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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-18, Mumbai [in short CIT(A)], in appeal No. CIT(A)-18/IT-210/ACIT-11(3)(1)/15-16 dated 20-12-2016. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle-11(3)(1), Mumbai (in short ‘ACIT’/ AO) for the A.Y. 2010-11 vide order dated 30.03.2015 under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of Revenue is against the order of CIT(A) restricting the disallowance at the rate of 12.5% of the bogus purchases. For this Revenue has raised the following four grounds: - “1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in restricting the disallowance of the alleged purchases of Rs.1,11,22,370/- made from M/s. Ansa Sales Agency (Rs.51,41,659/-) and M/s. Bhavi Sales Agency Pvt. Ltd. (59,80,611/-) to 12.5% i.e. Rs.13,90,296/- thereby granting a relief of Rs. 97,32,074/- by ignoring the fact that neither the party nor the confirmation letter was produced during the course of assessment proceedings which would prove that the purchases alleged to have been made were genuine."
2. Whether on the facts and In the circumstances of the case and in law, the Ld.CIT(A) erred in restricting the disallowance of the purchases made from (i) M/s. Ansa Sales Agency and (d) M/s. Bhavi Sales Agency Pvt. Ltd who were proven accommodation entry providers as per the findings made by the Sales Tax authorities in consequence to the investigation carried out.
3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not following the ratio laid down to check whether the purchase party is genuine or not by the Hon'ble ITAT D Bench in its decision in [DCIT Vs Rajeev G. Kalathil] wherein the Hon'ble ITAT opined that the AO could have called for the details of the bank accounts of the suppliers to rind out as whether there was any immediate cash withdrawal from their accounts, which was done In this case and the assessee failed on this count?
Whether on the facts and in the circumstances of the case and In law, the Ld.CIT(A) erred in ignoring the decision of the Hon'ble Punjab & Haryana High Court in the case of JR. Solvent Industries (Pvt.) Ltd. (2012) (22 taxmann.com 115) wherein it was held that where purchases were made from a non-existing seller, same would be held to be bogus even if complete quantitative details of purchase were available in the assessee's books of account.”
Briefly stated facts are that the assessee engaged in the business of trading, manufacturing, export and servicing in cutting tools. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department, Mumbai who are providing bogus bills of purchase amounting to Rs. 1,11,22,370/- as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: - Sr. Hawala Biller Name Amount No.
M/s Ansa Sales Agency Rs. 51,41,659 2. M/s Bhavi Sales Agency Pvt. Ltd Rs. 59,80,611 Total Rs. 1,11,22,370
The AO issued noticed under section 133(6) to the parties which returned back with the remark as “left” and assessee failed to produce these parties. During the course of assessment proceedings and during appellate proceedings, the assessee submitted all the documentary evidences such as inward register, stock register, payment received against such sales, receipt of material purchases, account payee cheque. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of unproved purchase at Rs. 1,11,22,370/- to the return income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who restricted the disallowance at 12.5% of the bogus purchases by observing as under: - “As narrated earlier, the ld. A.O. in this case has held that the parties from which the purchases were made by the appellant were found to be bogus and that is the reason for which it was not produced during the assessment proceedings. Not having doubted the consumption/ sales, the motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress true profits. Considering the facts of the case as well as the various case laws cited (supra), I estimate the suppressed profit to the extent of 12.5% of the purchases made from the bogus entities, as the suppressed profit element embedded in such purchases. This estimation is in addition to the GP shown by the appellant. Accordingly, this ground of appeal is partly allowed."
4. We have considered the issue and gone through the facts and circumstances of the case. We find that the CIT(A) has rightly applied the profit rate at the rate of 12.5% and we confirm the same. This issue of Revenue’s appeal is dismissed.
In the result, the appeal of Revenue is dismissed. Order pronounced in the open court on 24-08-2018. AadoSa kI GaaoYaNaa Kulao mao idnaMk 24-08-2018 kao kI ga[- .