ITO WD 3(1), KALYAN vs. BHARAT RAGHAVBHAI PATEL, MUMBAI

The present Appeal filed by the revenue is against the order of Commissioner of Income Tax (Appeals)-1, Mumbai dated 29.09.16 for AY 2010-11.

As per the facts of the present case, the assessee filed its return of income for the year under consideration declaring total income at Rs. 2,52,830/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Subsequently, information was received by the AO from DGIT(Inv.), Mumbai related to bogus purchase entries received from the Sales Tax Department, Maharashtra. The AO had information that some of the parties from whom the assessee had made purchases were bogus and they are engaged in the business of providing bills without actual delivery of goods. The case was reopened u/s 147 of the I.T. Act and after carrying out investigations and after seeking reply from the assessee, disallowed the claim of purchase amounting to Rs. 70,56,560/- as bogus purchases and added the same u/s 69C of I.T. Act on Bharat Raghavbhai Patel account of unproved purchases vide order passed u/s 143(3) r.w.s. 147 of the I.T. Act passed on 18.08.14. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee. Now before us, the revenue has preferred the appeal by raising the above grounds.

The sole ground raised by the assessee relates to challenging the order of Ld. CIT(A) in restricting the disallowance @ 15% of the net purchases.

We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that Ld. CIT(A) after considering the facts of the present case as well as orders passed by AO had reached to the conclusion that since the AO has not doubted the sales, therefore in these circumstances, the motive behind obtaining bogus bills by the assessee thus, appears to be inflation of purchase price so as to suppress true profits. The Ld. CIT(A)