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Income Tax Appellate Tribunal, BENCH “C” MUMBAI
Before: SHRI D.T.GARASIA, JM & SHRI RAJESH KUMAR, AM
PER RAJESH KUMAR, A. M: The captioned is appeal by the assessee pertaining to assessment year 2011-12 and it is directed against the order dated 20.1.2017 passed by the ld. CIT(A). At the outset, we would like to mention that neither the assessee nor his authorized representative appeared before this Tribunal when the appeal
2 I . T . A . N o . 2 3 6 8 / M u m / 2 0 1 7 was called for hearing nor any application seeking adjournment of the hearing was received in the office of the Tribunal despite service of notice through RPAD. Therefore, we proceed to dispose of the appeals of the assessee ex-parte after hearing the ld. DR.
The sole issue raised in all the grounds of appeal is against the sustenance of addition of Rs.32,44,172/- at the rate of 12.5% of alleged bogus purchases of Rs.2,59,53,378/- by the CIT(A) as against the total disallowance made by the AO of such alleged purchases u/s 69C of the Act.
Facts of the case are that the assessee filed return of income on 20.9.2011 declaring total income of Rs.44,50,120/-. The return was processed u/s 143(1) of the Act. Thereafter the case of the assessee was selected for scrutiny and process under section 143(2) and 142(1) was followed. Thereafter AO received the information from the DGIT(Inv) and Sales Tax Department, Government of Maharashtra that the assessee has received bogus bills of purchases from five parties viz.(i) Navkar Enterprises, (ii) Saileela Trading Pvt Ltd, (iii) Siddhi Vinayak Traders, (iv) Siddhi Enterprises and (v) Sai Jan Trading Private Limited. The assessee made total purchases of Rs.9,43,05,205/- during the year. In view of this, AO called upon the assessee to prove the genuineness of the purchases along with the documentary evidences as the suppliers names were listed in the website of 3 I . T . A . N o . 2 3 6 8 / M u m / 2 0 1 7 Sales Tax Department, GOM as a suspicious dealers, who were supplying bills to various parties without providing actual and physical delivery of the materials. Therefore, the AO vide order sheet entry dated 19.2.2014 called upon the assessee to prove the genuineness of the purchases along with documentary evidences failing which it would be deemed as bogus entries of bills and would be added to the total income of the assessee. The AO 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 with the remark of postal authorities “NOT KNOWN”. Since the assessee failed to reply and response to the queries and explanation called for by the AO, he again called upon the assessee to produce Sai Jan Trading Pvt Ltd for verification and again the assessee failed to do so. Therefore, the AO came to the conclusion that the assessee has no explanation to offer and purchases were not genuine and made addition for the assessment year 2010-11 in respect of following parties: i) Sai Jan Trading Private Limited. Rs.55,05,686/- ii) Saileela Trading Pvt Ltd, Rs.78,84,385/- (iii) Siddhi Enterprises Rs.1,22,14,557/- (iv) Siddhi Vinayak Traders Rs.3,48,750/- ------------------ Rs.2,59,53,378/- Accordingly, the assessment was framed at Rs.3,13,75,730/- vide order dated 27.3.2014 passed under section 143(3) of the Act.
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Aggrieved by the order of AO, the assessee preferred an appeal before the FAA, who in turn by following the decision rendered in Appeal No.CIT(A)- 36/IT-236/ACIT-24(2)/2015-16 for AY 2009-10 vide para 5 has partly allowed the appeal of the assessee by sustaining the addition at 12.5% of the bogus purchases from four parties. Accordingly, the ld.CIT(A) directed the AO to restrict the addition to Rs.32,44,172/-being 12.5% of total purchases of Rs.2,59,53,378/-. Again aggrieved by this decision of the ld.CIT(A), the assessee in second appeal before this Tribunal.
The ld.DR re-iterated the facts of the case and relied upon the decision of the AO and prayed that the order of ld.CIT(A) be set aside and that of AO be restored.
After hearing the ld.DR and on perusal of the record, we find that the assessee undoubtedly has availed hawala entries from the four parties mentioned hereinabove and thus is a beneficiary of bogus purchases. No doubt, the parties mentioned above are listed in the website of Government of Maharashtra as a suspicious dealers and engaged in providing bogus bills to various clients without providing, supplying and giving actual physical possession of the materials mentioned in the bills. The AO disallowed and added 100% of such bogus purchases to the total income of the assessee on the ground that the assessee failed to prove the genuineness of transactions,
5 I . T . A . N o . 2 3 6 8 / M u m / 2 0 1 7 creditworthiness and identity of the bills providers as also the notice issued u/s 133(6) received back without service. The FAA directed the AO to restrict the addition at 12.5% of total bogus purchases made from four parties. The CIT(A), by following his predecessor’s decision in Appeal No.CIT(A)-36/IT- 236/ACIT-24(2)/2015-16 for AY 2009-10 restricted the disallowance at the rate of 12.5% of bogus purchases. We also find that in the similar and identical facts of the cases, the coordinate benches have been taking a consistent view that some percentage addition ranging from 5% to 12.50% to restrict the leakage of revenue which has resulted from assessee’s purchasing the material from gray market thereby saving VAT and other incidental taxes. In the instant case, we find that the ld.CIT(A) passed a very reasonable and proper order restricting the addition to 12.5% of bogus purchases by following his predecessor’s order. Therefore, we are not inclined to interfere with the order of ld.CIT(A) as there being not any defect , infirmity or illegality and hence dismiss the appeal of the assessee.
In the result, the appeal of the assessee is dismissed.