HIRARAM JODHARAM CHAUDHARY,MUMBAI vs. INCOME TAX OFFICER 19(1)(5), MUMBAI

The present appeal has been preferred by the assessee against the order dated 26.12.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

At the outset, we would like to mention that neither the assessee nor his authorised representative appeared before the Bench when the case was called up for hearing despite the service of notice through RPAD which was duly acknowledged by the assessee and therefore we are proceeding to dispose of the appeal on merit after hearing the Ld. D.R.

The only issue raised by the assessee is against the partly confirmation of the addition to the extent of Rs.7,48,161/- being 6.8% of the bogus purchases of Rs.1,10,02,364/- by the CIT(A) as against the 12.50% of the such bogus purchases by the AO.

The facts in brief are that the assessee filed the return of income on 25.09.2009 declaring the total income at Rs.3,47,400/- which was processed under section 143(1) accepting the return of income. Thereafter the case of the assessee was reopened after the AO received information from DGIT (Inv.) Wing, Mumbai that the assessee is beneficiary of hawala transactions operated by several hawala parties which was unearthed by Sales Tax Department, Government of Maharashtra. The AO during the course of assessment proceedings observed that the assessee has made the purchases of Rs.1,10,02,364/- from the various parties as detailed in para 2 of the assessment order which were appearing in the list of hawala dealers as brought out by the Sales Tax Department. The AO accordingly called for the information pertaining to the above said parties such as name

In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition at the same rate of 12.5% as offered by the AO, however, allowing the relief equal to the GP declared by the assessee on these alleged bogus purchases. Being aggrieved by the order or Ld. CIT(A) the assessee is in appeal before us.

After hearing the Ld. D.R. and perusing the material as placed before us, we find that the assessee is indisputably the beneficiary of hawala transactions from various parties as stated in para 2 of the assessment order which were declared by the Sales Tax Department as hawala parties involved in the racket of issuing bogus bills without supplying any actual material. The notice issued under section 133(6) by the AO to verify these parties also returned unserved. The assessee could not produce these parties for verification though the 4 M/s. Hiraram Jodharam Chaudhary assessee has filed the copies of bills, vouchers, detail of payments etc. before the AO. The assessee also proved the corresponding sales against the so called bogus purchases. The Ld. CIT(A) sustained the addition to the extent of Rs.7,48,161/- which works out to 6.8% of the such alleged bogus purchases which in our view is quite reasonable and we do not find any reason to deviate from the order of the Ld. CIT(A) as Ld. CIT(A) has fairly sustained the addition to the tune of 6.8% of the total bogus purchases in order to tax the profit element. Accordingly, we are inclined to the order of Ld. CIT(A).

In the result, appeal of the assessee is dismissed.