PRAVIN B. KANUNGO,MUMBAI vs. ITO 19(2)(5), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A)- 29, Mumbai dated 19/01/2017 for A.Y.2011-12 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act.

Nobody appeared on behalf of the assessee inspite of giving opportunity, nor any adjournment petition was filed, therefore, Bench decided to dispose off the appeal after considering the material placed on record and contentions of learned DR. Shri Pravin B Kanungo 3. We have gone through the orders of the authorities below and found that assessment was reopened on the basis of information received from the DGIT(Inv.), Mumbai who in turn had received information from the sales-tax department about some bogus hawala entry providers as per which the assessee was involved in taking entries of non genuine purchases from the seven parties amounting to Rs.4,94,81,389/-.

The AO observed in the assessment order that the assessee has shown purchases to the tune of Rs.4,94,81,389/- from seven parties. In order to verify the genuineness of these purchases, the AO required the assessee to furnish various details. According to him, barring the ledger account and cheque payment details, no other documents like delivery challans, lorry receipts, transportation details etc were produced by the assessee during the assessment proceedings. He placed reliance on the admission made by the alleged parties before the sales tax department that they have not made any sale or purchase transaction. However, as the assessee had declared corresponding sales, the AO held that the assessee was actually in possession of the goods. He presumed that the assessee would be purchasing goods from other suppliers without bills and must have benefited from the margins resulting from the grey market purchases. Therefore, after rejecting the books of account u/s.145(3), he estimated the additional GP @12.5% of the alleged bogus purchases. While doing so, he placed his reliance on the judgement of CIT vs. Simit P. Sheth 356 ITR 451 and M/s. Bholenath Poly Fab P.Ltd. 355 ITR 290.