ITO WD 1(2), THANE vs. MANOJ R MITTAL, THANE

The only ground raised by the Revenue is with respect to relying upon the principle that without purchases of goods there cannot be sale without appreciating that Shri Anil Goyaland his group concern representing the bogus purchases and were not into any actual business rather providing bogus entries. 2.1. During hearing, Shri O.P. Meena, ld. DR advanced arguments which is identical to the ground raised. On other hand Shri Hemant S. Shetty, ld. Counsel for the assessee defended the conclusion arrived at in the impugned order. 2.2 We have considered the rival submissions and perused the material available on record. Facts in brief are that, the assessee, an individual, is engaged in the business of trading iron and steel under the name and style as ‘M/s. Sai Steel Traders’ declared income of Rs. 1,44,585/-. The return was accompanied by audit report, profit and loss account, balance sheet etc. The assessee declared sales, during the year, at Rs. 98,99,246/- resulting into gross profit of Rs. 9,61,877/- and net profit of Rs. 1,44,771/-. During assessment proceedings, it was found that the assessee has transacted / shown purchases from the group companies of Shri Anil Syamsunder Goyal, who is in the business providing accommodation entries on commission. Notice under section 148 was issued on 24/12/2009. Subsequently, notices under section 143(2) and 142(1) of the Act were served upon the assessee. The assessee attended the proceedings and produced books of accounts, furnished the documents called for. From the record, submitted by the assessee it was found that the assessee made purchases from five parties as has been described in para 3 in the assessment order. It was further explained by the assessee that he is unable to produce the bills as the same are either untraceable due to passage of time/ shifting of office. Considering the totality of facts, the impugned amount was added to the income of the assessee as unsubstantiated purchases.

On appeal before the Ld. Commissioner of Income Tax (Appeals), the factual matrix was considered and the admission of the assessee that he was not maintaining any stock register it was apparent that the assessee inflated the purchases, therefore, by following various decisions, as mentioned in the impugned order, the addition to the extent of Rs. 17,46,947/- was affirmed. The Revenue is aggrieved and is in appeal before the Tribunal.

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. respective counsel, if kept in juxtaposition and analyzed, there is categorical finding in the impugned order that the assessee inflated the purchases by obtaining accommodation entries from Anil S. Goyal group and by this act he suppressed the fact. The Ld. Commissioner of Income Tax (Appeals) worked out the suppression of sales to the extent of Rs.17,46,947/- which is higher than the disallowance on account of bogus purchases. The assessee is forfeited by the decision from the Hon'ble Jurisdictional High Court in CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. (ITA No. 5604/2010, order dated 17/12/2012) and Balaji Textiles Industrial Pvt. Ltd. vs. Income Tax Officer (1994) 49 ITD 177 (Mum.)(ITAT), wherein it was held that there cannot be sales without purchases of goods, thus we are of the view that the Ld. Commissioner of Income Tax (Appeals) has taken a justified stand/ reasonable view, consequently, it is affirmed, resulting into dismissal of appeal of the Revenue. Finally, the appeal of the Revenue is dismissed. This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 07/11/2016.