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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: HON’BLE SHRI AMARJIT SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid cross appeals for Assessment Year [in short referred to as ‘AY’] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-45, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-45/ITO-33(2)(2)/ITA-27/2015-16 dated 27/02/2018 wherein the sole issue involved is addition on account of alleged bogus purchases. 2.1 Facts leading to the same are that assessee being resident individual engaged in dealing in leather items under proprietorship concern namely M/s Royal Belts was assessed u/s. 143(3) r.w.s. 147 for impugned AY on 23/03/2015 wherein the income of the assessee was assessed at Rs.57.88 Lacs after sole addition on account of alleged bogus purchases for Rs.55.68 Lacs. The original return of income filed by the assessee on 25/01/2010 at Rs.2.20 Lacs was processed u/s.143(1). 2.2 The re-assessment proceedings got triggered upon receipt of certain information from DGIT (Inv.)/ Sales tax Department, Maharashtra that the assessee stood beneficiary of bogus purchases bills aggregating to Rs.55.68 Lacs from 11 parties, the details of which has already been extracted at para-2 of the quantum assessment order. Accordingly, notice u/s 148 dated 14/03/2014 was issued to the assessee which was followed by statutory notices u/s. 143(2) and 142(1) wherein the assessee was directed to establish the genuineness of the purchases. 2.3 Notices issued u/s. 133(6) to all the suppliers to confirm the transactions were returned by postal authorities with the remarks “not Ketan Gokuldas Badiani Assessment Year :2009-10 known / left” which was confronted to the assessee. Although the assessee, in support of the transactions, submitted invoices, bank statements, stock register etc., however, failed to substantiate the delivery of the material. The factual matrix led the ld. AO treat the purchases as non-genuine and accordingly, the same were added to the income of the assessee.
Aggrieved the assessee agitated the same before Ld. CIT(A) vide impugned order dated 27/02/2018 wherein the Ld. first appellate authority, after due consideration of factual matrix as well as assessee’s submission, restricted the impugned additions to 5% which has given rise to the cross-appeals before us.
We have heard the rival submissions and perused relevant material on record. We are of the considered opinion that there could be no sale without actual purchase of material keeping in view the assessee’s nature of business. The assessee was in possession of primary purchase documents. The sales turnover has not been disputed by the revenue. At the same time, the assessee failed to conclusively substantiate the delivery of material. Notices issued u/s 133(6) did not elicit satisfactory response. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which first appellate authority has rightly done. Therefore, finding the same to be a reasonable one, we dismiss the cross appeals. Ketan Gokuldas Badiani Assessment Year :2009-10 5. The cross appeals stand dismissed. Order pronounced in the open court on 2nd April, 2019. Sd/- Sd/- (Amarjit Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 02/04/2019 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.