IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, AM & SHRI RAM LAL NEGI, JM I.T.A. No. 5801/Mum/2018 (Assessment Year 2011-12) ITO 24(3)(5), Shri Ravi Ramniklal 5th floor, Piramal Kothari, B-14, Sunil Shopping Chambers, Lalbaug, Parel, Vs. Centre, J. P. Road, Andheri Mumbai-400 012 (W), Mumbai-400 058 PAN No. AAEPK4521E (Appellant) (Respondent) Appellant Shri C. S. Sharma, DR by Respondentby None 24.09.2019 Date of Hearing 30.09.2019 Date of Pronouncement ORDER Per S. Rifaur Rahman, Accountant Member present Appeal has been filed by revenue against order of Ld. Commissioner of Income Tax (Appeals) 36 in short referred as Ld. CIT(A) , Mumbai, dated 29.06.18 for Assessment Year (in short AY) 2011-12. 2 I.T.A. No. 5801/Mum/2018 Shri Ravi Ramniklal Kothari, 2. At very outset, it was noticed that none has appeared on behalf of assessee in spite of calls. Therefore, we have no other option except to proceed assessee ex-parte. On other hand Ld. DR present in court is ready with arguments. Hence, we have decided to proceed with hearing of case ex-parte with assistance of Ld. DR and material placed on record. 3. brief facts of case are that assessee is proprietor of M/s Ramniklal & sons and M/s Ravi Kothari & Co. and filed its return of income on 30.09.2011 declaring total income of Rs. 12,75,190/-. return of income was processed u/s. 143(1) of IT Act, 1961. Thereafter, case was reopened by issuing notice u/s. 148. In response, assessee filed letter dated 21.03.16 and submitted that original return filed on 13.09.11 be treated as return filed in response to notice u/s 148 of Act. Thereafter, notices u/s. 143(2) and 142(1) of I.T. Act 1961 alongwith questionnaire were issued and served upon assessee. 3 I.T.A. No. 5801/Mum/2018 Shri Ravi Ramniklal Kothari, 4. case was reopened on information received from DGIT(Inv), Mumbai, wherein it was stated that information was received from Sales Tax Department, Govt. of Maharashtra that assessee is involved in bogus purchases /hawala transactions. As per details furnished by them and from data available on record, AO found that assessee has acquired some bogus purchase bills during this assessment year without delivery of goods amounting to Rs. 47,57,859/- from 3 parties, which are mentioned below:- Sr. No. Name FY Amount(Rs.) 1 Jagdish Enterprises 2010-11 1,57,815/- 2 Prakash Steel India 2010-11 6,32,093/- 3. Manidhari 2010-11 39,67,951/- Enterprises Total 47,57,859/- 5. Further, assessee was asked to submit various information relating to this purchase like confirmation letter from parties, details of goods delivery, ledger copy of parties, bank 4 I.T.A. No. 5801/Mum/2018 Shri Ravi Ramniklal Kothari, statement, etc. In response, assessee has filed ledger copy of parties, purchase bills and bank statements and assessee has confirmed that he has purchased from these parties and duly made payments. After considering submission of assessee, AO made addition by observing that assessee has not received any material nor possess any delivery note, accordingly, he disallowed 25% of bogus purchases. 6. Aggrieved with above order, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A), after considering submission of assessee, had reduced disallowance of 25% to 12.5% of bogus purchases. 7. Aggrieved with above order, revenue has preferred appeal before us. 8. Considering submissions and material placed on record, we notice that Ld. CIT(A) has rightly restricted disallowance to extent of 12.5% and we are inclined to accept findings of Ld. CIT(A) and further we come across 5 I.T.A. No. 5801/Mum/2018 Shri Ravi Ramniklal Kothari, decision of Coordinate Bench of this Tribunal in case of Sunil B. Vorani (HUF) vrs ITO (ITA No. 1337/Mum/2017), wherein it was held as under:- Be that as it may, after evaluating entire facts, grounds raised by assessee, perusal of records and judgments relied by parties, we find that Ld. CIT(A) has upheld findings of AO in estimating profit @ 25% of total sales. In our considered view, considering facts of present case and while relying upon following judgments:- 1) ClT vs Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj). (HC), 2. CIT v Simit D, Sheth (2013) 356 ITR 451 (Guj)-(HC) and 3. CIT vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (1C) and taking into consideration facts of present case, and also considering order passed by Coordinate Bench of SMC in assessee s own case and to account for profit element embedded in these purchase transactions to factorize profit earned by assessee against purchase of material in grey market and undue benefit of VAT against bogus purchases, we are of considered view that upholding additions @ 25% of sales by Ld. CIT(A) is unreasonable. ends of justice would be met in case additions are 6 I.T.A. No. 5801/Mum/2018 Shri Ravi Ramniklal Kothari, restricted @ 12.5 % of purchase amount of Rs. 2,26,39,391/-. Consequently orders passed by Ld. CIT(A) are set aside and hence we direct AO to restrict additions to extent of 12.5% of bogus purchases of Rs. 2,26,39,391/-. made from parties. Accordingly these grounds raised by assessee are partly allowed. 9. Therefore, respectfully following aforesaid decision, we are inclined to accept findings of Ld. CIT(A). Accordingly, grounds raised by revenue are dismissed. 10. In net result, appeal filed by revenue stands dismissed. Order pronounced in open court on 30th Sept 2019. Sd/- Sd/- (Ram Lal Negi) (S. Rifaur Rahman) Judicial Member Accountant Member Mumbai; Dated 30.09.2019 Sr.PS. Dhananjay 7 I.T.A. No. 5801/Mum/2018 Shri Ravi Ramniklal Kothari, 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 ITO24(3)(5), Mumbai v. Ravi Ramniklal Kothari