ITO - WD- 32 (1)(3), MUMBAI vs. BIJAL NIRISH MASALIA, MUMBAI

आदेश / O R D E R

Per Bench: -

Bijal Nirish Masalia 32(1)(3)/ITA-115/2016-17 dated 30/08/2018 on following grounds of appeal:- (1) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition to Rs.2,40,490/- @ 12.5% of Rs.19,23,920/- on account of bogus purchases, without appreciating the fact that the assessee has not produced any cogent evidence to substantiate that he had taken actual delivery of goods purchased from the parties and the notices u/s.133(6) issued to the parties, from whom alleged bills were received, were returned undelivered by the postal authorities with the remark ‘Not known’ and the assessee has also failed to produce the purchase parties before the AO ." (2) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the ratio of the decision of Gujarat High Court in the case of N.K. Proteins Ltd. wherein it was confirmed that in the event of bogus purchases, the addition on the whole of such purchases was required to be made and this particular ratio was confirmed by Hon'ble Supreme Court in SLP No. CC No.769 of 2017 dated 16.01.2017, by dismissing the SLP of that assessee." (3) "The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored."

2.1 Facts on record would reveal that the assessee being resident individual stated to be dealing in color paints and job work of painting, was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 11/03/2016 wherein the income of the assessee was determined at Rs.26.34 Lacs, inter-alia, after addition of alleged bogus purchases for Rs.19.23 Lacs as against returned income of Rs.7 Lacs filed by the assessee on 12/10/2010 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.19.23 Lacs from 4 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 Bijal Nirish Masalia issuance of notice u/s 148 on 24/03/2015 followed by statutory notices u/s 143(2) & 142(1), wherein the assessee was directed to substantiate the purchase transactions. 2.3 To confirm the purchases transactions, notice u/s 133(6) was issued to all parties, however, the same were returned back by the postal authorities with remarks ‘not known’. Although the assessee defended the purchases, however, not satisfied, Ld. AO disallowed the stated purchases and added the same to the income of the assessee. The learned first appellate authority, inter-alia, relying upon the decision of Hon’ble Gujarat High Court rendered in CIT V/s Simit P. Sheth [356 ITR 451] & Bholanath Polyfabs Pvt. Ltd. [355 ITR 290] restricted the impugned addition to 12.5% of alleged bogus purchases. Aggrieved, the revenue is in further appeal before us. It appears that the assessee has not appealed any further.