ITO 27 (1)(4), MUMBAI vs. DINESH RAMJI BHANUSHALI, NAVI MUMBAI

आदेश / O R D E R

Per Bench: -

Dinesh Ramji Bhanushali Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-24/IT- 521/144/ITO-27(1)(4)/2017-18 dated 10/05/2018 qua deletion of certain additions on account of alleged bogus purchases. The grounds raised by revenue read as under: -

1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.12,75,054/- made by the Assessing Officer on account of bogus purchases, without appreciating the fact that the assessee had failed to produce bills, vouchers and other documentary evidences in support of his claim and without considering the latest Apex Court decision in the case of N K Protein Ltd. wherein it is held that once it is proved that the purchases are bogus then addition should be made on entire purchases and not on profit element embedded in such purchases.

2. On the facts and circumstances of the case, the Ld. CIT(A) erred in estimating the profit from Hawala Purchases by disallowing only Rs.3,86,430/- being 12.5% of the bogus purchases as even the basic onus of producing transport bills, delivery challans etc. were not fulfilled by the assessee.

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 in electrical / hardware goods under proprietorship concern namely M/s Vidhut Aid was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 25/03/2015 wherein the income of the assessee was determined at Rs.18.07 Lacs after sole addition of alleged bogus purchases for Rs.16.61 Lacs as against returned income of Rs.1.45 Lacs filed by the assessee on 29/09/2009 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

Dinesh Ramji Bhanushali stood beneficiary of alleged bogus purchases to the tune of Rs.30.91 Lacs from 11 parties, the details of which has already been extracted at para-6.1 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 29/03/2014. In response, the assessee offered original return as filed on 29/09/2009. The statutory notices u/s 142(1) and 143(2) were issued in due course of assessment proceedings wherein the assessee was directed to substantiate the purchase transactions. 2.3 To confirm the purchases transactions, notices u/s 133(6) were issued to all parties, however the same were returned back unserved by postal authorities with the remarks “left”. The field inquiries revealed did not throw any light on the whereabouts of the suppliers. These facts were confronted to the assessee. The assessee submitted that the purchases were genuine and corresponding sales were made to industrial units and the payment to suppliers were through banking channels. However, the assessee failed to produce any of the suppliers. Resultantly, Ld. AO worked out peak of the purchases at Rs.16.61 Lacs and added the same to the income of the assessee. The learned first appellate authority, relying upon the decision of Hon’ble Gujarat High Court rendered in CIT V/s Simit P. Sheth [356 ITR 451] restricted the addition to 12.5% of disputed purchases which came to Rs.3.86 Lacs and deleted the balance additions. Aggrieved, the revenue is in further appeal before us. It appears that the assessee is not in further Dinesh Ramji Bhanushali appeal. We have heard and considered the arguments raised by Ld.DR before us.