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Income Tax Appellate Tribunal, “ C ” BENCH, MUMBAI
O R D E R PER MAHAVIR SINGH, JM:
This appeal by the Revenue is arising out of the order of CIT(A)-29, Mumbai, in appeal No. CIT(A)-29/IT-64/AC 18(1)/14-15 dated 12-05-2015. The Assessment was framed by ACIT Circle 14(3), Mumbai for the A.Y. 2011-12 vide order dated 28-02-2014 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of Revenue is against the order of CIT(A) restricting the disallowance of bogus purchase by applying profits rate at 12.5%. For this Revenue has raised following four grounds: - “1. On the facts and in the circumstances of the case, the CIT(A) has erred in law as well as on fact by not sustaining addition u/s 69C of Rs 4421 139/- on account of gross value of transaction of bogus Purchases, after having accepted the finding in principle that the purchases were made from undisclosed/ unverifiable/
d Chetan Pravin Chitalia; AY: 11-12 unidentifiable parties in the grey market by investing in cash and the purchases shown were only accommodation entries and not actual purchases.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deviating from the findings made by the AO and applied G P. rate and to limit the disallowance of purchases made from tainted suppliers to 125%. since the assessee had failed to substantiate his claim before the AO during the course of the assessment proceedings even after ample opportunity was provide to him.
On the facts and in the circumstances of the case and in law, Ld CIT(A) erred in allowing purchases by placing reliance on the decision of Gujarat High Court in the case of CIT vs Simit P Sheth O/TAXAP/552/2012 Tax Appeal NO 533 of 2012 dt. 16.01.2013 (356 ITR 451) and ITAT Ahmedabad in the case of M/s Vijay Proteins Ltd Vs ACIT 58 ITD 428 and ITAT, Mumbai decision in the case of Rajiv G. Kalathi in dtd. 20 08.2014 in AY 2009-10, which are not relevant to the facts of the instant case.
4. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in restricting the addition made on account of bogus purchases from 2 parties viz M/s N R Traders and M/s Balaji Impex, existence of whom could not be proved by the assessee during the course of the assessment proceedings, as also the purchases from these parties were made in the month of April, 2010 and no payment was made to these parties in the FY. 2010-11. The bank account of M/s N. R. Traders in which the payment was made was opened much after the purchases made from the party is shown.”
d Chetan Pravin Chitalia; AY: 11-12 3. Briefly stated facts are that the AO noticed from the accounts of the assessee that the assessee had made purchase from the parties who are declare as the hawala dealer/ accommodation entry providers by the Department of Sales Tax Govt. of Maharashtra. These parties has indulged in issuing bills without delivery of any goods or material on commission basis. The following are the purchase from the parties: -
Sr. No Name of the party Amount (Rs.) a. M/s N.R. Traders 21,46,139/- b. M/s Balaji Impex 22,75,000/- Accordingly, the AO made addition of bogus purchase of Rs. 44,21,139/- under section 69C of the Act.
Aggrieved, assessee preferred the appeal before CIT(A), who after considering the submissions of the assessee restricted the disallowance at 12.5% of profit rate of the bogus purchases by observing in Para 5 of his appellate order: - “5. I have considered the facts of the case and submissions made. The facts are not in dispute. The suppliers are not available at the address furnished and assessee has been unable to explain the same. However, the assessee has produced the bills, delivery challans and also the stock statement before the AO and it is also shown that the payments has been made by account payee cheques. The withdrawals of money from the payees account soon after the payment has been made is immaterial unless it is shown that such withdrawal has been made by the assessee or on its behalf. Considering the facts in totality and also the decision of ITAT, Ahmedabad in the case of Vijay Proteins Ltd. vs. ACIT 58 ITD 428 and also Gujrat High Court in the case of Simit P. Sheth, 356 ITR 451, the disallowance made by the AO is directed to be limited to 12.50/o of the total purchases made. This ground is therefore allowed in part.”
d Chetan Pravin Chitalia; AY: 11-12 Aggrieved, now Revenue is in appeal before us.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the AO conducted enquiries from the bank and found that the bank account of NR traders and Balaji Traders, in which payments were made by the assessee were opened after the purchases were made from these parties. The withdrawal details and payment made by the assessee are also considered by the AO. It was noted by the AO that all withdrawals are immediately after the payments made by assessee. The AO also noted that the signatures in the bank accounts are different than this in the purchase bills and delivery challans. But the AO also noted the fact that all the purchase shown from these parties are recorded in the stock register maintained by the assessee, which is genuine and goods shown are purchase from these parties were actually purchase from grey market in cash. The assessee before AO as well as before CIT(A) produced copy of bank statements showing the payments of purchases, bills and delivery challans and also stock statements and payments are made by account payee cheques. Once this is the fact that the sales are not doubted we find that the CIT(A) has rightly applied profit rate at 12.5% and hence, we find no infirmity in the order of CIT(A) and hence the same is confirmed.
In the result, the appeal of Revenue is dismissed. Order pronounced in the open court on 03-05-2017.