ACIT CIR 28(2), NAVI MUMBAI vs. KASI SYAMALA REDDY, NAVI MUMBAI

Ground raised by the assessee is against the addition upheld by the Id. CIT(A) as made by the AD amounting to Rs.1,43,02,913j- being 12.5% of the alleged bogus purchases beside affirming the reopening of the assessment u/s 147 and 148 of the Act.

Facts of the case are the assessee filed return of income on 30.9.2009 declaring total income of Rs.3,36,110j- which was processed u/s 143(1) of the Act and the assessment was framed u/s 143(3) of the Act on 31.10.2011 assessing the income at Rs.5,18,580/-. Thereafter AO received the information from the DGIT(Inv) and also from Sales Tax Department, Government of Maharashtra that the assessee is a beneficiary of bogus purchases to the tune of Rs.11,44,23,300j- and accordingly the case was reopened u/s 147 of the Act by issuing notice dated 26.2.2014 u/s 148 of the Act. Thereafter the statutory notices were issued and served upon the assessee. During the course of assessment proceedings, the AO called upon the assessee to prove the genuineness of the purchases along with 3 I . T . A . N o . 2 3 2 7 / M u m / 2 0 1 7 documentary evidences which was replied by the assessee by submitting that the purchases were actually made from the alleged parties and was also sold to various clients. The assessee also submitted the purchase bills and payment details through banking channels etc. The AD also issued notices to the parties u/s 133(6) of the Act to verify the genuineness of purchases but the same were returned unserved. Thus, the AD was not satisfied with the submissions of the assessee and came to the conclusion that the assessee made purchases through hawala dealers parties without purchasing the materials physically and consequently applied GP rate at the rate of 12.5% thereby making addition of Rs.1,43,02,913/- and assessing the total income of the assessee at Rs.1,48,61,340/- vide order dated 18.3.2015 made u/s 143(3) r.w.s.147 of the Act. In the appellate proceedings, the Id.CIT(A) dismissed the appeal of the assessee, after taking into account the submissions and contentions of the assessee by holding that the AO has adopted a very reasoned view in the matter and thus upheld the addition. Aggrieved by the order of the Id. C!T(A), the assessee is in this Tribunal.

We have carefully considered the contentions of the Id. DR and perused the material placed before us including the orders of authorities below. We find that the assessee has availed bogus purchases bills to the tune of Rs.11,44,23,300/-. The Id. CIT(A) confirmed the same by holding that the AO has taken a reasonable view of the matter after taking into account the 4 I . T . A . N o . 2 3 2 7 / M u m / 2 0 1 7 contentions of the assessee. In the similar cases, the coordinate benches have been taking a consistent view that some reasonable percentage addition ranging from 4% to 12.50% of the bogus purchases should be made towards savings made by the assessee i.e the assessee might have purchased the material from gray market thereby saving VAT and other incidental taxes. After examining the materials before us and arguments of the Id DR , we observe that the Id.CIT(A) has taken a cogent and reasoned view. Thus we do not find any infirmity or illegality in the order of ld.CIT(A) and therefore the same is affirmed.

In the result, the appeal of the assessee stands dismissed.