Income-tax Officer-27(1)(4), Navi Mumbai v. Deepak Nalin Ashar
[Citation -2019-LL-0909-18]

Citation 2019-LL-0909-18
Appellant Name Income-tax Officer-27(1)(4), Navi Mumbai
Respondent Name Deepak Nalin Ashar
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 09/09/2019
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags bogus purchase • documentary evidence • hawala purchase • estimation of profit • initiation of reassessment proceedings • banking channel
Bot Summary: On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.2,87,278/- made by the Assessing Officer on account of bogus purchases, without appreciating the fact that the assessee had failed to produce bills, vouchers and other documentary evidences in support of his claim and without considering the latest Apex Court decision in the case of N K Protein Ltd. wherein it is held that once it is proved that the purchases are bogus then addition should be made on entire purchases and not on profit element embedded in such purchases. On the facts and circumstances of the case, the Ld. CIT(A) erred in estimating the profit from Hawala Purchases by disallowing only Rs.41,040/- being 12.5 of the bogus purchases as even the basic onus of producing transport bills, delivery challans etc. 143(3) r.w.s. 147 wherein the income of the assessee was determined at Rs.8.95 Lacs, inter-alia, after addition of alleged bogus purchases for Rs.3.28 Lacs as against returned income of Rs.3.95 Lacs filed by the assessee on 11/08/2010 which was processed u/s.143(1). The statutory notices u/s143(2) 142(1) were issued in due course wherein the assessee was directed to substantiate the purchase transactions. The assessee failed to produce the supplier which led the Ld. AO to disallow these purchases. The sales turnover reflected by the assessee has not been disturbed / disputed by Ld. AO. However, at the same time, the assessee miserably failed to substantiate the purchases during assessment proceedings. The additions which could be sustained, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey 4 ITA 4968/Mum/2018 A.Y.2010-11 Deepak Nalin Ashar market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done.


IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE HON BLE SHRI MAHAVIR SINGH, JM AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. No.4968/Mum/2018 (Assessment Year 2010-11) Income tax Officer-27(1)(4) Deepak Nalin Ashar Tower 6, 4th Floor 144-2923/202, C-Wing, Prem Smruti / th Room No.409 6 Road, Behind Rajawadi Hospital Vashi Railway Station Complex, Vashi, Vs. Ghatkopar (E) Navi Mumbai. Mumbai-400 077. PAN/GIR No. ACRPA-5751-H (Appellant) (Respondent) Revenue by Shri Ashutosh Rajhans-Ld.DR Assessee by Shri Jayant R. Bhatt-Ld.AR 09/09/2019 Date of Hearing 9/09/2019 Date of Pronouncement ORDER Per Bench:- 1. Aforesaid appeal by revenue for Assessment Year [AY] 2010-11 contest order of Ld. Commissioner of Income-Tax (Appeals)-24 Mumbai, [in short referred to as CIT(A) ], Appeal No. CIT(A)-24/IT- 570/793/ITO-27(1)(4)/2017-18 dated 09/05/2018 qua deletion of certain 2 ITA 4968/Mum/2018 A.Y.2010-11 Deepak Nalin Ashar additions on account of alleged bogus purchases. grounds raised by revenue read as under: - 1. On facts and circumstances of case and in law, Ld. CIT(A) erred in deleting addition of Rs.2,87,278/- made by Assessing Officer on account of bogus purchases, without appreciating fact that assessee had failed to produce bills, vouchers and other documentary evidences in support of his claim and without considering latest Apex Court decision in case of N K Protein Ltd. wherein it is held that once it is proved that purchases are bogus then addition should be made on entire purchases and not on profit element embedded in such purchases. 2. On facts and circumstances of case, Ld. CIT(A) erred in estimating profit from Hawala Purchases by disallowing only Rs.41,040/- being 12.5% of bogus purchases as even basic onus of producing transport bills, delivery challans etc. were not fulfilled by assessee. 2.1 Facts on record would reveal that assessee being resident individual stated to be engaged in fabrication of chemical and pharma equipments under proprietorship concern namely M/s Right Fabricators, was assessed for impugned AY u/s. 143(3) r.w.s. 147 wherein income of assessee was determined at Rs.8.95 Lacs, inter-alia, after addition of alleged bogus purchases for Rs.3.28 Lacs as against returned income of Rs.3.95 Lacs filed by assessee on 11/08/2010 which was processed u/s.143(1). 2.2 Pursuant to receipt of certain information from investigation wing / Sales tax Department, Govt. of Maharashtra, it transpired that assessee stood beneficiary of alleged bogus purchases to tune of Rs.3.28 Lacs from entity namely M/s Goodluck Industries. Accordingly, as per due process of law, re-assessment proceedings were initiated against assessee u/s 147 by issuance of notice u/s 148 on 19/03/2015. In 3 ITA 4968/Mum/2018 A.Y.2010-11 Deepak Nalin Ashar response, assessee offered original return of income. statutory notices u/s143(2) & 142(1) were issued in due course wherein assessee was directed to substantiate purchase transactions. 2.3 To confirm purchases transactions, notice u/s 133(6) was issued to said party which remained un-responded. Upon confrontation, assessee submitted that purchases were genuine and payment to said supplier was through banking channels. However, assessee failed to produce supplier which led Ld. AO to disallow these purchases. learned first appellate authority, relying upon decision in earlier year, restricted additions to 12.5% and deleted balance additions. Aggrieved, revenue is in further appeal before us. It appears that assessee is not in further appeal. 3. Both representative had advanced arguments which we have duly considered. 4. We are of considered opinion there could be no sale without actual purchase of material keeping in view assessee s nature of business. assessee was in possession of primary purchase documents and payments to supplier was through banking channels. sales turnover reflected by assessee has not been disturbed / disputed by Ld. AO. However, at same time, assessee miserably failed to substantiate purchases during assessment proceedings. Under such circumstances, additions which could be sustained, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in grey 4 ITA 4968/Mum/2018 A.Y.2010-11 Deepak Nalin Ashar market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done. Therefore, concurring with approach of learned first appellate authority in restricting additions to 12.5%, we dismiss appeal. So far as decision of Hon ble Gujarat High Court rendered in N.K. Industries Ltd. Vs DCIT [72 Taxmann.com 289] is concerned, we find that facts of that case has already been distinguished by Hon ble Bombay High Court in Pr.CIT Vs. M/s Mohommad Haji Adam & Co. [ITA No.1004 & others of 2016, dated 11/02/2019] wherein Hon ble Court has approved estimation, on similar factual matrix, based on Gross Profit Rate. 5. In result, appeal stands dismissed. Order pronounced in open court on 09th September, 2019. Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) Judicial Member Accountant Member Mumbai; Dated 09/09/2019 Sr.PS:-Jaisy Varghese Copy of Order forwarded to 1. Appellant 2. Respondent 3. CIT(A) 4. .CIT concerned 5. DR, ITAT, Mumbai 6. Guard File 5 ITA 4968/Mum/2018 A.Y.2010-11 Deepak Nalin Ashar BY ORDER, (Dy. Asstt.Registrar) , ITAT, Mumbai. Income-tax Officer-27(1)(4), Navi Mumbai v. Deepak Nalin Ashar
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