PRASHANT GANJANAN REDIJ,MUMBAI vs. ITO 32(2)(5), THANE

आदेश / O R D E R

Per Sandeep Gosain, Judicial Member:

Prashan Ganjanan Redij 2. The brief facts of the case are that the assessee filed its return of income on 28.09.11 declaring total income of Rs. 8,72,820/-. As per the assessee, he is engaged in the business of trading of furnace oil. The AO on receiving the information from the Sales Tax Department, Maharashatra that five parties from whom the assessee made purchases were indulged in issuance of bogus purchase bills i.e. without delivery of actual goods. The AO on the basis of this information reopened the assessment and after carrying inquiries and seeking reply of the assessee passed order of assessment u/s 143(3) r.w.s. 147 of the I.T. Act thereby making additions /disallowance @ 12.5% of the purchases of Rs. 1,78,49,090 and added it to the total income of the assessee. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties dismissed the appeal of the assessee and upheld the order passed by the AO. Now before us, the assessee has preferred the present appeal by raising the above grounds.

Ground No. 1.

Prashan Ganjanan Redij 3. This ground raised by the assessee is general in nature and after perusal of the record we find that fair opportunity of hearing was provided by the Ld. CIT(|A) before passing the impugned order. Therefore, this ground raised by the assessee do not survive and is thus dismissed. Ground No. 2.

4. This ground raised by the assessee relates to challenging the order of CIT(A) in upholding the additions made by AO in respect of bogus purchases.

5. We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed byLd. CIT(A). The Ld. CIT(A) has dealt with this ground in para no. 3 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 3.3 and 3.4 of its order and the same is reproduced below:- 3.4 I have carefully gone through the assessment order as well as the written submission of the appellant. I have also perused the details filed by the AR. Some 5-6 years ago the sale tax department Prashan Ganjanan Redij of the government of Maharashtra had conducted extensive enquiries against such dealers who used to proved bills facilitating bogus purchases/ sales. As a result of this inquiry, information about many assesses were forwarded to the Income Tax Department. The AO has stated in the assessment order that the appellant is one such person who has inflated his purchases by showing purchases from many such persons who appear in the list of bogus entries providers as prepared by the Sales Tax Department. During the course of assessment proceedings, the AO found that the assessee had not been able to establish the genuineness of purchases in dispute. The main arguments of the AO on the basis of which he had formed his opinion were- (1) The assessee was not able to submit any lorry receipts or any details regarding transportation of goods. 2) The suppliers from whom the disputed purchases have been made, are included in the list of hawala operators prepared by the Sales Tax Department. (3) The suppliers from whom the disputed purchases have been made, did not comply to notice u/s 133(6). (4) The suppliers from whom the disputed purchases have been made, were not produced before the AO. (5) Even if the purchases are not treated as bogus, the expenditure on such purchases remain unexplained.

3.4 It is seen from record that the A.O. has not mechanically disallowed the entire purchases amounting to -Rs.1,78,49,090/-, rather he has disallowed 12.5% of the amount of purchase in dispute. Further, he has rejected the books by invoking the provision of section 145(3). It is not in dispute that the notices u/s 133(6) issued to the suppliers mentioned above came back undelivered with remark 'not known/left". Further from a perusal of P&L a/c of the concerned year it is seen that the entire purchases shown by the appellant is Rs. 1,73,82,868/- while as per information received from Sales Tax Department the appellant has made purchases totaling upto Rs. 1,78,49,090/-. When the basic details like purchase remain unverifiable, it is open for the AO to reject the books of account of the assessee. Thus it is held that the A.O. was right in rejecting the book results of the assessee. Furthermore, as stated above the A.O. has himself estimated the profit rate which should have arisen because of the alleged bogus purchase rather than disallowing the entire purchases. The A.O. also fairly conceded in para 8,5 of his order that the appellant: had incurred expenditure on such purchases, but such expenditures remain unexplained. Further the rate of profit taken by the AO on the disputed purchases seems reasonable considering the volume and nature of trade of the assessee. Since the A.O. has himself given substantial relief to by a speaking order I do not see any reason to interfere in the order of the AO. The grounds of appeal Nos. 1& 2 are dismissed and accordingly addition of Rs. 22,31,136/- is confirmed.

Prashan Ganjanan Redij 4. The grounds of appeal

No. 3 is general in nature and therefore this grounds does not require any comments.

5. In the result, the appeal is dismissed. After analyzing the aforementioned order passed by Ld. CIT(A) and after considering the judgments relied upon by both the parties as well as hearing the counsels of the parties at length, we are of the considered view that Ld. CIT(A) while dealing with said grounds had considered the facts available on record and has rightly held that the AO had issued notices u/s 133(6) to all the parties but the said notices were returned by the postal authorities with the remark “Not Known/left or No reply were received”. The Ld. CIT(A) has also considered the fact that while passing the order of assessment, AO had relied upon the extensive inquiries conducted by Sales Tax Department against each such dealer, who used to provide bills facilitating bogus purchases/ sales. We have also taken into consideration that the AO has not mechanically disallowed the entire purchases amounting to Rs. 1,78,49,090/-, but he has disallowed only 12.5% of the amount of purchases after rejecting the books of account by invoking the provision of section 145(3) of the I.T. Act.

Prashan Ganjanan Redij Although, the Ld. AR appearing on behalf of the assessee submitted that for the relevant previous year the assessee has declared gross profit ratio @ 3.82% and in this respect, the Ld. AR relied upon page no. 1 of the paper book which is a comparative chart of GP earned by the assessee for the last several years. On the contrary, Ld. DR relied upon the orders passed by the revenue and also upon the judgment of Supreme Court in the case of N.K. Proteins Ltd. Vrs. DCIT wherein 100% addition of entire bogus purchases were made. Be that as it may, we find that no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). The Ld. CIT(A) upheld the orders passed by AO who in turn while passing the assessment order had relied upon the orders passed by Hon’ble Supreme Court in the case of H.M. Esufali Abdulali and the judgment passed by Gujarat High Court in the case of Simit P. Sheth (2013) 356 ITR 451 whereas Ld. DR has relied upon the judgment of N. K. Proteins Ltd. Vrs. DCIT passed by Hon’ble Supreme Court of India. Since the revenue has not Prashan Ganjanan Redij preferred any appeal against the order of Ld. CIT(A), therefore, we reject the arguments raised by Ld. DR that 100% additions of entire bogus purchases ought to have been made. The Ld. CIT(A) has rightly upheld the orders passed by AO as in this case AO had already issued notices u/s 133(6) of the I.T. Act to the respective parties and there was no delivery proof placed on record by the assessee. Considering the peculiar facts of the present case, we find no reasons to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this ground raised by the assessee stands dismissed. Ground No. 3

6. This ground raised by the assessee is general in nature, thus requires no specific adjudication.

7. In the net result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 1st Nov., 2017 Sd/- Sd/- (ShamimYahya) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 01.11.2017 Sr.PS. Dhananjay Prashan Ganjanan Redij आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : अपीलाथी/ The Appellant 1. 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned यवभागीयप्रयतयनयि, आयकरअपीलीयअयिकरण, मुंबई/ DR, ITAT,