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PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee under Section 253 of Income-tax Act is directed against the order of ld. CIT(A)-53, Mumbai dated 28.12.2017 for Assessment Year 2009-10. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the action of Assessing Officer in reopening the assessment on the basis of information received from sales tax department under section 147/148 of Income Tax Act, 1961 for the Asst. Year 2009-10.
2. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (A) erred in directing the Assessing Officer to disallow bogus purchase at the rate 12.5% amounting to Rs. 3,61,702/-.
2. Brief facts of the case are that the assessee is engaged in the business of trading in Traders & Wholesalers in stainless steel under the name and style of proprietorship concern M/s Raviratna Stainless. The assessee filed return Mum 2018-Shri Rajendra Bhanwarlal Doshi of income for Assessment Year 2009-10 on 26.09.2009 declaring income of Rs. 2,02,500/-. The return of income was processed and accepted under section 143(1) of the Act. The assessment was re-opened by issuing notice under section 148 on 8.03.2014. The assessment was re-opened on the basis of information received from Sale Tax Department, Government of Maharashtra that some of the dealers were indulging in providing accommodation entry by issuing bogus bills without supply of any goods or material. The assessee was also one of the beneficiaries who has availed accommodation entry from three parties aggregating to Rs. 28,93,617/-.
Notice under section 148 dated 08.03.2014 was served upon the assessee.
The assessee was supplied with the reasons for re-opening. The Assessing Officer proceeded for re-assessment. During the re-assessment proceeding, the assessee was asked to furnish the supporting documentary evidences to substantiate the purchases from all three parties. The assessee furnished the address of all three parties. The Assessing Officer issued notice under section 133(6) to all the parties at the addresses provided by assessee. The notices sent by Assessing Officer were returned back with the remark “not known” or ‘left’. The assessee was asked to prove the genuineness of the purchases. The assessee furnished the copy of bank statement and the details of purchases. The contention of the assessee and the evidence furnished by Assessing Officer was not accepted by Assessing Officer holding that the onus to prove the genuineness of purchases were upon the Mum 2018-Shri Rajendra Bhanwarlal Doshi assessee. The assessee filed merely evidence that purchases were made through account payee cheque, which is not conclusive proof when genuineness of transaction is in doubt. The Assessing Officer disallowed 25% of the alleged non-genuineness purchases being profit earned from such purchases. On appeal before the ld. CIT(A), the disallowance was restricted to 12.5% on the basis of decision of Hon’ble Gujarat High Court in Smith P Sheth 219 Taxman 85 (Guj). Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.
None appeared on behalf of assessee despite the service of notice of hearing through RPAD for the date of hearing fixed for today. Therefore, we left no option except to hear the submission of ld. DR for the Revenue and to decide the case on the basis of material available on record. Ground No.1 of the appeal relates to validity of re-opening. The ld. DR for the Revenue supported the order of authorities below and submits that the assessemnt6 was re-opened on the basis of credible information from Sales Tax Department. The information was tangible material and was sufficient to re- open the assessment.
We have considered the submission of ld. DR for the revenue and perused the orders of authorities below. We have seen that the assessment was re- opened on the basis of specific information received by Assessing Officer about the beneficiaries of accommodation entries availed by assessee from hawala dealers. In our view, the credible information received by the ITA No. 835 Mum 2018-Shri Rajendra Bhanwarlal Doshi Assessing Officer from Sales Tax Department were sufficient and credible and tangible material for re-opening the assessment. Thus, we do not find merit in the ground no.1 of the appeal, which is dismissed.
Ground No.2 relates to sustaining the partial disallowance on account of bogus purchases. The ld. DR for the Revenue supported the order of lower authorities. The ld. DR for the Revenue further submits that Investigation Wing of Income-tax Department and the Sale Tax Department, Government of Maharashtra made a full-fledged enquiry, the parties from whom the assessee has shown the purchases are bogus hawala dealers. The hawala dealers were engaged in issuing the bogus bills without delivery of any material or goods. The assessee is one of the beneficiaries who have availed accommodation bill only to inflate the expenses and to bring out the profitability in order to avoid the tax. The ld. DR for the Revenue further submits that the lower authority has already given sufficient relief to the assessee. The assessee is not entitled for any further relief.
We have considered the submission of ld. DR for the Revenue and perused the material available on record. We have noted that the Assessing Officer has identified the disputed/hawala purchases from three parties of Rs. 28,93,617/-. However, while passing the assessment order, the Assessing Officer added only 25% of said purchases as estimated profit earned on such purchases. The assessing officer disallowed the purchases to the extent of profit embedded in the alleged bogus purchases The ld. CIT(A) restricted Mum 2018-Shri Rajendra Bhanwarlal Doshi the disallowance to 12.5% by following the decision of Hon’ble Gujarat High Court in Simit P Sheth(supra). We have noted that the assessee is engaged in the business of ferrous & non-ferrous metal. Therefore, considering the nature of business activities of the assessee, we do not find any illegality or infirmity in the order passed by ld CIT(A) in sustaining the disallowance @12.5% of the alleged bogus purchases. No documentary evidence or any submission explaining the fact is filed by assessee.
Therefore, we are not inclined to interfere with the finding of lower authorities. Hence, ground no.2 of the appeal raised by assessee is dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 04/10/2018.