DHIRAJ BABULAL JAIN,MUMBAI vs. INCOME TAX OFFICER 19(1)(4), MUMBAI

Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-54 [CIT(A)], Mumbai, Appeal No. CIT(A)-54/IT-714/ITO- 19(1)(4)/2015-16 dated 22/12/2017 qua confirmation of certain additions on account of alleged bogus purchases. The assessment for impugned ITA.No.1843/Mum/2018 Dhiraj Babulal Jain Assessment Year- 2011-12 AY was framed by Ld. Income Tax Officer 19(1)(4), Mumbai [AO] u/s 143(3) read with section 147 of the Income Tax Act,1961 on 12/03/2015 wherein the income of the assessee has been determined at Rs.32.15 Lacs after certain additions as against returned income of Rs.18.37 Lacs filed by the assessee on 30/09/2011 which was processed u/s 143(1). None has appeared for assessee and no valid adjournment application is on record. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative [DR]. The issue involved under appeal is estimated addition against certain alleged bogus purchases. 2.1 The reassessment proceedings were initiated upon receipt of certain information from Sales Tax Department, Maharashtra regarding dealers indulging in bogus purchase bills and it was noted that the assessee stood beneficiary of such bogus purchase bills to the tune of Rs.1,10,24,932/- from five such entities, the details of which has been extracted in para-2 of the quantum assessment order. Consequently, statutory notice u/s 148 dated 28/02/2014 was issued to the assessee which was followed by notices u/s 143(2) and 142(1). During impugned AY, the assessee being resident firm was engaged in trading of metals etc. 2.2 The assessee defended the purchases made by him and submitted documentary evidences to substantiate the purchases. However, notices issued u/s 133(6) to all the entities elicited no satisfactory response and further the assessee failed to demonstrate delivery of goods. Finally, not convinced with assessee’s submissions, Ld. AO estimated the additions ITA.No.1843/Mum/2018 Dhiraj Babulal Jain Assessment Year- 2011-12 against these purchases @12.5% which resulted into an addition of Rs.13,78,116/- in the hands of the assessee.

5. So far as the merits of the case are concerned, we are of the considered opinion that there could be no sale without purchase of material since the assessee was engaged in trading activities. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchases documents. At the same time, the assessee could not conclusively substantiate the delivery ITA.No.1843/Mum/2018 Dhiraj Babulal Jain Assessment Year- 2011-12 of material and failed to produce any of the party to confirm the transactions. Notices issued u/s 133(6) elicited no satisfactory response. All these factors cast a serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which Ld. CIT(A) has rightly done. Therefore, finding the same in order, we dismiss this ground of assessee’s appeal.

6. Resultantly, the assessee’s appeal stands dismissed. Order pronounced in the open court on 22nd June,2018