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Income Tax Appellate Tribunal, K Bench, Mumbai
Before: Shri R.C. Sharma & Shri Ravish Sood
This appeal has been filed by the assessee against the order of the CIT(A)-41, Mumbai dated 11.07.2016 for A.Y. 2009-10 in the matter of order passed under Section 144 r.w.s 147 of the Income Tax Act (hereinafter “the Act”).
In this appeal the assessee is aggrieved for upholding the addition of 30% of bogus purchase by the CIT(A).
We have heard the rival contentions carefully and gone through the orders of the Authorities below and found that the assessee is carrying on the business of manufacturer cum trader of paper stickers and other packing materials. The AO was in receipt of information from DGIT(Inv.), Mumbai that the assessee had indulged in bogus purchases of `1,35,98,732/- from various parties. The said parties had indulged in issuing accommodation bills without actual sale and delivery of goods.
M/s. Mihir Overseas Therefore, the case was re-opened. In response to the notice issued, the assessee had submitted the party wise purchases along with address and total invoice amount of each parties. However, the assessee had not provided the PAN and VAT number, confirmation, copy of the purchase bills, transportation evidence and stock register to prove the movement of goods. Being not satisfied with the explanation of the assessee the AO added 100% of the said purchase in assessee’s income.
By the impugned order the CIT(A) restricted the addition to the extent of 30% of the total purchase.
From the record we find that the assessee has explained corresponding sales with respect to the entire purchases. The sales have not been disregarded. Before the AO assessee has also filed party-wise purchase along with address and total invoiced amount of each party. Merely because the assessee had not provided the VAT number of these parties the AO has added the amount. Since the corresponding sales have been accepted and the assessee had shown reasonable gross profit on sale, therefore, confirming the addition to the extent of 30% is not justified. Keeping view the totality of the facts and circumstances we direct the AO to restrict the addition to the extent 12.5% of such bogus purchases. We direct accordingly.
In the result, the appeal filed by the assessee is allowed in part.