SMT.SAROJDEVI S JAIN,MUMBAI vs. INCOME TAX OFFICER WARD 9(3)(2), MUMBAI

This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax(Appeals)-5, Mumbai, dated 27-06-2018(hereinafter referred to as CIT(A).

Brief facts of the case are that, assessee, an individual, engaged in the business of trading of ferrous and non-ferrous metals has filed her return of income electronically on 09-09- 2010, declaring the total income at Rs.6,11,780/-. In this case, the Office of DGIT(Inv.), Mumbai, had communicated the information received from Sales Tax Department of : 2 : Maharashtra to the Assessing Officer that assessee has obtained hawala purchase bills from hawala parties and as a result the assessee is involved in taking entries from the following parties:

Aggrieved, assessee preferred an appeal before the CIT(A), who dismissed the appeal of assessee, by sustaining the addition made by the AO.

Aggrieved the appellate order , the assessee preferred the present appeal before us challenging the validity of the issuance of notice u/s.148 of the Act and consequent re- assessment order and also agitated the part confirmation of addition to the tune of Rs.8,61,073/- .

Ld.DR relied heavily on the orders of CIT(A) and AO, by submitting that the appeal of assessee may be dismissed as : 3 : the assessee was found to be engaged in availing bogus purchases from Hawala Parties, without physical delivery of materials thereby saving non-payment of VAT and various other levies. Therefore, ld DR prayed before the Bench that the addition confirmed by the Ld.CIT(A) may be sustained.

After hearing both the parties and perusing the material on record, we observe that in this case, undisputedly, assessee is beneficiary of bogus Hawala Purchase entries. The assessee challenges the part sustenance of addition on account of purchases by the AO @12.5% which is stated to be excessive and unreasonable in view of the profits of the assessee. The assessee is a dealer in iron and steel items in which the GP ranges from 2% to 4%. We are, therefore, of the view that it would be reasonable and fair if the addition is directed @ 4%, on the said bogus purchases of the assessee. Accordingly, we set aside the order of CIT(A) and direct the AO to make addition @ 4% .

Since we have decided the issue on merit , the grounds raised on legal issues not to be adjudicated.

In the result, the appeal of assessee is partly allowed.