ACIT 32(2), MUMBAI vs. KALPESH P DOSHI, MUMBAI

This appeal filed by the Revenue on 26.5.2015 is against the order of the CIT (A)-44, Mumbai dated 11.2.2015 for the assessment year 2010-2011.

In this appeal, Revenue raised six grounds in toto and they revolve around the solitary issue relates to the relief grated by the CIT (A) with regard to the addition of entire bogus purchases amounting to Rs. 45,62,456/-. During the assessment proceedings, AO noted that the assessee made bogus purchases from three parties viz (i) M/s. Laxmi Traders (Rs. 19,45,959/-); (ii) M/s. Royal Enterprises (Rs. 7,78,804/-) and (iii) M/s. Jainex Enterprises (Rs. 18,37,693/-). Subsequently, AO also initiated proceedings u/s 133(6) of the Act in respect of the said purchases. Accordingly AO made the addition. Aggrieved with the above addition, assessee was in appeal before the CIT (A). 3. During the proceedings before the first appellate authority, after considering the submissions of the assessee, CIT (A) followed the judgment of the Hon’ble jurisdictional High Court in the case of Nickunj Eximp Enterprises Pvt Ltd vs. ACIT vide Writ petition No. 2860 of 2012, dated 18th June, 2014. Further, relying on the ratio laid down by the Hon’ble Gujarat High Court in the case of CIT vs. Simit P. Sheth, of 2012, dated 16.1.2013 and restricted the addition to 7.8% of the bogus purchases. CIT (A) considered the average GP of the assessee for the AYs 2007-08; 2008-09 and 2009-10. Thus, CIT (A) granted relief to the extent of 92.02%.

Before us, Ld DR for the assessee explained the above facts and submitted that the CIT (A)erred in non-considering the facts relating to the non-payment of VAT to the Statement Government, which was considered by the Hon’ble Gujarat High Court in the case of Simit P Sheth (supra). In reply, Ld AR for the assessee submitted that he will have no objection if the GP is estimated applying 12.50% on the so called bogus purchases.

We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited precedents and the relevant material placed before the Tribunal. On hearing both the parties and considering the concession of the Ld AR for the assessee, we are of the opinion that the Assessing Officer should apply the flat rate of 12.50% of the said amount of Rs. 45,62,456/-. Accordingly, we order. Thus, the grounds raised