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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Parth Tradelinks P. Ltd. Income Tax Officer, B-1602 Kailash Tower, M.G. Aayakar Bhavan, M.K. Road Vs. RD, Kandivali (W) Mumbai-20 Mumbai-400 0067 Appellant .. Respondent PAN No. AAACP6609H Assessee by .. Shri Vipul J. Shah, AR .. Shri Anupama Singla, DR Revenue by Date of hearing .. 23-03-2017 .. Date of pronouncement 07-04-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT(A)-21, Mumbai, in appeal No. CIT(A)-21/ITO-13(1)(3)/IT-222/2015-16 dated 27-05-2015. The Assessment was framed by ITO – 13(1)(3), Mumbai for the A.Y. 2009-10 vide order dated 28-03-2015 under section 144 read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) in upholding the addition of unexplained expenditure under section 69 of the Act being bogus purchases. For this assessee has raised following ground: -
“On the facts and in the circumstances of the case and in law, the learned CIT (A) grossly erred in upholding the addition of Rs. 21,89,884/- (being 6 % of Rs 3,64,98,059/- ) on account of unexplained expenditure without appreciating the fact that the purchases were made from various parties that were genuine and not bogus. The Appellant Director prays that the said addition is unjustified and may please be deleted.”
Parth Tradelinks P. Ltd.; AY:09-10
Briefly stated facts are that the assessee is a Private Ltd. Company engaged in the business of chemicals etc. This assessment was framed in response to issuance of notice under section 148 of the Act by framing assessment under section 144 read with section 147 of the Act. The reason for reopening was that the assessee made bogus purchases of Rs. 3,64,98,059/- from various parties, the basis of information was Sales Tax Department of Govt. of Maharashtra. The AO noted that he is received information from DGIT (Investigation) Mumbai regarding bogus purchase of Rs. 3,64,98,059/- made by assessee during FY 2008-09 from the following parties. Sr. Name of the purchase Phirty PAN F. Y. Amount of No. Transaction 1. STHAPWA TRADE IMPEX PVT. AAKCS6555K 2008-09 130,055,393/- LTD 2. RITESH CORPORATION 2008-09 23,442,666/- When it was brought to notice of the assessee that these purchase are bogus from a Hawala Parties and was asked to produce these parties for verification, the assessee could not produce and admitted that profit element at the rate of 6% of the bogus purchases can be added as recorded by AO in Para 4.4 as under: - “4.4 – In response to the above, the Assessee’ Representative in the order sheet noting of the even date stated as under: -
The assessee has made genuine purchases from the above mentioned parties. Also the payments have been made through account payee cheque. The material purchase has been actually delivered to the party to whom sales has been done, so considering the further litigations & to buy peace of mind we are ready to offer @ 6% the total purchases of the above parties."
The assessee agreed for the addition of Rs.21,89,884/- on account of the Profit representing or embedded in the non-genuine purchases booked during the year. This percentage is arrived at after taking into Page 2 of 4
Parth Tradelinks P. Ltd.; AY:09-10 consideration the profit margins shown by assessee in the earlier years and the margins prevailing in the trading business in this tine. Accordingly, an amount of Rs.21,89,884/- is added to the returned income of the assessee.”
Accordingly, the AO added this amount and also by discussing the issue on merits by observing as under: - In view of the discussion at foregoing pares, it is held that the assessee has suppressed profit to the tune of Rs.21,89,884/- being 6% of non-genuine purchases of Rs.3,64,98,059- for the year under consideration, and the same is accordingly, added back to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) are separately initiated for furnishing inaccurate particulars of income and for concealing the income”
Aggrieved assessee preferred the appeal before CIT(A), who also confirming the action of the AO vide Para 6 as under: - “6. I have considered the submissions of the Ld. AR. Contrary to the appellant's submission that no notices u/s 133(6) were issued, I find that in Para 4.5. (b) the assessing officer has recorded that the notices u/s 133(6) were issued but was returned unserved since the parties were not available at the stated address. The assesse was informed regarding this vide order sheet entry dated 5.03.2016. The appellant was unable to produce these parties and could not even provide any knew address at which summons u/s 131 could be issued. Even in the course of the appellate proceedings, despite opportunity granted, the appellant could not produce the impugned hawala parties. appellant is a dealer in chemicals and solvents. Purchases of Rs 7.63 crores is shown during the year. The assessing officer has not disallowed the entire purchases. He has instead disallowed only 6% of the Page 3 of 4
Parth Tradelinks P. Ltd.; AY:09-10 purchases by considering the profit element embedded in the impugned sales. The appellant had accepted the disallowance in the assessment proceedings voluntarily. The purchases claimed from these two parties are quite large and it is inconceivable that if the suppliers were genuine, they would be untraceable. I find no reason to interfere in the conclusion of the assessing officer. The ground of appeal no 1 is dismissed.”
Now, aggrieved assessee is in second appeal before Tribunal.
Before us, the learned Counsel for the filed details of purchase and stated that sales have not been doubted by the AO but when it was pointed out to him the assessee himself has surrender before the AO, he could not answer on the same. It is a fact that the assessee has made payment by cheque to these parties but it is also a counter fact that these are hawala parties from whom the assessee has made purchase. Admittedly, the sales are not doubted by the AO and hence, the AO has rightly made an addition at the rate of 6% of profit rate on the bogus purchases. Hence, we confirm the order of CIT(A) and this issue of assessee’s appeal is dismissed. Appeal of assessee is dismissed.
In the result, the appeal of assessee is dismissed. Order pronounced in the open court on 07-04-2017.