PARASINGH B. PARMAR,MUMBAI vs. ITO 19(2)(5), MUMBAI

These are the appeals filed by the assessee against the order of CIT(A)-29, Mumbai dated 05/04/2017 for A.Y.2010-11 and 2011-12 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act.

In both the years, assessee is aggrieved for upholding addition by estimating profit of 5% on the alleged bogus purchases.

Rival contentions have been heard and record perused.

On the basis of information from Sales Tax Department, AO found that assessee has made some purchases from hawala dealers. On finding that goods were actually purchased but not from the very same dealer, the AO estimated profit of 12.5% on such purchases and added the same in assessee’s income.

It was argued by learned AR that only on the basis of information from Sales Tax Department, the AO has jumped to the conclusion that assessee has made bogus purchases. As per learned AR, assessee has also asked for cross examination but the same was not provided. Our attention was also invited to para 4.3.1 of the CIT(A)s order wherein such request of assessee was declined.

On the other hand, learned DR contended that CIT(A) has very reasonably estimated extra profit at 5%.

I have considered rival contentions and carefully gone through the orders of the authorities below and found that addition has been made by estimating profit on the purchases made from hawala dealers. However, the corresponding sales of the goods so purchased have not been declined. It is also a matter of record that assessee has asked for cross examination of the suppliers on whose statement AO has concluded that these were the bogus suppliers. However, assessee was not given opportunity to cross examine the said suppliers. Keeping in view the totality of facts and circumstances of the case vis-à-vis nature of trading activity the assessee is engaged in and the rate of G.P. declared by assessee, I deem it appropriate to uphold the addition of 2% on such purchases. I direct accordingly.