DINERO METALS PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER WARD 15(1)(4), MUMBAI

Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) confirmed the action of the assessing officer in making addition of 12.5% of the bogus purchase.

Against the above order of learned CIT-A, the assessee is in appeal before the ITAT.

I have heard both the counsel and perused the records. I find that credible and cogent information was received in this case by the assessing officer that certain accommodation entry provider/bogus suppliers were being used by certain parties to obtained bogus bills, assessee was found to have taken accommodation entry/bogus purchase bills during the concerned assessment year from different parties. Based upon this information assessment was reopened. The credibility of information relating to reopening remains un-assailed. In such factual scenario the assessing

The sales tax Department in its enquiry have found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties, In such circumstances there is no doubt that these parties are non-existent, I find it further strange that assessee wants the revenue to produce assessee's own vendors, whom the assessee could not produce. The Purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by honourable apex court decision in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC). In the present case, the assessee wants that the (A.Y. 2011-12) Dinero Metals Pvt. Ltd. vs. ITO unassailable fact that the suppliers are non existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above apex court decisions.

I further find that Hon'ble jurisdictional High Court in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014) has upheld hundred percent allowance for the purchases said to be bogus when the sales have not been doubted. However the facts of that case were different. Furthermore the sales in that case were basically to government departments. Hence the ratio from this decision is not fully applicable on the facts of the case.

In these circumstances, the learned departmental representative has referred to honourable Gujarat High Court decision in the case of tax appeal no 240 of 2003 in the case of N K Industries vs Dy CIT, order dt 20/06.2016, wherein hundred percent of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction of the addition to 25% of the bogus purchases was set aside. It was expounded that when purchase bills have been found to be bogus 100% disallowance was required. The special leave petition against this order alongwith others has been dismissed by the honourable apex court vide order dt 16 .1 2017 .

However, I note that this is not an appeal by the revenue. Hence, enhancement of disallowance cannot be considered on the facts and circumstances of the case. I hold that 12.5% disallowance out of bogus purchase would serve the end of justice.

In the result, this appeal filed by the assessee stands dismissed.