SAMEER VASANT MEHTA,,RAIGAD vs. INCOME-TAX OFFICER,,

The assessee has raised the following grounds of appeal:- On the facts and in law, 1. The Ld. CIT(A) erred in holding that the reopening u/s 148 was valid without appreciating that the reopening was bad in law and accordingly, the reasst. Ought to have been held as null and void. 2. The Ld. CIT(A) erred in holding that the purchases made by the assessee from three parties to the tune of Rs.10,41,304/- were non genuine and thereby erred in confirming the addition on account of suppressed gross profit thereon of Rs.9,35,452/-. 3. The Ld. CIT(A) failed to appreciate that the purchases made by the assessee of Rs.10,41,304/- were genuine and duly supported by proper documents and hence, there was no reason to confirm any addition on this issue and the addition made by the CIT(A) of suppressed gross profit of Rs.9,35,452/- should be deleted.

The issue raised in the present appeal is against the addition made on account of suppressed gross profit on Hawala purchases.

Briefly, in the facts of the case, the assessee was engaged in trading in chemical items. The Assessing Officer received information from the Sales Tax Department in respect of accommodation entries given on account of bogus purchase bills, the name of assessee appeared in the said list. In view thereof, the Assessing Officer recorded reasons for reopening the assessment and notice under section 148 of the Act was issued to the assessee. In reply, the assessee filed return of income and asked for the reasons. The assessee objected to the reasons recorded and also questioned the reopening of assessment under section 148 of the Act. On merits, the assessee was found to have made purchases from three different parties. The Assessing Officer sought information under section 133(6) of the Act but no such party was available and hence, the assessee was asked to produce the vendors, who could not be produced. Consequently, addition was made on account of bogus purchases totaling ₹ 10,41,304/-.

The CIT(A) upheld the addition in the hands of assessee.

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee pointed out that the issue stands covered by the decision of Pune Bench of Tribunal in bunch of appeals with lead order in M/s. Chhabi Electricals Pvt. Ltd. Vs. DCIT in ITA No.795/PUN/2014, relating to assessment year 2010-11, order dated 28.04.2017.

The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.

On perusal of record and after hearing both the learned Authorized Representatives, the only issue which is addressed by the assessee is against the addition made on account of bogus purchases. The assessee though raised ground of appeal No.1 against reopening of assessment under section 148 of the Act but has not raised any arguments against the same. Hence, the same is dismissed.

Now, coming to the second issue raised is whether the addition of purchases made by the assessee is to be made in the hands of assessee simiplicitor. The issue stands covered by the order of Tribunal in M/s. Chhabi Electricals Pvt. Ltd. Vs. DCIT (supra), wherein it has been held that GP rate of 10% is to be applied on the goods purchased over and above the GP rate declared by the assessee. Applying the said principle to the issue here, the addition is restricted to 10% of GP rate on the goods purchased over and

In the result, appeal of assessee is partly allowed.