MAHASUKHLAL L. SHETH,MUMBAI vs. I.T.O. 14(2)(4), MUMBAI

We have heard the ld. AR for the assessee and the ld. DR for Revenue and perused the material available on record. The ld AR for the assessee argued that the AO nowhere mentioned that that the goods were actually not purchased and subsequently not sold. The Ld AR for assessee invited our attention to various documents related with the actual purchases which was placed on record before the AO. The Ld AR for assessee further relied upon the decision of Bombay High Court in CIT Vs Nikunj Eximp Enterprises. On the other hand the ld DR for the revenue strongly relied on the order of the AO and contended that the assessee could not prove the genuinenity of the purchase and would argue that entire addition made by AO be upheld.

We have considered the rival contention of the parties and gone through the material available on record. The ld AR for the assessee not argued anything against the validity of the reopening of the assessment, thus the legal ground raised in the appeal is considered as not pressed and the same is dismissed. We have seen that the AO made the addition on the basis that the name of the dealer from the goods were purchased appeared in the website of the Sale Tax Department of Maharashtra. The said list was issued on the basis of the default in nonpayment of VAT to the state Government. This fact itself does not prove that those dealers were not made any sale. We have further seen that while considering the contention of the assessee the Ld CIT(A) considered all the fact and concluded that under Income Tax Act only real income can be taxed. It was further concluded that even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. And considering the reasonable percentage of such purchases in order to fulfill the gap of revenue leakage the additions was restricted to 10% of the impugned purchases. During the course of hearing neither the ld AR for the assessee nor the ld DR for the revenue could substantiate as to how the order of Ld CIT(A) is erroneous. The order of the ld CIT (A) is based on cogent reasoning and we do not find any infirmity for our interference. Thus both the appeal being filed by assessee and appeal ITA No. 5747/Mum/2012 filed by Revenue for Assessment Year (AY) 2004-05 are dismissed.

The assessee and the revenue have raised identical grounds of appeal for AY 2005-06, 2006-07 and for 2007-08, hence all the appeals of assessee as well as Revenue are dismissed. No order as to cost. Order pronounced in the open court on this 7th October, 2016.