income was processed u/s. 143(1) of the IT Act, 1961. Thereafter, the case was reopened by issuing notice u/s. 148. In response, assessee filed letter dated 21.03.16 and submitted that original return filed on 13.09.11 be treated as return filed in response to notice u/s 148 of the Act. Thereafter, notices u/s. 143(2) and 142(1) of the I.T. Act 1961 alongwith questionnaire were issued and served upon the assessee.

The case was reopened on the information received from DGIT(Inv), Mumbai, wherein it was stated that information was received from Sales Tax Department, Govt. of Maharashtra that assessee is involved in bogus purchases /hawala transactions. As per the details furnished by them and from the data available on record, AO found that assessee has acquired some bogus purchase bills during this assessment year without delivery of goods amounting to Rs. 47,57,859/- from 3 parties, which are mentioned below:- Sr. No. Name FY Amount(Rs.) 1 Jagdish Enterprises 2010-11 1,57,815/- 2 Prakash Steel India 2010-11 6,32,093/-

Further, assessee was asked to submit various information relating to this purchase like confirmation letter from the parties, details of goods delivery, ledger copy of the parties, bank statement, etc. In response, assessee has filed the ledger copy of the parties, purchase bills and bank statements and assessee has confirmed that he has purchased from these parties and duly made payments. After considering the submission of the assessee, AO made the addition by observing that assessee has not received any material nor possess any delivery note, accordingly, he disallowed 25% of the bogus purchases.

Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A), after considering the submission of the assessee, had reduced the disallowance of 25% to 12.5% of the bogus purchases.

Aggrieved with the above order, revenue has preferred the appeal before us.

Considering the submissions and material placed on record, we notice that Ld. CIT(A) has rightly restricted the disallowance to the extent of 12.5% and we are inclined to accept the findings of Ld. CIT(A) and further we come across the Shri Ravi Ramniklal Kothari, decision of the Coordinate Bench of this Tribunal in the case of Sunil B. Vorani (HUF) vrs ITO (ITA No. 1337/Mum/2017), wherein it was held as under:-

Therefore, respectfully following the aforesaid decision, we are inclined to accept the findings of Ld. CIT(A). Accordingly, grounds raised by the revenue are dismissed.