TMI Blog2018 (4) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances in all the three years are common, therefore, all the three appeals were heard together and are now being decided by this consolidated order. 3. From the record we found that the MVAT department puts up the list of 'SUSPICIOUS or 'HAWALA DEALERS on website of MVAT. Based on this information, Income Tax department undertakes to disallow purchase in Income-Tax Assessment. It was argued by learned AR that when MVAT Department grants registration to a dealer, all details are called for including bank account, PAN, address, etc. In some cases, before grant of RC even visit is done to confirm the Place of Business of the dealer. The signatory to the application is required to attend before registration authority and sign in his presence. This itself establishes that the dealer is in existence when Registration Certificate is obtained. Subsequently, the dealer may default in paying tax or pays less tax. They do not disclose proper turnover and are found to be SUSPICIOUS. Some such suspicious dealer also pays up to clear their name. Some dealers in order not to pay VAT file Affidavit that they have issued only Hawala bills and there is no physical delivery of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been charged by the M-VAT Department. When the concerned Department on which the Assessing Officer is relying for inquiries are made is not treating the sale as bogus, it was submitted, the Assessing Officer can't treat the purchase as bogus. However, learned AO did not agree and made adhoc addition of 12.5% of the alleged bogus purchases in all the years under consideration. 6. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us. 7. We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that assessee is engaged in the business of iron and steel trading, where normal GP rate works out at 4%.On the information received from Sales Tax Department regarding suspicion supplier, the AO reopened the assessment and added 12.5% of such purchases in assessee s income. By the impugned order, CIT(A) confirmed the addition after relying on the decision of Simit P Sheth. We found that place of business and year under consideration were different and as such gross profit margin in this case cannot be used for comparison purposes. Therefore, the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases was upheld. 9. Further, the learned AR relied on the following decision where the facts of the case were similar to the case of the assessee: CIT v. Nikunj Eximp Enterprises (P.) Ltd. 35 Taxmann.com 384 (BOM HC) Rajesh P. Soni v. ACIT (2006) 100 TTJ 892 (Ahd.)(Trib.) DCIT v. Brahmaputra Steels (P) Ltd. 122 TAXMAN 32(GAUHATI)(MAG.) Totaram Sharma vs. ITO Ward (AhmedabadTax Appeal No. 1344 of 2008 with Tax Appeal No. 1355 of 2008.) Balaji Textile Industries (P) Ltd. v. ITO [1994] 49 ITD 177 (ITAT Mumbai) 10. Reliance was also placed on the following decisions in support of the contention that simply based on the information from Sales Tax department, AO cannot make addition without making further investigation to substantiate his allegation of bogus purchase. In all the said case law, It has been held that if assessee has provided quantitative details and if sales are not doubted by AO, then addition cannot be sustained only because of non-appearance of supplier before the AO. M/s. Imperial Imp Exp vs. ITO (ITA No.5427/Mum/2015)[Mum.ITAT] ACIT vs. Mahesh K Shah (ITA No.5194/Mum/2014)[Mum ITAT] Rajesh P Soni v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said argument are Nikunj Eximp Enterprises (P.) Ltd. v. CIT 216 Taxman 171 (Bom.), CIT v. Nangalia Fabrics (P.) Ltd. 220 Taxmann 17 (Guj.), CIT v. M.K. Bros. 163 ITR 249 (Guj.), Asstt. CITv. Akruti Dyeing Printing Mill's (P.) Ltd. [Tax Appeal No. 997 of 2008, dated 27/01/2009], CIT v. Veekay Prints (P.) Ltd. [Tax Appeal No. 2557 of 2010, dated. 1/2/2012], Diagnostics v. CIT 334 ITR 111 (CaL), HO v. Totaram B. Sharma [Tax Appeal Nos. 1344/2008 1355/2008, dated 9-2-2010], Dy. CIT v. Adinath Industries [2001] 252 ITR 476 (Guj.), CIT v. Precious Jewels Corpn. 17 taxmann.com 264 (Raj.), CIT v. Rajesh P. Soni [Tax Appeal No. 1107 of 2006, dated 27-2-2012. 11. On identical facts and circumstances, the Hon'ble Jurisdictional High Court as well as the Tribunal, Mumbai Bench, has deleted the addition made under section 69C, in the following cases:- i) CIT v/s Nikunj Eximp Enterprise Pvt. Ltd. 372 ITR 619 ii) A CITv/s Tarla R, Shah, ITA no.5295/Mum./2013, dated 2nd February 2016; and iii) Shri Harilal Chunilal Jain v/s ITO, ITA no.4547/Mum./2014, dated 1 January 2016. 12. It is evident from the assessment order that on the basis of information obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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