ASST CIT 10(3)(1), MUMBAI vs. NIVEDITA CHEMICALS P.LTD, MUMBAI

The captioned appeal by revenue as well as assessee for Assessment Year [AY] 2011-12 assails the order of Ld. Commissioner of Income tax (Appeals)-17 [CIT(A)], Mumbai dated 25/03/2015 qua confirmation of certain additions with respect to certain bogus purchases.

Briefly stated, the assessee, being corporate assessee, was assessed u/s 143(3) at Rs.2,56,24,430/- after certain adjustments / disallowances vide Assessing Officer [AO] order dated 24/02/2014 as against returned income of Rs.1,78,89,673/- e-filed by assessee on 26/09/2011. The assessee was engaged as manufacturer of drugs and chemicals. One of the addition was related with bogus purchases amounting to Rs.60,34,455/- made by assessee from three parties which were listed as accommodation entry provider / bogus supplier as per the information received from the Sales Tax Department, Maharashtra. In support, the assessee submitted ledger extracts, invoice copies, proof of delivery of goods and bank statement highlighting transactions with these parties. The Ld. AO noted certain discrepancies in the documents and conducted physical inquiry at the premises of the suppliers which revealed none of the parties existed at the given addresses which led the AO to conclude that these purchases were bogus which resulted into impugned additions.

The Ld. Counsel for assessee [AR] drew our attention to the fact that the assessee has suffered disallowance of Rs.28,38,922/- out of alleged bogus purchases of Rs.60,34,455/- which is roughly 47% and therefore, on the higher side and therefore, the assessee deserves further relief in the case particularly when the assessee was in possession of purchases documents and all payments were through banking channels.

Per contra, the Ld. Departmental representative assailed the order of Ld. CIT(A) by contending that the onus to prove the purchases beyond doubt squarely lied on the assessee which he has failed to discharge and hence, the assessee deserves full disallowance against bogus purchases. & 2464/M/2015 Nivedita Chemicals Private Limited Assessment Year 2011-12 6. We have heard the rival contentions and perused the relevant material on record. After analyzing the various contentions of respective representatives coupled with observation / findings of Ld. CIT(A) and after appreciating factual matrix of the case, we find that the conclusion reached at by the Ld. CIT(A) is a reasonable and fair one in view of the fact that the assessee was in possession of requisite invoices, payments were though banking channels, quantitative details were provided to the lower authorities. The Tribunal, invariably, in all such cases, have taken a stand that even if presuming that all purchases were bogus, entire addition thereof was not warranted for particularly when the sales were not in dispute and the addition, if any, which has to be made in all such cases is to account for profit element embedded in such purchase transactions. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and see no reason to interfere with the same. Hence, by confirming the same, we dismiss both the appeals.

In nutshell, the revenue’s appeal as well as assessee’s appeal stands dismissed. Order pronounced in the open court on 01st May, 2017.