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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, HON’BLE & SHRI SANDEEP GOSAIN, HON’BLE
आदेश / O R D E R PER R.C.SHARMA (A.M): 1. This is an appeal filed by the Revenue against the order of CIT(A)-20, Mumbai dated 28.02.2017 for A.Y.2010-11, in the matter of order passed u/s.143(3) r.w.s. 147 of the I.T Act.
In this appeal revenue is aggrieved for confirming the addition by Ld.CIT(A) at 6% on the bogus purchases.
Rival contentions have been heard and record perused.
(A Y: 2010-11) Lab Devices India P. Ltd.
Facts in brief are that, the assessee is engaged in the business of laboratory instrumentation. The Assessing Officer received information from the Sales Tax (VAT) Department that the assessee had indulged in the practice of providing bogus purchase bills and routing it through the books of account. From the details so received it was perused by the Assessing Officer that the assessee had made bogus purchases from nine parties. The amount involved in such bogus purchases was Rs.54,33,026/- which was added to the total income of the assessee. During the assessment proceedings though the assessee had produced relevant documents and copy of ledger account corresponding to such purchases but it had failed to produce the parties for confrontation. An independent enquiry conducted and efforts made by the A.O. also revealed that the parties were non-existent. The Assessing Officer thus made an addition of Rs. 54,33,026/- treating the same as bogus purchases.
By the impugned order, Ld.CIT(A) confirmed addition to the extent of 6% of the Gross Profit after observing as under:- “6.3. I have gone through the assessment order and submissions made in this regard. It is noted that the A.O. had made addition out of purchase made by the assessee to the tune of Rs. 54,33,026/- on the basis of the information received from the VAST authorities. The A/R of the assessee has vehemently opposed the additions and submitted that the purchases were genuine. It was also submitted that payment was all made through banking channel and the delivery of materials was supported by delivery challans. It is stated that the A.O. had made addition on the basis of information received from VAT authorities without affording opportunity of cross examination the assessee. It is noted that the entire matter
(A Y: 2010-11) Lab Devices India P. Ltd. pertains to hawala purchases from so called suspicious dealers as per the information of VAT authorities. The A.O. has disallowed these purchases as the assessee could not produce these parties for verification. It is noted that primary onus to establish that the purchases were genuine was on the assessee. The assessee is only partly able to discharge the complete onus. It is also noted that A.P. has simply made addition on the basis of statement without much enquiry into the facts of the case. On the other hand assessee has filed copies of bills, bank statement etc. to establish that purchases were genuine. On the face of these evidences the entire purchases cannot be held to be bogus merely on the basis of a statement of seller who was never cross examined by the assessee. It is also noted that the items purchased were used as input into assessee’s product for sales which have been accepted by the department. 6.4 It is noted that only profit element is liable to tax in such case as was held in the case of:
1. 1. CIT v. Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj). (HC).
2. CIT v. Simit P. Sheth (2013) 356 ITR 451 (Guj) (HC) 3. CIT v. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (HC) 4. ITO v. Permanand (2007) 107 TTJ 395 (JD)(Trib) 5. Shri Madhukant B. Gandhi v. ITO Bench ‘B’ dt. 23.02.20100 (AY 2005- 06)(MUM.) (Trib.) 6. Sanjeev Woolen Mills v. CIT (2005) 279 ITR 434 (SC)
6.5 In view of the above discussion it is seen that the addition made by the A.O on account of alleged bogus purchases cannot be sustained fully in appeal. Having regards to facts of the case it would be fair and reasonable if the addition made is restricted to G.P. addition of 6% on the alleged bogus purchase of Rs. 54,33,026/- which comes to Rs.3,25,982/-. Accordingly these grounds of appeal are partly allowed.”
6. Against the above order of the Ld.CIT(A), Revenue is in further appeal before us.
(A Y: 2010-11) Lab Devices India P. Ltd.
We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record, we found that the Assessing Officer has made addition on the basis of information from the Sales Tax department in respect of bogus suppliers. After appreciating the evidence filed before the Ld.CIT(A), Ld.CIT(A) concluded that the entire purchases cannot be held to be bogus merely on the bases of the statement of the seller, who was never cross examined by the assessee. It was also observed that corresponding sales/consumption shown by the assessee accepted by the Department. After applying various Judicial pronouncements the Ld.CIT(A) restricted the addition to the extent of 6% on the alleged bogus purchases. Nothing was brought to our notice by Ld. DR to persuade us to deviated from the finding recorded by the Ld.CIT(A) restricting the addition to the extent of 6%. Accordingly we do not find any reason to interfere in the order of the Ld. CIT(A).
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on this 07/11/2017