ITO WD 1(4), THANE vs. JAYA NARESH PURSWAMI, THANE

The sole issue raised by the revenue is against the deletion of addition in respect of bogus purchase to the tune of 87.5% by CIT(A) as against 100% additions of bogus purchases made by the AO.

Facts of the case are the AO received the information from the DGIT(Inv) who in turn was passed on the information by the Sales Tax Department, Government of Maharashtra that the assessee has obtained accommodation entries for purchases through the parties declared as hawala operators by the Sales Tax Department, Government of Maharashtra. Accordingly, the assessment of the assessee was reopened by issuing notice u/s 147 r.w.s.148 of the Act after recording the reasons to believe that the income of the assessee has escaped assessment. Thereafter the statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. During the course of re-assessment proceedings, the assessee was asked to prove the genuineness of the purchases made from the two parties viz Amizara Trading Corporation amounting to Rs.31,64,073/- and S M Trading Co.Rs.5,63,077/- aggregating to Rs.37,27,150/-. However, the assessee neither replied nor furnished any information as called for by the AO. Moreover, the notices 3 u/s 133(6) of the Act issued to the said two parties were returned unserved. Accordingly, the AO disallowed and added the entire amount of bogus purchases by framing the assessment u/s 143(3) r.w.s.147 of the Act vide assessment order dated 19.3.2014 assessing the total income of the assessee at Rs.51,60,620/-. Aggrieved by the action of the AO, the assessee appealed before the FAA, who after considering the submissions and examining the records placed before him partly allowed the appeal of the assessee by sustaining the bogus purchases at the rate of 12.5% of the purchases by relying on the decision of the Hon’ble Gujarat High Court in the case of CIT V/s Simit P Sheth, 356 ITR 451. Aggrieved by the order of FAA, the revenue is in appeal before us. 4. After considering the rival submissions and perusing the relevant records as placed before us , we find that the assessee has indisputably availed the bogus entries of purchases from hawala traders to the tune of Rs.37,21,150/- which could not be proved during the assessee during assessment proceedings as genuine. Moreover, the assessee did not file any information/details and record as called for by the AO and the notices issued u/s 133(6) of the Act were returned unserved. However, the assessee filed the detailed submissions before the ld.CIT(A) who after taking into account the bills ,vouchers,bank statements etc submissions 4 and contentions reduced the addition to the extent of 87.50% and sustained to the tune of 12.5% of the total purchases and thus allowed the appeal partly. Having considered the facts on records and after hearing both the parties, we are of the considered view that the ld.CIT(A) has passed a very balance and reasoned decision in the matter. Therefore, we are not inclined to interfere with it. 5. In the result, the appeal of the revenue is dismissed.