Hasmukh Jagshi Visaria Vs ITO (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT), Mumbai bench, has significantly reduced the rate of profit applied to alleged bogus purchases in the case of Hasmukh Jagshi Visaria. The Tribunal, hearing appeals for assessment years 2009-10 and 2011-12, directed the Assessing Officer (AO) to restrict the addition on account of unverified purchases to 2% of the bogus purchase value, a substantial reduction from the 12.5% confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] and the 100% initially added by the AO.
The case originated when the assessee, a wholesale dealer and supplier of various types of paper, filed his return of income for Assessment Year 2009-10, declaring a certain income. Subsequently, the AO received information from the Sales Tax Department, Government of Maharashtra, alleging that the assessee was a beneficiary of ‘hawala’ purchase entries. Based on this information, the AO reopened the assessment under Section 147 of the Income Tax Act, 1961, by issuing a notice under Section 148.
The information suggested that the assessee had obtained bogus bills totalling Rs. 5,59,52,213 from 13 parties identified as hawala operators by the Sales Tax Department. During the reassessment proceedings, the AO sought details and explanations from the assessee to substantiate the genuineness of these purchases. The assessee provided responses and documentation.
