MANISH MAHIPTARAI SHAH,BHIWANDI vs. ITO 1(2), KALYAN

I heard the parties and perused the record. The assessee is a wholesale trader in Steel bars, rods and angles. Consequent to the information received from the Sales tax department, it came to the notice of the revenue that the assessee has made purchases to the tune of Rs.11,61,471/- during the year under consideration from the parties, who were listed out by the Sales tax department as hawala dealers, i.e., they provided only accommodation bills without actually supplying the material. Hence the AO treated the above said amount of Rs.11,61,471/- as bogus purchases and disallowed the same. The Ld CIT(A) sustained the addition to the extent of Rs.3,91,493/- by considering the net profit rate/GP rate declared by the assessee. Still aggrieved, the assessee has filed this appeal.

At the time of hearing, the Ld A.R submitted that the AO had made identical addition in AY 2009-10. When the matter travelled to the ITAT, the Tribunal, vide its order dated 14.3.2017 passed in restricted the addition to 5% of the alleged bogus purchases.

I heard Ld D.R and perused the order passed by the division bench in the assessee’s own case for AY 2009-10. Since the facts are identical, consistent with the view taken therein, I modify the order passed by Ld CIT(A) and direct the AO to restrict the addition to 5% of the alleged bogus purchases.

In the result, the appeal filed by the assessee is partly allowed. Order has been pronounced in the Court on 4.5.2017.