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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI SANDEEP GOSAIN
सुनवाई की तायीख / Date of Hearing : 01.03.2017 घोषणा की तायीख /Date of Pronouncement : 17.03.2017 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the Revenue on 15.6.2016 is against the order of the CIT (A)-45, Mumbai dated 11.3.2016 for the assessment year 2011-2012. In this appeal, Revenue raised the following grounds which read as under:- “(i). On the facts and in the circumstances of the case and in law, Ld CIT (A) has erred in restricting the addition of Rs. 1,27,15,912/- made in respect of bogus purchases to Rs. 15,89,489/- especially when CIT () has clearly found that the assessee did not fully substantiate the claim of genuine purchases. (ii). On the facts and in the circumstances of the case and in law, the Ld CIT (A) has erred in not making inquiry or directing the AO to conduct inquiries to establish the correct facts in this case, when it is noticed that the assessee had completely failed to establish the genuineness of purchase. (iii). On the facts and in the circumstances of the case and in law, the Ld CIT (A) has erred in determining the profit percentage at the rate of 12.5% of bogus purchases while the assessee failed to establish the genuineness of the purchases claimed.”
2. The only issue raised in this appeal relates to the relief granted by the CIT (A) in respect of the addition of entire bogus purchases. Briefly stated relevant facts of the case are that the assessee is engaged in the business of „construction of building and land development‟. Assessee filed the return of income declaring the total income of Rs. NIL and claimed Rs. 56,63,33,688/- as „closing work-in-progress‟. The assessment was completed u/s 143(3) of the Act wherein the AO reduced the said claim to Rs.56,36,17,776/- and treated the difference amount of Rs. 1,27,15,912/- as unexplained expenditure u/s 69C of the Act. Further, during the assessment proceedings, AO observed that during the year assessee made purchases from certain parties [viz Amar Trading Corportion; (ii) Jainex Traders Pvt Ltd; (iii) Maa Chamunda Sales Pvt Ltd; (iv) Somnath International and (v) Tirupati Enterprises], whose names are appearing in the whose names are listed by the Sales Tax Department in their website ie www.mahavat.gov.in as Sales Tax defaulters. All such purchases involving the suppliers enlisted the said Sales Tax Department website were added by the AO u/s 69C of the Act. Matter travelled to the first appellate authority.
During the proceedings before the first appellate authority, CIT (A) relied on 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 and disproved the addition made by the AO u/s 69C of the Act. 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, CIT (A) restricted the addition to Rs. 1,58,949/- ie 12.5% of such alleged bogus purchases of Rs. 1,27,15,912/-. Aggrieved with the relief granted by the CIT (A), Revenue is in appeal before the Tribunal by raising the above grounds.
During the proceedings before us, none appeared to represent the assessee‟s case. Considering the covered nature of the issues, we proceed to adjudicate this appeal on merits with the help of the Ld DR for the Revenue.
On the other hand, Ld DR for the Revenue dutifully relied on the order of the AO and the view taken by him.
On hearing both the parties and on perusal of the orders of the Revenue Authorities in general and the contents of para 7 of the CIT (A)‟s order in particular, we find the same are relevant in this regard. Considering the significance of the said para for the sake of completeness of this order, relevant portion from the said para is extracted as under:- “7............