INCOME TAX OFFICER 19(3)(4), MUMBAI vs. M/S.SUPER TECH INDUSTRIES, MUMBAI

Assessee by : None Revenue by : Chaudhary Arun Kumar Singh - Ld.DR सुनवाई की तारीख/ : 19/08/2019 Date of Hearing घोषणा की तारीख / : 19/08/2019 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2011-12 contest the order of Ld. Commissioner of Income-Tax 2 M/s. Super Tech Industries Assessment Year :2011-12 (Appeals)-29, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)- 29/IT-482/19(3)(4)/16-17 dated 16/03/2018 on following Ground of appeal :- 1. "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) erred in directing the AO to restrict the estimation of the profit @12.5% instead of 100% of the total non-genuine purchases without considering that the assessee did not discharge his initial burden to prove that the purchases made from the bogus parties were genuine and did not produce any delivery challans, transport receipts, goods inward register maintained at godown etc.." 2. "Whether on the facts and circumstances of the case and in Law, the Ld.. CIT(A) erred in not considering the order of Hon'ble Supreme Court in the case of N K Protein Ltd, Dt. 16.01.2017, which is on the similar issue of bogus purchases and when the apex court order was already the law of the land when the Ld. CIT(A) passed the order on 16.03.2018." 3. "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) is justified in not appreciating the fact that during the investigation made by sales tax department of Maharashtra Government, directors/Prop./Partners of such parties have accepted on oath that they are providing only accommodation entries and not doing any real business, the treatment of such purchases as being genuine does not hold ground?."

4. The appellant prays that the order of the Learned CIT(A) on the above ground be set aside and that of the AO be restored.”

2. None has appeared for assessee and no valid adjournment application is on record. Left with no option, we proceed to dispose-off the appeal after hearing learned departmental representative and on the basis of material on record. 3.1 Facts on record would reveal that the assessee being resident firm stated to be engaged in trading of metals was assessed for impugned AY u/s 144 read with Section 147 on 19/02/2016 wherein the income of the assessee was determined at Rs.105.34 Lacs after certain additions of Rs.105.05 Lacs on account of alleged bogus purchases as against returned income of Rs.0.28 Lacs filed by the assessee on 27/09/2011. 3 M/s. Super Tech Industries Assessment Year :2011-12 3.2 The reassessment proceedings got triggered pursuant to receipt of certain information from DGIT (Investigation), Mumbai / Sales Tax Department, Maharashtra that the assessee obtained bogus purchase bills aggregating to Rs.105.05 Lacs from 4 suspicious entities, the details of which have already been extracted in para-2 of quantum assessment order. Accordingly, the case was reopened as per due process of law by issuance of notice u/s 148 on 06/02/2015 wherein the assessee was directed to substantiate the purchase transactions. However, in the absence of any response from assessee, Ld. AO proceeded to complete the assessment on best judgment basis in terms of Section 144 of the Income Tax Act, 1961. Ultimately, finding the stated purchases unverifiable, the books of accounts were rejected u/s 145(3) and the assessee was saddled with addition of Rs.105.05 Lacs, being suspicious purchases.

4. Aggrieved, the assessee preferred appeal against the same before learned first appellate authority with partial success vide impugned order dated 16/03/2018 wherein the assessee, inter-alia, pleaded for restricting the addition to some reasonable estimates. After considering the same, learned first appellate authority, inter-alia, relying upon the decision of Hon’ble Gujarat High Court in CIT V/s Simit P. Sheth [356 ITR 451] restricted the additions to 12.5% of alleged bogus purchases. While doing so, it was noted that corresponding sales could not be achieved without making the purchases and Ld. AO had not doubted the sales turnover. Further, the payment to suppliers was through banking channels and duly reflected in assessee’s bank account. It was also observed that Ld. AO