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Income Tax Appellate Tribunal, MUMBAI BENCH “K” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-1, Mumbai and arises out of the assessment completed u/s 144 r.w.s 147 of the Income Tax Act 1961, (the ‘Act’). 2. The grounds of appeal filed by the Revenue read as under:
1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in giving relief to the assessee out of total bogus purchases even though- Shri Abdul Kayyum Khan i. The assessee could not produce primary evidences like Octroi Receipts, Delivery Challan etc. evidence to prove the genuineness of the purchases before the AO and before CIT(A). ii. The affidavits filed by the entry providers before Sales Tax Authorities cannot be ignored having evidentiary value.
2. On the facts and in the circumstances of the case and in law, the Hon’ble CIT(A) erred in not following the order of ITAT, Pune in dated 20.02.2015 in the case of M/s Kolte Patil Developers Ltd. wherein 100% addition of bogus purchases was confirmed.
3. The order of the Ld. CIT(A) may be vacated and that of the Assessing Officer may be restored.
3. Briefly stated, the facts of the case are that the Assessing Officer (AO) on examination of the information received from the Sales Tax Department, Government of Maharashtra found that the assessee had made bogus purchases from the following entry providers:
Sr. Name of the entry Maharashtra AY Amount in No. provider Vat No. the purchase bills taken by the assessee in Rs.
Vitarag Trading Co. 27830385697V 2009-10 14,80,350/- 2. Sampark Steels 27170360840V 2009-10 10,89,344/- 3. Rekha Trading Co. 27520270001V 2009-10 5,17,547/- 4. Impex Trading Co. 27190553859V 2009-10 3,04,512/- 5. Navdeep Trading 27540616280V 2009-10 4,80,996/- Co.
6. Prayan Trading Co. 27740535951V 2009-10 14,51,479/- Total 53,24,228/- After recording the reasons, the AO issued on 25.03.2013 notice u/s 148 to the assessee through RPAD. The said notice could not be served on the assessee by the postal authorities. Thereafter, the AO Shri Abdul Kayyum Khan 143(2) and 142(1) along with questionnaire on 19.08.2013. Again the said notices were returned back by the postal authorities as unserved. Finally, the AO issued a show cause notice on 26.02.2014 to the assessee which was again returned back by the postal authorities as unserved. In view of the above, the AO made an addition of the above bogus purchase of Rs.53,24,228/- to the income of the assessee.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). Again there was no compliance by the assessee before the Ld. CIT(A). We find that the Ld. CIT(A) has followed the judgment of the Hon’ble Gujarat High Court in the case of Simit P. Shah 356 ITR 451 and directed the AO to restrict the disallowance to 15% of the said purchases.
Before us, the Ld. DR submits that there was no compliance by the assessee to the statutory notice issued by the AO. Also there was no compliance by the assessee to the notice issued by the Ld. CIT(A). Therefore, the Ld. CIT(A) should have confirmed the addition of Rs.53,24,228/- instead of restricting it to 15%. There was no compliance by the assessee before the Tribunal on the date fixed for hearing.
We have heard the Ld. DR and perused the relevant materials on record. In the case of CIT vs. Simit P. Sheth (2013) 38 taxmann.com (Guj), the Hon’ble Gujarat High Court has held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can be added to income of