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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)- 42, Mumbai dated 23/09/2016 for the A.Y.2009-10 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act. 2. In this appeal assessee is aggrieved for addition of Rs.4,18,766/- alleged to be bogus purchases. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a Partnership Firm engaged in the business of manufacturing and trading of electrical goods. The assessee had filed its return of income on 25.09.2009 declaring a total income of Rs.5,39,514/-. The same was merely processed u/s 143(1) of the Act. Subsequently the AO received information from the office of the DGIT(Inv), Mumbai that the M/s. Western Plastic & Rubber Works assessee is a beneficiary of accommodation bill of purchases from certain bogus hawala dealers. The information was that the concerned dealers had not sold any actual goods but had given bogus bills of sales to the assessee. The AO noted that the assessee has taken accommodation entries from two hawala dealers. Accordingly the AO initiated action under section 147 of the Act. In the assessment framed u/s.143(3) r.w.s. 147, AO added entire purchases of Rs.4,18,766/- u/s.69C.
By the impugned order CIT(A) confirmed action of the AO.
I have considered rival contentions and carefully gone through the orders of the authorities below and found from record that corresponding sales of such alleged bogus purchases was not denied by the AO and on the total sales so affected, assessee has offered GP of 26.24%. When the corresponding sales have not been denied, it is not correct to add the entire amount of such purchases in assessee’s income.
Keeping in view totality of facts and circumstances of the case vis-à-vis GP of 26.24% declared by the assessee and nature of its business, I deem it proper to restrict the addition to the extent of 5% of such purchases. I direct accordingly.