IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.7152/MUM/2017(A.Y. 2009-10) Income Tax Officer 10(3)(1), Room No.621, 6th Floor, Aaykar Bhavan, M.K.Road, Mumbai 400020 ...... Appellant Vs. M/s. Nautica Clothing India Pvt. Ltd. 1008, 10th Floor, Ijmima Complex, Near Raheja Complex, New Link Road, Malad(West), Mumbai 400064. PAN: AACCN0650Q ..... Respondent ITA NO.1863/MUM/2018(A.Y. 2009-10) M/s. Nautica Clothing India Pvt. Ltd. .... Appellant Mumbai 400 064. PAN: AACCN 0650Q Vs. Income Tax Officer 10(3)(1), Mumbai 400020 ...... Respondent Revenue by : Ms. Kavita P. Kaushik Assessee by : Shri Sambhav Shah Date of hearing : 17/09/2019 Date of pronouncement : 17/09/2019 ORDER PER VIKAS AWASTHY, JM: These cross appeals by Revenue and assessee are directed against order of CIT(A)-17, Mumbai dated 29/09/2017 for assessment year 2009-10. 2 ITA NO.7152/MUM/2017(A.Y. 2009-10) ITA NO.1863/MUM/2018(A.Y. 2009-10) 2. brief facts of case as emanating from records are; assessee company is engaged in trading of readymade garments. assessee filed its return of income for impugned assessment year on27/09/2019 declaring total income of Rs.4,11,520/-. return of assessee was processed under section 143(1) of Income Tax Act, 1961 (in short Act ). Thereafter, assessment was reopened on ground that assessee has indulged in bogus purchases from suspicious dealers. Assessing Officer in assessment proceedings made addition of entire alleged bogus purchases i.e. Rs.73,88,09,154/-. Aggrieved against assessment order dated 31/03/2015 passed under section 143(3) r.w.s. 147 of Act, assessee filed appeal before CIT(A). first appellate authority after examining facts and applying ratio laid down by Hon ble Gujarat High Court in case of CIT vs. Simit P. Shah, 356 ITR 451(Guj) restricted addition to 12.5% of purchases made from hawala dealers. Against findings of CIT(A), Revenue, as well as, assessee is in appeal before Tribunal. 3. Ms. Kavita P. Kaushik representing Department submitted that CIT(A) has erred in restricting addition to 12.5% of bogus purchases. documents on record clearly indicate that assessee has indulged in transactions with hawala dealers notified by Maharashtra Sales Tax Department s Investigation Wing. assessee has failed to explain source of expenditure for making purchases. Ld. Departmental Representative placed reliance on decision of Hon ble Apex Court in case of N.K.Proteins Ltd vs. DCIT, (2017) TOIL 3 ITA NO.7152/MUM/2017(A.Y. 2009-10) ITA NO.1863/MUM/2018(A.Y. 2009-10) 23(SC) to contend that 100% addition is justified in case of such bogus purchases. 4. On other hand, Shri Sambhav Shah appearing on behalf of assessee submitted that authorities below have erred in holding that assessee has indulged in bogus purchases. assessee had submitted various documents viz. copies of invoices, description of quantity of goods purchased, copy of purchase order, proof of dispatch of good and proof of payments to prove trail of goods. ld. Authorized Representative further contended that Revenue has not raised any doubt over sales declared by assessee. In absence of purchases there cannot be sales, hence, 100% addition as made by Assessing Officer cannot be sustained. ld. Authorized Representative further contended that CIT(A) restricted addition to 12.5% of bogus purchases, however, in light of documents furnished by assessee entire addition ought to have been deleted by CIT(A). ld. Authorized Representative, thus, prayed for modifying order of CIT(A) and deleting entire addition made on account of alleged bogus purchases. 5. We have heard submissions made by rival sides and perused orders of authorities below. Assessing Officer in reassessment proceedings made addition of Rs.73,88,09,154/- on account of bogus purchases made by assessee from alleged hawala dealers notified by Maharashtra Sales Tax Department. During assessment proceedings, assessee furnished various documents to prove genuineness of transactions. However, Assessing Officer brushed aside same and made addition of entire alleged bogus purchases. 4 ITA NO.7152/MUM/2017(A.Y. 2009-10) ITA NO.1863/MUM/2018(A.Y. 2009-10) In first appellate proceedings before CIT(A), assessee got substantial relief as CIT(A) after examining various documents restricted addition to 12.5% of total alleged bogus purchases. It is undisputed fact that sales declared by assessee have not been doubted by Department. In absence of purchases, there cannot be sales. Thus, entire purchases made from alleged hawala dealers cannot be added. In given facts even if it is presumed that bills are bogus, since sales have not been doubted, to match sales, only presumption would be that goods have been procured from grey market. In such scenario, addition, at best can be made by estimating gross profit on such purchases. CIT(A) has estimated GP at 12.5% of alleged bogus purchases. We do not find any infirmity in impugned order. Accordingly, same is upheld. Consequently, appeal by Revenue and assessee are dismissed being devoid of merit. 6. In result, appeal of Revenue, as well as assessee are dismissed. Order pronounced in open court after hearing appeals on Tuesday, 17th day of September 2019. Sd/- Sd/- (RAJESH KUMAR ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 17/09/2019 Vm, Sr. PS(O/S) 5 ITA NO.7152/MUM/2017(A.Y. 2009-10) ITA NO.1863/MUM/2018(A.Y. 2009-10) Copy of Order forwarded to : 1. Appellant , 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy (Dy./Asstt. Registrar) ITAT, Mumbai Income-tax Officer, 10(3)(1), Mumbai v. Nautica Clothing India Pvt. Ltd