RAJESH NOBERT COLACO,MUMBAI vs. ITO -24(3)(5), MUMBAI

These are the appeals filed by assessee against the order of CIT(A) – 36, Mumbai dated 25/01/2017 for A.Y.2010-11 and 2011-12in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act, 1961. 2. In these appeals, assessee is aggrieved for reopening of assessment as well as for upholding addition by estimating profit at 14% of alleged bogus purchases.

I have gone through the orders of the authorities below. The facts of the case are that assessee filed return of income for A.Y.2011-12 by declaring total income of Rs.22,81,740/- on 11.10.2010. Processing was made u/s 143(1) of the Act. The case of the appellant was reopened for the reason that intimation vide letter bearing No. DGIT(lnv.)/Corr.field/ 2O13-14 dated 26/12/2013 was received in the office of the AO from the office of the Director General of Income tax ( Inv.), Mumbai wherein it was stated that the information was received from Sales Tax Department, Govt. of Maharashtra regarding cases involving bogus purchases/Hawala transaction. The data contains the details of transactions of each beneficiary with bogus biller, their TIN and PAN details and the PAN details of the beneficiaries. From the data on verification, it was found that Shri Rajesh N. Colaco during F.Y. 2009-10 has acquired some bogus purchase bills amounting to Rs. 54,14,625/-. After having the detailed discussion in para-3, the AO held as under:- In the light of the foregoing and after careful consideration of the case, I hold that the profit element embedded in the purchases is to be brought to tax. Since during the year the assessee has earned gross profit @ 14%, 1 estimate the gross profit at the rate 14% of the unproved purchases of Rs.1O,68,30O/-. The addition works out at Rs1,49,562/- which is hereby disallowed and added back to the total income of the assessee.

By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.

I have considered rival contentions and carefully gone through the orders of the authorities below and found that during the year under consideration assessee has already declared GP of 14%. Therefore, keeping in view the nature of assessee’s business business vis-à-vis, GP offered by the assessee, I direct the AO to restrict the addition by estimating further profit of 8% of such bogus purchases. I direct accordingly.

The facts and circumstances in the A.Y.2010-11 are parameteria, following the reasoning given hereinabove, I direct the AO to restrict the addition by estimating further profit of 8% of bogus purchases.