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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. These are cross appeal for Assessment Year [AY] 2009-10 which contest stand of Ld. Commissioner of Income-Tax (Appeals)-44 [CIT(A)], Mumbai, Appeal No.CIT(A)-44/ITO.32(2)(4)/ITA-134/2014-15 dated 01/12/2015 qua addition on account of alleged bogus purchases. The assessment for impugned AY was framed by Ld. Income Tax Officer- 32(2)(4) [AO] u/s 143(3) read with Section 147 of the Income Tax Act, 1961 on 27/02/2015 wherein the assessee has been saddled with addition of Rs.1,38,57,521/- on account of certain alleged bogus purchases. 2.1 Facts leading to the same are that the assessee being resident individual engaged in the business of trading of building material under proprietary concern namely N.M.Realtors was subjected to reassessment proceedings for impugned AY vide issuance of notice u/s 148 dated 11/03/2014 which was followed by statutory notices u/s 143(2) and 142(1). The original return of income was filed by the assessee at Rs.2,83,740/- which was processed u/s 143(1). 2.2 The reassessment proceedings were initiated upon receipt of certain information from Sales Tax Department, Maharashtra & DGIT (Investigation) 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.1,38,57,521/- from ten such parties. The assessee defended the purchases made by him but notices issued u/s 133(6) to confirm the transactions remained un-served with remarks like left / not & ITA 5742/Mum/2015 Nisha Mayur Kamdar Assessment Year- 2009-2010 known. After considering assessee’s submissions, documentary evidences and certain judicial pronouncements, Ld. AO added the same to the income of the assessee u/s 69C.
Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 23/03/2015 where Ld. CIT(A) restricted the disallowance to 6.54% by making following observations:- It has been held in the case of M/s Nikunj Enterprises 372 ITR 69 (Bom) by the Hon’ble Bombay High Court that merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent-assessee. Further it has been held in the case of Saraswathi Oil Traders Vs. CIT 254 ITR 259 (Supreme Court) that when the sales have not been doubted then there was no question to doubt the purchases and the addition should have been made only to the extent of gross profit. To this extent I am in agreement with the appellate that if the appellant has fulfilled its onus of making the payments by cheque and has supplied the address of the sellers, then it cannot be presumed that the suppliers were bogus simply because the sellers were not found at the given addresses. However, at the same time, it cannot be said that the information provided by the sales tax Dept. should not be taken cognizance by the A.O. Therefore, after considering the totality of facts and after following the ratio of Saraswathi Oil Traders Vs. CIT (SC) cited supra, I am of the opinion that it is the profit element in the total component in dispute which needs to be added to the income of the appellant. The total amount which is being treated as bogus by the A.O. is Rs.1,38,57,521/-. The appellant has shown a gross profit rate of 6.54%. Thus 6.54% of Rs.1,38,57,521/- which is Rs.9,06,282/- is taken as profit of the appellant on purchases that are not fully and properly explained. Addition of Rs.9,06,282/- is accordingly confirmed our of an addition of Rs.1,38,57,521/- and the balance is deleted. Ground of Appeal
Nos. 1 & 2 are therefore partly allowed. Aggrieved, the assessee as well as revenue is in appeal before us.
4. The Ld. Departmental Representative [DR] submitted that the addition was on lower side whereas Ld. Authorised Representative for assessee [AR] pleaded for some more relief.
5. After considering rival contentions, we find no reason to interfere with the stand of Ld. CIT(A) since the assessee was engaged in trading activities and could not achieve the sales turnover without purchase of