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.4972/Mum/2018 (Assessment Year:2009-10) Income tax Officer-27(1)(4) Dinesh Ramji Bhanushali th Tower 6, 4 Floor D-II-14, Mahindra Park / Vs. Room No.409, Vashi Railway Station Complex, LBS Road, Ghatkopar (W) Vashi, Navi Mumbai. Mumbai-400 086. PAN/GIR No. AAAPB-7320-A (Appellant) ( Respondent) Revenue by Shri Ashutosh Rajhans-Ld.DR Assessee by None 09/09/2019 Date of Hearing 09/09/2019 Date of Pronouncement ORDER Per Bench:- 1. Aforesaid appeal by revenue for Assessment Year [AY] 2009-10 contest order of Ld. Commissioner of Income-Tax (Appeals)-24 2 ITA No.4972/Mum/2018 A.Y. 2009-10 Dinesh Ramji Bhanushali Mumbai, [in short referred to as CIT(A) ], Appeal No. CIT(A)-24/IT- 521/144/ITO-27(1)(4)/2017-18 dated 10/05/2018 qua deletion of certain 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.12,75,054/- 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.3,86,430/- being 12.5% of bogus purchases as even basic onus of producing transport bills, delivery challans etc. were not fulfilled by assessee. None has appeared for assessee and therefore, matter is proceeded with ex-parte qua assessee. 2.1 Facts on record would reveal that assessee being resident individual stated to be engaged as trader in electrical / hardware goods under proprietorship concern namely M/s Vidhut Aid was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 25/03/2015 wherein income of assessee was determined at Rs.18.07 Lacs after sole addition of alleged bogus purchases for Rs.16.61 Lacs as against returned income of Rs.1.45 Lacs filed by assessee on 29/09/2009 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 3 ITA No.4972/Mum/2018 A.Y. 2009-10 Dinesh Ramji Bhanushali stood beneficiary of alleged bogus purchases to tune of Rs.30.91 Lacs from 11 parties, details of which has already been extracted at para-6.1 of quantum assessment order. 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 29/03/2014. In response, assessee offered original return as filed on 29/09/2009. statutory notices u/s 142(1) and 143(2) were issued in due course of assessment proceedings wherein assessee was directed to substantiate purchase transactions. 2.3 To confirm purchases transactions, notices u/s 133(6) were issued to all parties, however same were returned back unserved by postal authorities with remarks left . field inquiries revealed did not throw any light on whereabouts of suppliers. These facts were confronted to assessee. assessee submitted that purchases were genuine and corresponding sales were made to industrial units and payment to suppliers were through banking channels. However, assessee failed to produce any of suppliers. Resultantly, Ld. AO worked out peak of purchases at Rs.16.61 Lacs and added same to income of assessee. learned first appellate authority, relying upon decision of Hon ble Gujarat High Court rendered in CIT V/s Simit P. Sheth [356 ITR 451] restricted addition to 12.5% of disputed purchases which came to Rs.3.86 Lacs and deleted balance additions. Aggrieved, revenue is in further appeal before us. It appears that assessee is not in further 4 ITA No.4972/Mum/2018 A.Y. 2009-10 Dinesh Ramji Bhanushali appeal. We have heard and considered arguments raised by Ld.DR before us. 3. 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 suppliers were through banking channels. sales turnover reflected by assessee has not been disturbed / disputed by Ld. AO. However, at same time, notice issued u/s 133(6) to all entities remained unserved and field inquires did not throw any light on whereabouts of suppliers. assessee failed to produce even single party to confirm transaction and primary onus casted upon assessee, to substantiate purchase transactions, remained un- discharged. 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 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 5 ITA No.4972/Mum/2018 A.Y. 2009-10 Dinesh Ramji Bhanushali 2016, dated 11/02/2019] wherein Hon ble Court has approved estimation, on similar factual matrix, based on Gross Profit Rate. 4. 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 BY ORDER, (Dy. Asstt.Registrar) , ITAT, Mumbai. Income-tax Officer-27(1)(4), Navi Mumbai v. Dinesh Ramji Bhanushali