ITO 4(2)(4), MUMBAI vs. MINERVA BIOGENIX P.LTD, MUMBAI

No. Name Amount (Rs.) 1. Raj Traders 95,81,520/- 2. Ajanta Enterprises 16,62,300/- Total 1,12,43,820/- Notices issued u/s 133(6) to these parties either remained un-served or no response was received against the same. The assessee contended ITA.No.133 & 134/Mum/2013 Minerva Biogenix Private Limited Assessment Years-2010-11 & 2011-12 that it was engaged in trading activities and purchased goods through broker namely Mihir Mehta. The attention was drawn to the fact the quantitative details were available and there could be no sales without purchases and further, the payments were through banking channels. However, Ld. AO noted that the proprietor of Raj Traders vide affidavit- cum-declaration dated 18/07/2011 admitted to be operating 96 firms who were engaged in issuing bogus bills to various concerns without actually dealing in any goods. The Ld. AO also recorded statement on oath of assessee’s director as well as of broker namely Mihir Mehta to inquire about the purchases transactions. Finally, not convinced, the impugned purchases were treated as bogus purchases and added to the income of the assessee.

Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 09/10/2015 where the Ld. CIT(A) after considering assessee’s submissions and placing reliance on several judicial pronouncements noted that the opportunity to cross examine the supplier was not granted to the assessee and the turnover was not disturbed / disputed by Ld. AO. The Ld. CIT(A) also noted the Gross Profit / Net Profit rate earned by the assessee in several years and concluded that the assessee suppressed profit to the extent of 0.10% of the turnover and therefore, restricted the same to Rs.1,41,187/-. Aggrieved, the revenue is in further appeal before us.

The Ld. Departmental Representative [DR] drew our attention to the fact that the assessee could not produce any of the suppliers to confirm the transactions and thus failed to discharge the onus casted on him and hence, Ld. CIT(A) erred in providing substantial relief to the ITA.No.133 & 134/Mum/2013 Minerva Biogenix Private Limited Assessment Years-2010-11 & 2011-12 assessee. Per Contra, Ld. Counsel for Assessee [AR] placed reliance on the stand of Ld. CIT(A) to contend that the same was fair and reasonable and therefore, no further additions were warranted.

We have carefully heard the rival contentions and perused relevant material on record. 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 purchases were backed by invoices. At the same time, the assessee could not produce any confirmation from the impugned supplier and notices issued u/s 133(6) yielded no result. It is also noted that one of the supplier himself admitted to be operating 96 firms who were engaged in providing accommodation bills only without dealing in any goods which cast 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 element 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. However, we find the estimation to be on the lower side keeping in view the overall facts and circumstances of the case and therefore, enhance the same to 8% of alleged bogus purchases of Rs.1,12,43,820/- which comes to Rs.8,99,506/-. We direct so. Resultantly, the revenue’s appeal stands partly allowed.

Now, we take up revenue’s appeal for AY 2011-12. The assessee, in this year, has been saddled with similar ITA.No.133 & 134/Mum/2013 Minerva Biogenix Private Limited Assessment Years-2010-11 & 2011-12 additions by Ld. AO for Rs.1,09,79,866/- on account of bogus purchases which has been reduced by Ld. CIT(A) to Rs.1,84,048/-. Since the issue is identical except for figures and minor variations, taking same stand, we estimate the addition @8% of alleged bogus purchases for Rs.1,09,79,966/- which comes to Rs.8,78,389/-. Resultantly, the revenue’s appeal stands partly allowed.

Finally, both the appeals filed by revenue stand partly allowed. Order pronounced in the open court on 01st November, 2017.