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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI JOGINDER SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member)
The captioned by assessee for Assessment Year 2010-11 is directed against the order of Ld. Commissioner of Income Tax (Appeals)-13 [CIT(A)], Mumbai dated 01/10/2014 qua confirmation of addition of bogus purchase amounting to Rs.2,42,623/-.
Briefly stated the assessee was engaged in the business of offset printing and allied activities. It filed its return of income for impugned AY on 11/10/2010 declaring total income at Rs. ‘Nil’. The same was subjected to scrutiny assessment u/s 143(3) vide Assessing Officer [AO] order dated 22/03/2013 where total income was determined at Rs. ‘Nil’ after setting off of brought forward of business loss of Rs.3,55,206/-. Pursuant to information received from Sales Tax Department, it was noted that the assessee’s name stood in the list of beneficiary of bogus purchase transaction from following parties:-
No. Name of Party Amount (Rs.) 1. M/s Shraddha Trading Co. 70,150/- 2. M/s Sun Enterprises 81,619/- 3. M/s Mayur Paper 90,854/- Total 2,42,623/- The assessee submitted various documents viz. ledger printouts, copy of purchase bills. Delivery challans and Stock register etc. to substantiate the purchases but AO noting that the assessee could not produce transport details / receipt so as to substantiate the actual delivery of goods and made impugned additions. The assessee carried the matter without any success before First Appellate Authority who affirmed the stand of AO vide order dated 01/10/2014. CIT(A) noted that the assessee failed to produce transport details, paid VAT credit availed by him on impugned purchases and failed to maintain proper stock register and hence, could M/s Nuclear Offset Printers Private Limited Assessment Year 2010-2011 not substantiate the purchases conclusively which called for impugned additions. The same has been assailed before us.
The Ld. Counsel for assessee [AR] raised similar contentions and drew our attention to Tax Audit Report placed in the paper book to assert that the assessee maintained proper stock register and also asserted that purchases were duly supported by invoices and all payments were made through banking channels. The revenue nowhere disputed the sales of the assessee. Mere failure to produce transport receipts / details could not invite full disallowance. Per Contra, Ld. DR supported the stand of lower authorities and contended that the onus was on assessee to prove the purchases conclusively which he has failed to do and therefore, full disallowance is justified.
We have heard rival contentions and perused material available on record. The short dispute before us is qua addition of bogus purchase of Rs.2,42,623/-. The assessee has relied on its books of accounts to contest the addition whereas the revenue has contended that the assessee failed to discharge its initial onus of proving the purchases. The Tribunal invariably in all such cases have taken a stand that even if the purchases are found to be bogus, the entire addition thereof cannot be made, particularly when sales are not doubted by the Revenue and found certain percentage of such bogus purchases to be a reasonable addition to be made in such cases. The case laws on this issue are pronounced on the peculiar facts and circumstances of the case which varies from case to case and cannot be applied on a straight jacket formula rather a view has to be taken from a broader angle keeping in view the peculiarity of the facts and circumstances of each case. Therefore, we are of the considered opinion that that even if purchases are found to be bogus, the entire addition thereof cannot be sustained rather addition to the extent of 12.5% of such bogus purchases is reasonable in the instant case in hand. We hold so and therefore, restrict the disallowance to the extent of 12.5% of the bogus purchases of Rs.2,42,623/-. Resultantly, this ground of appeal of the assessee is partly allowed. Consequently, M/s Nuclear Offset Printers Private Limited Assessment Year 2010-2011 AO is directed to re-work the amount of set off of brought forward business losses of the assessee. In nutshell, the appeal of the assessee stands partly allowed. 5.