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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Shamim Yahya & Shri Ravish Sood & ITA No.3604 & 3605/Mum/2018
Per Shamim Yahya (Accountant Member) These appeals by the assessee are directed against order
of the Ld. CIT(A)-42, Mumbai, dated 02/02/2018 and pertains to Assessment Years 2009-10 and 2010-11, on the ground that the Ld. CIT has erred in sustaining 12.5%
disallowance on account of bogus purchases of Rs.14,09,620
for AY 2009-10 and Rs.7,58,190/- for AY 2010-11. ITA No.3604 & 3605/Mum/2018, 2
The Assessing Officer in this case has made 12.5%
addition on account of bogus purchase. Upon assesses
appeal, the Ld. CIT(A) confirmed the same.
The brief findings of the AO on facts are as under:-
The assessment was reopened upon information from DGIT regarding assessee engaging in bogus purchases. The AO observed that on going through the details filed during the course of assessment proceedings and no verification of the Tin of this parties, it was also found/noticed that the above mentioned purchase parties were appearing in the lists of the suspicious dealers who indulge in issuing bogus bills without any goods or material but for a commission, as per the official website of the Sales Tax Department, Government of Maharashtra. www.mahavat.gov.in. Considering this fact and the parties reflecting as suspicious dealers published by the Sales Tax Department, the assessee was given an opportunity to explain why purchases from the above parties should not be added to the total income as unexplained expenditure u/s 69C of the I.T. Act, 1961. The assessee did not submit anything specific in this regard. Assessee has submitted bank statements, party wise purchase invoices, ledgers & delivery challans. However, assessee has not furnished any supporting evidences like specific
ITA No.3604 & 3605/Mum/2018, 3
transaction details, identity proof, L/R or Octroi receipts etc.
Against above order assessee is in appeal before the ITA No.3604 & 3605/Mum/2018, 4
Tax Appeal no 691 of 2017. In this case the honourable High
Court has confirmed the deletion of disallowance on account
of alleged bogus purchase as necessary documentary
evidence for the purchase were on record. The special leave
petition against this order has been dismissed by the honourable Supreme Court in its decision dated 04/05/2018
SLP CIVIL Diary no 12670/2018. 6. In the present case the facts of the case indicate that assessee has made purchase from the grey market. Making
purchases through the grey market gives the assessee
savings on account of non-payment of tax and others at the expense of the exchequer. In such situation in our considered
opinion on the facts and circumstances of the case the 12.5%
disallowance out of the bogus purchases meets the end of justice. However in this regard learned counsel of the assessee has prayed that when only the profits earned by the assessee on these bogus purchase transaction is to be taxed
the gross profit already shown by the assessee and offered to tax should be reduced from the standard 12.5% being
directed to be disallowed on account of bogus purchase. Up
on careful consideration, we find considerable cogency in the ITA No.3604 & 3605/Mum/2018, 5
submission of the learned counsel of the assessee, as otherwise it will be double jeopardy to the assessee.
Accordingly, we modify the order of learned CIT-A and direct
that the disallowance in this case be restricted to 12.5% of the bogus purchases as reduced by the gross profit rate
already declared by the assessee on these transactions. Ld
counsel of the assessee fairly accepted this proposition.
Another proposition canvassed by the learned counsel of the assessee is that for assessment year 2009-10, there is no purchase from Universal trading, which figure has been taken as Rs.15.99 lakhs. This, the learned counsel pleaded
is arising from the remand report obtained by the learned
Commissioner of income tax from the assessing office. Hence
learned counsel pleaded that no disallowance should be made
on account of these purchases listed as bogus purchases.
Up on careful consideration we deem it appropriate to remit this issue also to the files of the Assessing Officer. The assessing officer shall make the factual verification of the assessee submission and thereafter decide as per law.
ITA No.3604 & 3605/Mum/2018, 6
One ground raised by the assessee relates to interest
under section 234B of the Act. On this issue learned counsel
of the assessee has placed reliance upon following case laws:
For the proposition that interest u/s 234B is not calculated in accordance with the extant provision of section 234B(1) and 234B(3) of the Act.
Up on careful consideration we are of the opinion that interest under section 234B is consequential in nature as held by the learned CIT(A). The submission of the assessee’s
counsel and the case laws referred may be considered by the assessing officer in making the levy of interest in this regard.
In the result, these appeals filed by the assessee are partly allowed.
Order pronounced in the Open Court on 23/04/2019 (Ravish Sood) (Shamim Yahya) "या"यक सद"य / JUDICIAL MEMBER लेखा सद"य / ACCOUNTANT MEMBER मुंबई Mumbai; "दनांक Dated : 23/04/2019 f{x~{tÜ? P.S/."न.स.
ITA No.3604 & 3605/Mum/2018, 7
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant (Respective assessee)
""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT, Mumbai. 4. आयकर आयु"त / CIT(A)- , Mumbai,
"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त ////
उप/सहायक पंजीकार (Dy./Asstt.