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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI D.T. GARASIA, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by revenue for Assessment Year [AY] 2010-2011 assails order of Ld. Commissioner of Income Tax (Appeals)-32 [CIT(A)], Mumbai dated 27/01/2015 qua relief provided by Ld. CIT(A) to the assessee on account of certain bogus purchases. 2. Briefly stated, the assessee, being resident individual, was subjected to an assessment u/s 143(3) of the Income Tax Act, 1961 vide Assessing Officer [AO] order dated 25/03/2013 where the total income of the assessee was determined at Rs.61,87,220/- after certain adjustments and disallowances as against returned income of Rs. 11,83,207/- filed by the assessee on 24/09/2010. The assessee was engaged in the business of Timber & Plywood under the name & style of M/s Sara Timber Corporation. During the assessment proceedings, as per information received from DGIT, Mumbai, the assessee was found to be the beneficiary of bogus purchases from certain suspicious dealers for an amount of Rs.1,30,82,100/-. To confirm the same, notices u/s 133(6) were issued, however, the same were returned back which led the AO to conclude that the assessee failed to substantiate the purchases and discharge the initial onus of proving its claim regarding purchases. In support, the assessee contended that adequate details of sale & purchase were maintained by the assessee and all the payments were through banking channels. However, not fully convinced with the arguments, AO sustained addition to the extent of Rs.49,31,792/- on account of these bogus purchases. Aggrieved, the assessee carried the matter before Ld. CIT(A) with partial success vide order dated 25/03/2013 and raised similar contentions. The Ld. CIT(A) after placing reliance on various judicial pronouncements restricted the said disallowance to 12.5% of the alleged bogus purchases which came to Rs.16,35,262/- as against Rs.49,31,792/- made by the Ld. AO. Aggrieved by the stand of Ld. CIT(A), the revenue is in appeal before us.
Smt. Zarina Yusuf Sara Assessment Year 2010-11 3. Before us, the Ld. DR contended that the assessee could not even provide the addresses of the suppliers and therefore, rightly suffered the said disallowance at the hands of AO. The complete onus was on the assessee to substantiate his purchases which he failed to discharge and moreover, the GP rate shown by the assessee reflected downward trend in the impugned AY and therefore, additions made by AO were to be confirmed. Per contra, Ld. counsel for assessee [AR] drew our attention to the fact that the assessee accepted the orders of the Ld. CIT(A) only to cover the shortcomings in the accounts of the assessee as noted by the revenue and did not went in further appeal against the same. The sales were nowhere disputed by the revenue and therefore, even if all the purchases were to be treated as bogus, entire additions thereof could not be made rather the addition has to be restricted to certain percentage only in the light of various judicial pronouncements.
We have heard the rival contentions and perused the relevant material on record. We find that the Ld. CIT(A) after appreciating the various contentions of the assessee and placing reliance on various judicial pronouncements, restricted the impugned additions to 12.5% of bogus purchases, which, in our opinion, is quite fair and reasonable keeping in view the facts that the sales were not disputed by the revenue, assessee was in possession of the sale / purchase invoices, payments were through banking channels and adequate stock details were maintained by the assessee. We also note the fact that the Tribunal, in all such cases, has more or less, taken a stand that an addition ranging from 5% to 12.5% of impugned bogus purchases would be sufficient to cover up the revenue loss on account of such bogus purchases. Therefore, taking the consistent stand, we see no reason to interfere with the findings / conclusions of the Ld. CIT(A) and therefore, no hesitation in dismissing revenue’s appeal.
In nutshell, the revenue’s appeal stand dismissed. Order pronounced in the open court on 12th April, 2017.
Sd/- Sd/- (D.T. Garasia) (Manoj Kumar Aggarwal)
Smt. Zarina Yusuf Sara Assessment Year 2010-11 �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 12.04.2017 Sr.PS:- Thirumalesh आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent 2. आयकर आयु�(अपील) / The CIT(A) 3. आयकर आयु� / CIT – concerned 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER,