ITO Vs Gautam B. Bafna (ITAT Mumbai)
In the instant case, the corresponding sales made out of disputed purchases were not doubted by the Ld. AO before us. No contrary evidence to this effect was also produced by the Ld. DR before us. It is not in the dispute that the assesee had indeed made purchases from certain parties whose names appeared in the list of hawala bills maintained by the sales tax department, Government of Maharashtra, but however the assessee could not prove the genuineness of such purchases. At the same time, there could not be any sales without making purchases. Hence, it could be safely presumed that assessee could have made purchases from the grey market in order to saving indirect taxes and incidental profit element thereon. We find that the Ld.CIT(A) had reasonably estimated such profit element to be at 12.5% of the value of disputed purchases, which is prevalent rate adopted by this Tribunal in series of decisions considering the nature of industry in which the assessee is engaged in, which is also approved by the Hon’ble Gujarat High Court in the case CIT vs Simith P.Sheth (supra).Accordingly, we hold that there is no infirmity in the order of the Ld.CIT(A) in this regard. Accordingly, the grounds raised by the revenue are dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by revenue in ITA No.3719/Mum/2018 for Assessment Year (AY) 2011-12 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-30, Mumbai in appeal No.CIT(A)-30/19(1)(3)/74/2014-15, dated 26/03/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 13/03/2014 by the ld. Income Tax Officer-16(3)(4), Mumbai (hereinafter referred to as ld. AO).
2. The only issue to be decided in this appeal is as to whether the Ld.CIT(A) was justified in restricting the addition made on account of non genuine purchases at 12.5% of value of purchases as against 100% made by the Ld. AO in the facts and circumstances of the instant case.
3. None appeared on behalf of the assessee. We have heard the Ld. DR and perused the materials available on record, we find that assesee is an individual trader dealing in metal. Pursuant to the information received from Sales Tax Department of Government of Maharashtra by the Income Tax Department that assessee had made certain purchases from the following parties whose names appear as tainted dealers in the records of sales tax department of Government of Maharashtra, the Ld. AO in the course of regular assessment proceedings sought to verify the genuinity of such purchases:-
