ITO 24(3)(3), MUMBAI vs. S.D. INDUSTRIES, MUMBAI

During the proceedings before the first appellate authority, after considering the submissions of the assessee, CIT (A) partly allowed the assessee‟s appeal. Aggrieved with the said decision of the CIT (A), Revenue is in appeal before the Tribunal by raising the above mentioned grounds.

At the outset, Ld Representatives of both the parties agreed to the point that the issue involved in the Revenue‟s appeal is against the relief granted by the CIT (A) on the addition involving the accommodation entries qua the purchases from the suppliers, whose names are 4934/M/14-10-11 Industries listed by the Sales Tax Department in their website ie www.mahavat.gov.in as Sales Tax defaulters. They also fairly mentioned that the Tribunal is consistently taking a view on the issue that by not confirming such bogus addition supplied by such parties rather the Tribunal is consistently resorting to confirming the additions to GP of the concerned assessee‟s. In this regard they brought our attention to the decision of the Tribunal in the case of Shri Pratap U Purohit vide ITA No.5296/M/2013 (AY 2010-2011), dated 10.02.2016. Further, they mentioned that if the said approach of confirming the GP based additions on such bogus purchases involving such tainted suppliers, whose names are appeared in the said website of the Sales Tax Department, the instant appeal filed by the Revenue should be dismissed upholding the order of the CIT (A).

On hearing both the parties and on perusal of the orders of the Revenue Authorities in general and the contents of para 2.3 in particular, I 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:- “2.3. .......... ........... Further, while dealing with the assessee’s own case for AY 2010-2011 on identical issue I have hold that average GP of past three years ie @ 20% of the bogus purchases after giving credit for the GP already offered and balance as escaped income for the purposes of taxation vide my order in appeal no. CIT(A)-34/IT-96/13- 14. Therefore, following the same I hold that to judge such inflated purchase / cost estimate GP at 20% considering the average GP of past 3 years and accordingly direct the AO to accept the GP @ 20% of the bogus purchases and give credit for the GP already offered on such purchase and tax the balance as escaped income for the purposes of taxation & delete the balance addition.”

Considering the above, I am of the opinion that the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, grounds raised by the Revenue are dismissed.

In the result, appeal of the Revenue is dismissed. As the facts for the year under appeal are identical to the facts of AY.2009-10, so,respectfully following the same we decide the effective ground of appeal against the AO. As a result,appeal filed by the AO stands dismissed. फलतःिनधा"रती अिधकारी "ारा दािखल क" गई अपील नामंजूर क" जाती है. Order pronounced in the open court on 22nd March , 2017. आदेश क" घोषणा खुले "यायालय म" "दनांक 22 माच" , 2017 को क" गई । (अमरजीत "सह / Amarjit Singh ) (राजे"" / Rajendra) "याियक सद"य / JUDICIAL MEMBER लेखा लेखा लेखा सद"य लेखा सद"य सद"य / ACCOUNTANT MEMBER सद"य मुंबई Mumbai; "दनांक/Dated : 22.03.2017. Jv.Sr.PS. आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत 1.Appellant /अपीलाथ"

Respondent /""यथ" 3.The concerned CIT(A)/संब" अपीलीय आयकर आयु", 4.The concerned CIT /संब" आयकर आयु" 5.DR “E ” Bench, ITAT, Mumbai /िवभागीय "ितिनिध, खंडपीठ,आ.अ."याया.मुंबई 6.Guard File/गाड" फाईल. स"यािपत "ित //// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst.