ITA No.5028/Mum/2018 A.Y. 2009-10 M/s. Kunal Steel - 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.5028/Mum/2018 (Assessment Year:2009-10) ACIT-17(2) M/s. Kunal Steel Aaykar Bhavan, Room No.123A 113, Kasara Street, 3rd Lane Vs. 1st Floor, M.K. Road Darukhana Mumbai-400020. Mumbai-400009. PAN/GIR No. AAHFK2164J (Appellant) : (Respondent) Revenue by : Shri Ashutosh Rajhans-Ld.DR Assessee by : None : 12/09/2019 Date of Hearing : 12/09/2019 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)-57, 2 ITA No.5028/Mum/2018 A.Y. 2009-10 M/s. Kunal Steel Mumbai, [in short referred to as CIT(A) ], Appeal No. CIT(A)-57/Arr. 502/2018-19 dated 01/06/2018 on following grounds of appeal: - 1. On facts and circumstances of case and in law, Ld. CIT(A) erred in reducing disallowance at 8% as against 12.5% adopted by A.O. in respect of bogus accommodation entries/bogus purchases. 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 firm stated to be engaged in trading of steel was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 30/11/2016 wherein income of assessee was determined at Rs.41.67 Lacs after addition of alleged bogus purchases for Rs.27.40 Lacs as against returned income of Rs.14.26 Lacs filed by assessee on 15/09/2010 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 for Rs.219.23 Lacs from entity namely M/s Hanuman Steels. 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 28/03/2016 followed by statutory notices u/s 143(2) & 142(1), wherein assessee was directed to substantiate purchase transactions. 3 ITA No.5028/Mum/2018 A.Y. 2009-10 M/s. Kunal Steel 2.3 Although assessee defended purchases, however, relying upon investigations carried out by Sales Tax Department and finding that assessee failed to prove delivery of material, learned AO estimated additions against stated purchases @12.5% and added same to income of assessee. learned CIT(A) restricted additions to 8%, against which revenue is in further appeal before us. It appears that assessee has not appealed any further. 3. We have heard and considered arguments made by Ld. DR. 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 delivery of material. 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 considering fact that assessee 4 ITA No.5028/Mum/2018 A.Y. 2009-10 M/s. Kunal Steel was dealing in low margin item like iron & steel. Therefore, finding no infirmity in estimation made by Ld. CIT(A), we dismiss appeal. 5. In result, appeal stands dismissed. Order pronounced in open court on 12th September, 2019. Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) Judicial Member Accountant Member Mumbai; Dated : 12/09/2019 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. ACIT-17(2), Mumbai v. Kunal Steel