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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: HON’BLE SHRI MAHAVIR SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Bench: -
Aforesaid appeal by revenue for Assessment Year [AY] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-2, Thane,
ITA 5060/Mum/2018 A.Y.2009-10 Yogesh Chaterlal Jain [in short referred to as ‘CIT(A)’], dated 28/06/2018 on following grounds of appeal: -
1. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) ws justified in not appreciating the law correctly that once the purchases are unverifiable/not genuine/ bogus, the same should have been disallowed in entirety?
2. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored.
None has appeared for assessee and therefore, the matter is proceeded with ex-parte qua the assessee. 2.1 Facts on record would reveal that the assessee being resident individual stated to be engaged as trader of hardware and electrical goods under proprietorship concern namely M/s Jain Electric & Hardware, was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 07/03/2014 wherein the income of the assessee was determined at Rs.16.35 Lacs after sole addition of alleged bogus purchases for Rs.12.21 Lacs as against returned income of Rs.4.14 Lacs filed by the assessee on 11/09/2009 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.12.21 Lacs from 8 entities, the details of which have already been extracted at para-2 of 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 22/03/2013 followed by statutory notices u/s ITA 5060/Mum/2018 A.Y.2009-10 Yogesh Chaterlal Jain 143(2) & 142(1), wherein the assessee was directed to substantiate the purchases transactions. 2.3 Although, the assessee defended the purchases, however, notices issued u/s 133(6) to all the entities remained un-responded to and the assessee also failed to produce any of the suppliers to confirm the transactions. The assessee also failed to prove the delivery of material which led the learned AO to treat the purchases as non-genuine and accordingly, the same was disallowed & added to the income of the assessee. The learned first appellate authority, inter-alia, after considering trend of Gross Profit / Net Profit rates reflected by assessee in various years & relying upon the decision of Hon’ble Apex Court rendered in H M Esufali H M Abdulla 90 ITR 271 estimated the additions at 25% of alleged bogus purchases. Aggrieved, the revenue is in further appeal before us. It appears that the assessee is not in further appeal.
We have considered the arguments advanced by Ld. DR.
We are of the considered opinion there could be no sale without actual purchase of material keeping in view the assessee’s nature of business. It transpires that the assessee was in possession of primary purchase documents and the payments to suppliers were through banking channels. The sales turnover reflected by the assessee has not been disturbed / disputed by Ld. AO. However, at the same time, the assessee miserably failed to prove the delivery of material. Notices issued u/s 133(6) remained un-responded to. Under such circumstances, the additions which could be sustained, was to account for profit element embedded in these
ITA 5060/Mum/2018 A.Y.2009-10 Yogesh Chaterlal Jain purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done. Therefore, concurring with the approach of learned first appellate authority in restricting the additions to 25%, we dismiss the appeal. 5. In result, the appeal stands dismissed.
Order pronounced in the open court on 16th September, 2019.
Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांकDated : 16/09/2019 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.