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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-1, Thane [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).
Briefly stated, the facts are that the assessee, trading in iron and steel filed its return of income for the assessment year (AY) 2010-11 on 15.10.2010 declaring total income of Rs.4,54,841/-. The return was processed u/s 143(1) of the Act. Subsequently, the AO received Shri Bhavin V. Vora Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchase bills amounting to Rs.91,20,342/- from five entry providers. On the basis of the said information, the AO reopened the assessment by issuing notice u/s 148 of the Act. During the course of reassessment proceedings, in order to verify the genuineness of purchases, the AO issued notice u/s 133(6) to the said five parties in the address given by the assessee. However, the notices were returned back by the postal authorities with the remark “un-served”. In response to a query raised by the AO to explain as to why the above bogus purchases should not be treated as unaccounted income, the assessee filed a reply stating that the purchases made from the five parties are genuine and claimed that the payments to the said parties were made through cheques. Further, the assessee submitted copies of invoice bills to substantiate these purchases. However, the AO was not convinced with the said reply of the assessee for the reason that those parties have admitted before the Sale Tax Department, Government of Maharashtra that they had not made any sales or purchase transaction. The AO relying on the decision in CIT v. Simit P. Sheth 356 ITR 451 (Guj), estimated the profit @ 12.5% on disputed purchases of Rs.91,20,342/- and thereby brought to tax Rs.11,40,043/-. In appeal, the Ld. CIT(A) agreed with the reasons given by the AO and confirmed the disallowance of Rs.11,40,043/-.