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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI JOGINDER SINGH & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-37, Mumbai and arises out of the assessment completed u/s 143(3) r.w.s 147 of the Income Tax Act 1961, (the ‘Act’).
The grounds of appeal
filed by the assessee read as under: -
1. The Ld. CIT(A) has grossly erred in law as well as on facts in disallowing the addition of Rs.9,30,930/- by estimating 12.5% as profit element on the alleged bogus purchase from four parties amounting to Rs.74,47,440/-.
2. The Appellant humbly prays that the addition made by the Ld. A.O. & partly confirmed by Ld. CIT(A) may please be deleted and relief be granted.
Briefly stated, the facts of the case are that the Assessing Officer (AO) received information from the Sales Tax Department, Government of Maharashtra that the assessee had availed bogus purchase bills from the following parties:
Sr. No. Name of the Party Amount 1. Kesar Enterprises Rs.28,61,300 2. Sunrise Enterprises Rs.7,40,740 3. Cosmos Enterprises Rs.17,82,300 4. Amar Enterprise Rs.20,63,100 Rs.74,47,440 In view of the above, the AO recorded the reasons and then reopened the assessment by issuing notice u/s 148. During the course of reassessment proceedings, the AO issued notice u/s 133(6) to the above parties to verify the genuineness of purchases. However, the letters sent by him were returned back by the postal authorities with the remark ‘not known’. Thereafter, the AO requested the assessee to give the latest address/whereabouts of the parties and produce them before him for examination. The assessee submitted before the AO that the purchases made from the above parties were genuine and claimed that the payments to them were made through cheque. The assessee also submitted before the AO copies of invoice bills, ledger extracts and banks statements to substantiate his purchases. However, the assessee could not give the latest address/whereabouts of the above parties. He also failed to produce them before the AO for examination. The AO observed that since the assessee could not file whereabouts of the above parties, no reliance could be placed on the ledger account submitted by him. As the assessee failed to discharge the primary onus cast upon him to prove the genuineness of purchases, the AO estimated the profit @ 25% of the above purchases of Rs.74,47,440/-. The disallowance made by him thus comes to Rs.18,61,860/-.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that the Ld. CIT(A), taking into account the facts and circumstances of the case estimated the profit @ 12.5% on the above purchases of Rs.74,47,440/-. The disallowance thus come to Rs.9,30,930/- in place of Rs.18,61,860/- made by the AO.
Before us, the counsel of the assessee files copies of letters/submissions made before the AO and the Ld. CIT(A). He relies on the order of the ITAT ‘F’ Bench, Mumbai in the case of M/s Geolife Organics vs. ACIT (ITA No. 3699/Mum/2016) and others.
On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A). He further submits that the estimation of profit @ 12.5% by the Ld. CIT(A) is the most reasonable one.
We have heard the rival submissions and perused the relevant materials on record. In the instant case, the assessee is engaged in the business of running a proprietorship concern in the name and style M/s Midas Marketing Inc. In the case of M/s Geolife Organics (supra) relied on by the Ld. counsel, the assessee was engaged in the business of trading in ferrous and non-ferrous metals under the proprietary concern namely M/s Ankur Steel & Engineering Company. Having considered the nature of business mentioned above, we are of the considered view that the case of the assessee is distinguishable from the above order of the Tribunal relied on by the Ld. counsel. Coming to the merit of the case, we find that the assessee failed to file before the AO the latest address/whereabouts of the parties from whom the purchases were claimed to have been made. He also failed to produce before the AO the said parties for examination. The AO has rightly observed that no reliance could be placed on the ledger account submitted by the assessee as he failed to file even the latest address of the said parties.