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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: Shri Joginder Singh, & Shri N.K. Pradhan
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 01/04/2014 of the Ld. First Appellate Authority, Mumbai. The only ground raised by the Revenue pertains to restricting the addition made u/s 69C of the Income Tax Act, 1961 (hereinafter the Act) amounting to Rs.2,66,19,862/- to Rs.33,27,483/- i.e. to 12.5% on account of bogus purchases, more specifically when accommodation entries were provided to the assessee and field enquiries resulted in confirmation of bogus purchases.
During hearing of this appeal, none was present for the assessee, whereas, Shri B.S. Bist, ld. DR, was present for the Revenue. We find that the Revenue filed this appeal on 30/07/2014 as is evident from order-sheet entry dated 30/12/2015. Registered notices were sent to the assessee for 11/01/2016 and on 18/07/2016, the ld. DR was to affect services upon he assessee for 20/02/2017. During hearing nothing was produced by the Revenue to affect the service. Even the registered AD notice was returned by the postal authorities, therefore, we have no option but to proceed ex- parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record.
2.1. We have considered the submissions of ld. DR and perused the material available on record. The facts, in brief, are that the assessee is engaged in wholesale trading in hardware in proprietary concern namely Shubham Hardware, declared total income of Rs.19,45,934/- in his return filed on 14/10/2010. The income of the assessee was consisting of business income and income from other sources. Subsequently, the case of the assessee was selected for scrutiny, therefore, notices u/s 143(2) and 142(1) of the Act was served upon the assessee. The assessee attended the proceedings and filed requisite details, explanation called for and thus the assessment was completed on a total income of Rs.2,85,65,800/- u/s 143(3) of the Act on 22/03/2013 by making certain additions/disallowances. The assessee claimed to have made purchases from M/s Victor Intertrade Pvt. Ltd. The ld. Assessing Officer is having information that before the Sales Tax Authorities, M/s Victor Intertrade Pvt. Ltd., tendered that they are indulged in providing bogus bills and actually did not supply any goods. On the basis of this information, the Ld. Assessing Officer submitted the ledger extracts of M/s Victor Intertrade Pvt. Ltd. for Financial Year 2009-10, recording the transaction of purchases made from them indicating the description of goods and valuation of purchases made from M/s Victor Intertrade Pvt. Ltd. along with copies of bank statements of the respective month evidencing the payments made to M/s Victor Intertrade Pvt. Ltd., through account payee cheque. The Ld. Assessing Officer rejected the explanation of the assessee and treated the purchases as unexplained expenditure by observing the same as bogus and consequent addition was made u/s 69 of the Act.
2.2. On appeal before the Ld. Commissioner of Income Tax (Appeal), the factual matrix was considered and following various decisions and directed the Assessing Officer to sustain the addition to the extent of 12.5% of the purchases made as the profit element embedded in such purchases. The Revenue is aggrieved and is in appeal before this Tribunal.
2.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. DR, if kept in juxtaposition and analyzed, we find that while coming to a particular conclusion, the Ld. Commissioner of Income Tax (Appeal) placed reliance upon various judicial pronouncements like the decision of the Tribunal in Vijay M. Mistry Construction Ltd. 355 ITR 498 (Guj.), Vijay Proteins 58 ITD 428 (Ahd.), Jitendra T. Adnani, order of the First Appellate Authority dated 26/03/2012, Hon'ble Gujarat High Court in CIT vs Simit Sheth (2013) 38 taxman.com 385 (Guj.), State Bank of India vs S.K. Sharma AIR 1996 SC 364 (SC), G.T.C. Industries Ltd. vs ACIT (65 ITD 380)(Bom.), ACIT vs Tribhovandas Bhimji Jhaveri (2000) 74 ITD 92 (Bom.), Sanjay Oil Cakes Industries vs CIT (2009) 316 ITR 274 (Guj.) and various other decisions (as contained in the impugned order) and decided accordingly. Considering the totality of facts, broadly, we affirm the same. However, no plausible explanation was offered by the assessee with respect to source of expenditure which was made for bogus purchases. The assessee also did not produce the parties from whom the bogus purchases were made, thus, the Department could not go into the deep of the transaction to unearth the racket of bogus billing. The Assessing Officer asked the assessee to produce/disclose the identity of these undisclosed entity and also the source of payment. Undisputedly, M/s Victor Intertrade Pvt. Ltd., through an affidavit, tendered that they are providing bogus bills and this factum was never contradicted. Thus, to fill the gap of unhealthy trading by the parties, we increase the addition to the extent of 14.5% of the bogus purchases against 12.5% sustained by the Ld. Commissioner of Income Tax (Appeal), consequently, the appeal of the Revenue is partly allowed. We are making it clear that this increase of 2% is because of the peculiar facts of the present appeal, narrated in the assessment order, which were not contradicted hundred percent by the Ld. Commissioner of Income Tax (Appeal). Finally, the appeal of the Revenue is partly allowed. This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 20/02/2017. Sd/- Sd/- (N.K. Pradhan) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 20/02/2017 f{x~{tÜ? P.S /�नजी स�चव आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent.