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Income Tax Appellate Tribunal, C Bench, Mumbai
Before: Shri Sandeep Gosain & Shri G. Manjunatha
This appeal filed by the assessee is directed against the order of the CIT(A)-17, Mumbai dated 17.03.2017 and it relates to A.Y. 2010-11.
At the very outset of hearing the learned A.R. submitted that identical issue has already been decided in favour of the assessee by the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2011-12 wherein the additions were restricted to 12.5% of the alleged bogus purchase. The operative portion of the Coordinate Bench’s order is extracted for ready reference: -
“5. We have carefully considered the rival contentions and perused relevant material on record. We are of the considered opinion that there could be no sale without purchase of material since the assessee was engaged in manufacturing activities. The material on record reveals that the assessee has purchased integrated circuits Chips [IC] from the suppliers. The weight of each chip was very low in the range of 1 to 1.3 grams per chips and therefore, the same did not require any heavy transportation. The said raw material was M/s. Inventum Engineering Co. Pvt. Ltd. essential to manufacture heaters, which was the line of assessee’s business. The assessee has also furnished quantitative details of consumption of these chips. Further, the sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchases documents. At the same time, the assessee could not conclusively substantiate the purchases made by him and failed to produce any of the party to confirm the transactions. Notices issued u/s 133(6) elicited no satisfactory responses. All these factors cast a serious doubt on assessee’s claim. 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. Hence, the addition on gross basis against the same was not justified. We estimate the same @12.5% of alleged bogus purchases of Rs.1,91,007/. Consequently, the addition to the extent of Rs.23,876/- stand confirmed and balance addition stand deleted.”
Respectfully following the above decision of the Coordinate Bench in assessee's own case for A.Y. 2011-12 we allow the appeal of the assessee in terms of the above decision.
In the result, the appeal filed by the assessee is allowed.