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Nitin Avantilal Doshi Versus CIT (A) -32, Mumbai

2017 (10) TMI 174 - ITAT MUMBAI

Addition on account of alleged bogus sales - proof of genuine claim - Held that:- The Sales Tax Department in its enquiry have found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, th .....

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ppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable - Decided against assessee. - I.T.A. No. 730/Mum/2015 - Dated:- 3-10-2017 - SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM For The Appellant : None For The Respondent : Shri Ram Tiwari ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against order of learned CIT(A)-32, Mumbai dated 06.01.2015 and pertains to assess .....

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es: Sr.no. Name of Party Purchases Amount (in Rs.) 1. M/s. Ankit Enterprises 42,59,263/- 2. M/s. Maulik Steel Corporation 40,29,858/- 3. M/s. Vaishali Enterprises 44,90,484/- 4. M/s Keval Enterprises 10,06,352/- 5. M/s. R.S. Enterprises 47,25,023/- TOTAL 1,85,10,9807- Disallowance : 12.5% of ₹ 1,85,10,980 amounting to ₹ 23,13,873/- 3. On the facts of the case and without prejudice to the above, the Learned CIT (A) has erred in confirming disallowance @ 12.5 % of the alleged bogus whi .....

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is not only bad in law and invalid, but also against the principals of natural law of equity and justice. 4. In this case, the assessee filed return of income for A.Y. 2011-12 on 29/09/2011 declaring total income of ₹ 19,21,254/-. The return was processed u/s 143(1). The case was selected for scrutiny assessment under CASS. Notices u/s 143(2) &142(1) were issued and served on the assessee. The assessee is a proprietor engaged in metals and alloys carrying business as wholesaler under t .....

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to a disallowance of ₹ 23,13,873/-. The purchases, as given below, were disallowed on the grounds that the same were "bogus" as notices issued to the parties were returned back unserved by the postal authorities. The assessee was asked to produce the parties personally and to confirm the purchases but the assessee did not discharge the responsibilities as the onus squarely lies with him. The assessee's submissions were not considered. In view of these facts, the purchases wer .....

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led before the learned CIT(A) who conformed the action of the assessing officer in making addition of 12.5% of the bogus purchase. The ld. CIT(A) held as under: 5.2 I have perused the assessment order, submissions of appellant, and the facts and circumstance of the case. On careful examination of the same, I observe that under Income Tax Act, 1961 what can be taxed is the real income. Even though the transaction is not verifiable, what is taxable is the income component, and not the entire trans .....

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e percentage of such purchases in order to fulfill the gap of any revenue leakage in aforesaid circumstances. In this case, the AO after taking into consideration various facts and circumstances has disallowed only 12.5% which was ₹ 23,13,873/- only and the appellant got relief of ₹ 1,61,97,107 (Rs. 1,85,10,980/- ₹ 23,13,873/-). The appellant also relied on the decisions in the cases of Commissioner of Income Tax-I Vs it P Sheth ,356 ITR 451 and M/s. Bholenath Poly Fab Pvt. Ltd .....

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fore, as a natural corollary, not the entire amount covered under such purchases, but the profit element embedded therein would be subject to tax. 2. CIT y/s. Simit P. Sheth 356 ITR 451 (Gui) Held, dismissing the appeal, that the Commissioner (Appeals) believed that the purchases were not bogus but were made from the parties other than those mentioned in the books of account. That being the position, not the entire purchase price but only the profit element embedded in such purchases could be ad .....

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s, and more particularly in the case of Simit P Sheth, where profitffi 12.5% allowed was not disturbed by the hon'nle High Court. In view of the above facts, I do not find any reason to disturb the disallowance made by the AO and there is no infirmity in his order. Therefore, the addition made by the AO is hereby confirmed and all the grounds of appeal are dismissed accordingly. In the result, the appeal is dismissed. 6. Against the above order of learned CIT(A), the assessee is in appeal be .....

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s during the concerned assessment year from different parties. Based upon this information assessment was reopened. The credibility of information relating to reopening remains un-assailed. In such factual scenario, the assessing officer has made the necessary enquiry. The issue of notice to all the parties have returned unserved. Assessee has not been able to provide any confirmation from any of the party. Assessee has also not been able to produce any of the parties. Necessary evidence relatin .....

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sessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee's own vendors, whom the assessee could not produce. 10. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence .....

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lly unsustainable in light of above apex court decisions. 11. We further find that Hon'ble jurisdictional High Court in the case of Nikunj Enterprises has upheld 100% allowance for the purchases when the sales have not been doubted. However, the facts of that case were different. Furthermore, the sales in that case were basically to government departments. Hence, the ratio from this decision is not applicable on the facts of the case. 12. In these circumstances, the ld. Departmental Represen .....

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