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IN THE INCOME-TAX APPELLATE TRIBUNAL “A” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER (Assessment Year 2010-11) Dhiraj Narottam Shah ITO-24(1)(4)/ 30(1)(3), 84, 2nd Vijaykarwadi, S.V. Pratyakshakar Bhavan, Road, Malad West, Vs. Bandra Kurla Complex, Mumbai-400064. Mumbai-51. PAN: ANIPS0170J Appellant Respondent Appellant by : None Respondent by : Shri Rajesh Kumar Yadav (DR) Date of Hearing : 23.07.2018 Date of Pronouncement : 23.07.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of ld. Commissioner of Income-tax (Appeals)-41, [ld. CIT(A)] Mumbai dated 01.03.2016 for Assessment Year 2010-11. The assessee has raised the following grounds of appeal:
1) That the additions made are completely on ad hoc basis and based on pure guesswork and is therefore without any substantial or cogent material on record, rendering it invalid as such. 2) That the Id. Commissioner of Income Tax (Appeals) has failed to provide cross examination of the parties before making the additions. The claim of bogus Purchases which is sustained by the Commissioner of Income Tax (Appeals) and therefore as per law laid down in Tristar Exports Pvt Ltd (Mumbai ITAT), the onus is on the department to discharge the duty of cross examination, which in the instant case has not been done. 3) That where there is Quantitative tally of Stocks, no addition could be made on account of bogus Purchases. 4) That the addition @ 30% on account of bogus Purchases in the case of a Trader is arbitrary, unfair and unreasonable when the past track record of profits is brought into picture. 5) That the assessment is made without disclosing to the assessee information so supplied and declining to take into consideration the information supplied Mum 2016- Dhiraj Narottam Shah by the departmental representative and without giving any opportunity to the assessee to rebut the all materials which the assessee produced in support of case constituting violation of the fundamental rules of justice. 6) That non production of the parties cannot be the basis for addition. 7) That addition made of unexplained expenses on sole basis of information received from VAT department is not justified. 8) That reopening of the case on the basis of information received from Sales Tax Department is not valid without any application of mind by the Assessing Officer, who has recorded the reasons, and as such, it is prayed that since there is no such own application of mind, the proceedings is bad in law and liable to be quashed. 9) That Commissioner of Income Tax (Appeals) has not appreciated the fact and/or law that the assessee has discharged the onus regarding purchase made by assessee, more particularly, the aforesaid purchases were supported by valid invoices and delivery challans as also the payment is made by account payee demand draft as same was purchased by issuing account payee cheque. 10) That Commissioner of Income Tax (Appeals) has not appreciated the fact that there is no evidence that whatever payment given by the assessee has come back to the assessee by way of cash from the so-called disputed purchase parties.
Brief facts and of the case are that the assessee is engaged in the business of trading in Dies & Solvent and Chemicals, filed its return of income for Assessment Year 2010-11 on 30.09.2010 declaring total income of Rs. 9,07,500/-. The assessment was completed on 28.03.2013 under section 143(3). The Assessing Officer while passing the assessment order besides the other addition and disallowances, disallowed the purchases of Rs. 60,16,306/- holding that the assessee has shown the purchases from the parties whose names are appeared in the list of Sales Tax Department, Government of Maharashtra as suspicious parties. On appeal before the ld. CIT(A), the addition was restricted to 30% of the alleged bogus purchase.
Therefore, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. Mum 2016- Dhiraj Narottam Shah
None appeared on behalf of assessee despite the service of notice through RPAD for more than one occasion. Therefore, we left no option except to hear the ld. DR for the Revenue and to decide the appeal on the basis of material on record. The ld. DR for the Revenue submits that assessee has shown the purchases from the parties whose name is appeared in the list of hawala dealers, in the website of Sales Tax Department, Government of Maharashtra. During the assessment, the assessee failed to substantiate the genuineness of purchases, therefore, the Assessing Officer made the addition of entire purchases as unexplained expenditure. However, the ld. CIT(A) restricted the addition @ 30% of the total purchases. The assessee has not placed any material on record to seek further relief. Therefore, the appeal may be dismissed.
We have considered the submission of ld. DR for the Revenue and gone through the orders of authorities below. During the assessment proceeding, the Assessing Officer noted that the assessee has shown purchases of Rs. 60,16,306/- from M/s Yash Enterprises. M/s Yash Enterprises is one of the suspicious parties identified by Sales Tax Department, Government of Maharashtra. The Sales Tax Department sent the copy of statement of Shri Bhavesh K Pujara, Prop. of M/s Yash Enterprises and the affidavit dated 03.02.2012 to the Income-tax Department. During the assessment, the copy of statement and affidavit was provided to the assessee. In the affidavit and statement the Prop. of M/s Yash Enterprises stated that he has provided the 3 Mum 2016- Dhiraj Narottam Shah bills of the purchases, without actual delivery of goods. The assessee was asked to prove the genuineness of the purchases. The assessee failed to substantiate the genuineness of the purchases, therefore, the Assessing Officer made the addition of entire purchases. The ld. CIT(A) on the basis of decision of Vijay Proteins Ltd. vs. CIT [2015] 58 taxmann.com 44 (Guj) and CIT vs. Simit P. Sheth [2013] 356 ITR 451 (Guj.) restricted the addition @ 30% of the alleged bogus purchases on his observation that the mere facts that supplier’s name is appeared in the list of hawala dealers of sales tax department and that the assessee is unable to produce him does not mean that the purchases is bogus when the payments is made through cheques and the gross profit ratio became abnormally high if the addition made by Assessing Officer is accepted. We find that the order of ld. CIT(A) is based on sound reasoning and does not require any further interference at our end. 5. Before us, neither the assessee has come forward nor filed any documentary evidence to seek further relief. Therefore, we do not find any merit in the grounds of appeal
raised by assessee. 6. In the result, appeal filed by assessee is dismissed. Order pronounced in the open court on 23.07.2018.