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Income Tax Appellate Tribunal - Ahmedabad

Dipesh Prabhudas Kothari, Huf, ... vs Income Tax Officer, Ward-3(2),, ... on 5 May, 2017

             IN THE INCOME TAX APPELLATE TRIBUNAL
               AHMEDABAD "D" BENCH AHMEDABAD

       BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
  AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER

                            ITA No. 2798/Ahd/2013
                           (Assessment Year: 2009-10)


Dipesh P. Kothari
315, Astodia, Rangati Bazar,
Ahmedabad 380002                                                     Appellant

                                      Vs.

ITO, Ward 3(2), Ahmedabad                                          Respondent


PAN: AABKH2547P


      आवेदक क  ओर से/By Assessee            : None
      राज व क  ओर से/By Revenue             : Shri Vilas V. Shinde, Sr. D.R.
      सन
       ु वाई क  तार ख/Date of Hearing : 03.05.2017
      घोषणा क  तार ख/Date of
      Pronouncement                         : 05.05.2017


                                     ORDER


PER S. S. GODARA, JUDICIAL MEMBER

This assessee's appeal for assessment year 2009-10 arises against the CIT(A)-6, Ahmedabad's order dated 23.09.2013, passed in appeal no. CIT(A)-VI/Wd.3(2)/284/11-12, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short "the Act".

Case called twice. None appears at assessee's behest. The Registry has already issued RPAD notice dated 27.02.2017. The same stands received back unserved. We thus proceed ex parte against the assessee. Its main appeal is taken up for adjudication on merits.

2. It is evident from assessee's pleadings that its sole substantive grievance challenges correctness of the CIT(A)'s action in restricting bogus purchases addition of Rs.54,98,573/- as made by the Assessing Officer in assessment order dated 29.12.2011 to that @12.5% only; coming to Rs.6,87,321/-.

3. We have heard learned Departmental Representative strongly supporting the above impugned addition. He invites our attention to the lower appellate findings summarizing relevant facts, issue involved and both the lower authorities' discussion as under:

"3.3 Ground No.s 2, 3 and 4 are against the addition of Rs. 54,98,573/- made towards bogus purchases. In the assessment order A.O observed that the appellant was engaged in the business of trading in chemicals; appellant claimed to have made purchases from M/s Niki Enterprise for Rs,41,45,585/- & from M/s Ambica Sales for Rs, 13,52,988/-; in response to notices Issued u/s 133(6), M/s Niki Enterprise and M/s Ambica Sales stated that they had not made any transactions with the appellant; and for the reasons stated at para-3 of the assessment order the purchases from these 2 parties were being treated as bogus purchases and accordingly, addition of the said sum was being made The contentions of the ld. A.R. are that sales could not have been made without corresponding purchases; the purchases were accounted for in the stock book as well as sales book; in view of case-laws relied on this is case for estimation of income and therefore G.P returned by the appellant at 3.05% may be adopted and addition be restricted accordingly.

In the case relied on by the A.R. namely CIT. Vs. Satyanarayan P. Rathi 351 ITR 150 (2013), the jurisdictional Gujarat High Court held as under:

"The issue pertains to bogus trade made by the respondent-assessee. The assessee is in the business of trading in iron and steel For the assessment year 2003-04, during the reassessment proceedings, it was found that the purchases worth Rs. 61.40 lakhs (rounded off] were not supported by sufficient evidence. The assessee's claim of having purchased such goods from various suppliers was verified, but was not found genuine. It was found that such parties had never supplied the goods as named by the assessee. On such basis, the Assessing officer made addition of the entire amount of purchases of Rs.61.40 lakhs (rounded off).

..................................

..................................

5. From the record, we noticed that the Commissioner (Appeals) well as the Tribunal found that that the purchase of raw material, in which the assessee was trading, were only made, but not from the disclosed sources. In other words, the case against the assesses was that the purchases were made in the grey market through cash payment and some entries were obtained from certain suppliers who had not sold such goods.

6. The present case, thus, being one of only purchase but not from disclosed sources, it would be only the profit element embodied in such purchase which could be added in the income of the assessee and, thus, rightly so done by the Commissioner (Appeals) and the Tribunal.

7. If this be our conclusion, the only question arises whether such profit element should be estimated at the rate of 30 per cent or 12 ½ per cent. Whenever such a question arises, some reasonable estimation is always permissible. Hardly any question of law on such aspect would arise. Merely, it is pointed out that the assessee was a trader and that the Tribunal retained 12 ½ percent of the purchase towards its possible profit, we do not find any reason to entertain the appeal. In the result, tax appeal is dismissed."

In the light of the said decision it is considered reasonable to estimate the income in connection with the bogus purchases made. Following the above mentioned case-law, I consider it reasonable to restrict the addition to 12.5% of the unverifiable purchases totaling to Rs, 54,98,573/-, which works out to Rs. 6,87,321/-. Accordingly, addition is restricted to the said amount. Balance addition is deleted. These grounds of appeal-are partly allowed."

4. The above extracted facts reveal that the assessee has admittedly not been able to get the purchases in question verified from the parties concerned. The same factual position continues herein as well as there is no evidence in the case file to rebut the above findings. It has already come on record that ITA No. 2798/Ahd/2013 (Dipesh P. Kothari vs. ITO) A.Y. 2009-10 -4- the lower appellate authority has considered hon'ble jurisdictional high court's decision (supra) in adding only the profit component @12.5%. We thus find no reason to interfere with the same.

5. This assessee's appeal is dismissed.

[Pronounced in the open Court on this the 05th day of May, 2017.] Sd/- Sd/-

 (PRADIP KUMAR KEDIA)                                                     (S. S. GODARA)
  ACCOUNTANT MEMBER                                                     JUDICIAL MEMBER
Ahmedabad: Dated 05/05/2017

                                            True Copy
S.K.SINHA
आदे श क   	त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)

5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड3 फाइल / Guard file.

By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद ।