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Income Tax Appellate Tribunal, “B” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Amarjit Singh (JM)
The appeal filed by the Revenue is directed against the order dated 1.6.2015 passed by the learned CIT(A)-32, Mumbai and it relates to A.Y. 2011- 12. The Revenue is aggrieved by the decision of the learned CIT(A) in restricting the addition relating to bogus purchases made by the Assessing Officer.
We have heard the parties and perused the record. The assessee is engaged in the business of iron and steel beams, angles, channels etc. The Assessing Officer noticed that the assessee has claimed purchase of 21.11 crores. The Assessing Officer received information that the assessee has purchased goods from certain dealers who have been categorised as hawala dealers by the Sales Tax Department i.e. those dealers have provided only accommodation bills without actually supplying goods. The Assessing Officer noticed that the assessee has purchased goods for an aggregate amount of `
2 Mohammed Raza H.Mukhi 5.37 crores from the above said parties. Accordingly the Assessing Officer disputed the claim of purchase and proceeded to assess the peak credit of the purchases amounting to ` 51,69,996 as income of the assessee u/s. 69C of the Act. The learned CIT(A) noticed that the Assessing Officer has assessed 3% of the purchases in A.Y. 2007-08 and accordingly directed the Assessing Officer to compute addition at 3% of the alleged purchases, which worked out to ` 16,11,916/-. Thus the learned CIT(A) gave relief of ` 35,58,080/-. Aggrieved the Revenue has filed this appeal before us.
We have heard the parties and perused the record. The learned Departmental Representative submitted that the learned CIT(A) was not justified in placing reliance on the assessment order passed for A.Y. 2007-08 since the question of purchase from hawala dealers does not arise in that year. He further submitted that the Assessing Officer was considerate enough to assess the peak credit instead of disallowing entire purchases. Accordingly, he submitted that the disallowance made by the Assessing Officer should be restored.
On the contrary learned AR submitted that the Assessing Officer himself has made addition of 3% on the alleged bogus purchases in the immediately preceding A.Y. 2010-11, wherein also a query was raised with regard to the alleged bogus purchases on the basis of information received from the Sales Tax department. He further submitted that the Assessing Officer did not provide opportunity to cross examine the suppliers even though the assessee had requested for the same. He further submitted that the gross profit ratio disclosed by the assessee over the years were consistent. He also submitted that the assessee, as trader of goods could not have sold goods without making actual purchases. Accordingly, he submitted that the learned CIT(A) should have deleted the entire addition. He submitted that the addition of 3% of the purchases is reasonable and accordingly prayed that the order passed by the learned CIT(A) be sustained.
3 Mohammed Raza H.Mukhi
Having heard the rival submissions, we are of the view that there is no reason to interfere with the order passed by the learned CIT(A) since the Assessing Officer himself has assessed 3% of the value of alleged bogus purchases in A.Y. 2010-11. Further the Assessing Officer has simply relied upon the information received from the Sales Tax Department and he did not make any independent inquiry. Opportunity for cross examining the suppliers was also not provided, hence, we do not find any infirmity in the order passed by the learned CIT(A) in confirming the addition of 3% of the alleged bogus purchases.
In the result, appeal filed by the Revenue is dismissed. Order has been pronounced in the Court on 22.5.2017.