Ravindrakumar Amratlal Jain Vs ITO (ITAT Mumbai)
Summary: The Mumbai ITAT partly allowed the assessee’s appeal concerning alleged non-genuine purchases for AY 2011-12. The assessment had been reopened under section 147 on information received from the Investigation Wing regarding alleged hawala bills or accommodation entries aggregating to ₹6,61,31,668. The Assessing Officer estimated the profit element at 12.5% and made an addition of ₹82,66,459. On appeal, the CIT(A) corrected the amount of alleged non-genuine purchases to ₹6,09,98,252 and correspondingly restricted the addition to ₹76,24,782. Before the Tribunal, the assessee also raised a legal challenge regarding absence of notice under section 143(2), but did not press that ground at the hearing and confined the effective dispute to the merits of the addition.
The Revenue relied on PCIT v. Kanak Impex (India) Ltd., where the Bombay High Court had restored 100% addition of bogus purchases. The Tribunal, however, followed the coordinate-bench reasoning in ITO v. Khimchand Okhchand Bhansali, which had distinguished Kanak Impex. It noted that in Kanak Impex the assessee had failed to prove the purchases and explain the source of expenditure, leading to application of section 69C. By contrast, in the comparable Tribunal matter, transactions through banking channels had been demonstrated and the Assessing Officer himself had estimated only the profit component. The coordinate bench had also considered similar cases of traders in ferrous and non-ferrous metals and restricted the addition to 5%.
