Dwarkaprasad Dhanraj Bharadia Vs ITO (ITAT Mumbai)
Summary: The Mumbai ITAT partly allowed the appeal of Dwarkaprasad Dhanraj Bharadia for AY 2009-10 and directed deletion of an addition of Rs.16,72,877, representing 12.5% of alleged bogus purchases of Rs.1,33,83,012. The assessee, proprietor of M/s Melitha Impex and engaged in import, export and trading of fabrics and fabric pieces, had originally declared income of Rs.2,87,102. Following information arising from Investigation Wing action in the Pravin Kumar Jain group, the assessment was reopened on the allegation that purchases from four concerns—M/s Ansh Merchandise Pvt. Ltd. (New Planet Trading Co. Pvt. Ltd.), M/s Casper Enterprises Pvt. Ltd. (Ostwal Trading (I) Pvt. Ltd.), M/s Mohit International and M/s Natasha Enterprises—represented accommodation entries.
During reassessment, the assessee furnished, among other material, ledger accounts and confirmations, purchase invoices, bank statements, corresponding sale invoices and delivery challans. The Assessing Officer nevertheless relied upon Investigation Wing material and statements attributed to Shri Pravin Kumar Jain and connected persons. Significantly, the AO did not dispute receipt of the material or the corresponding sales. He expressly recorded that receipt of the material was not in doubt having regard to the quantitative details and held that the corresponding sales could not have taken place without purchases. He therefore did not disallow the entire purchases but rejected the books under section 145(3) and estimated the alleged profit element at 12.5%, resulting in the addition of Rs.16,72,877.
