SMT VIMAL MAHADEV GIRI,MUMBAI vs. INCOME TAX OFFICER WARD 19(3)(5), MUMBAI

Issue raised is that learned CIT(A) erred in confirming the addition of purchases amounting to Rs. 8,48,276/- treating them as ‘bogus expense’.

In this case addition was made by the Assessing Officer on the ground that the assessee has taken bogus purchases from three parties totaling to Rs. 2,48,276/-. Notices were issued u/s. 133(6) to these parties but the same were returned. The assessee explained that the assessee has received sales from the supplies to the Government Department. However, authorities below could not accept the assessee’s submission and non-compliance of notices u/s. 133(6) was cited as a reason for making 100% disallowance. Against the above order, assessee is in appeal before the ITAT.

I have heard both the counsel and perused the records. Learned Counsel of the assessee prayed that sales have not been doubted in this case and disallowance has solely made on the ground of failure to produce the suppliers. Hence, learned counsel prayed that disallowance in this regard should be limited to 12.5% of the said purchase as done by the ITAT in several cases in this regard.

Learned Departmental Representative did not have any objection to this proposition.

Upon careful consideration, I direct that the disallowance in this case should be limited to 12.5% of the bogus purchases.

In the result, appeal by the assessee is partly allowed. Order has been pronounced in the Court on 10.6.2019.