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Income Tax Appellate Tribunal - Mumbai

Anil Popatlal Udeshi, Mumbai vs Ito 19(1)(1), Mumbai on 31 October, 2017

            IN THE INCOME TAX APPELLATE TRIBUNAL,
                   MUMBAI BENCH "A", MUMBAI

       BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND
     SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER

                            ITA No.40/M/2017
                         Assessment Year: 2009-10

         Shri Anil Popatlal Udeshi,       Income Tax Officer -
         Birla Mansion No.2,              19(1)(1),
         Dr. DD Sathe Marg,           Vs. 2nd Floor, Matru Mandir,
         Prathana Samaj,                  Mumbai - 07
         Mumbai - 400 004
         PAN: AAAPU1762D
               (Appellant)                        (Respondent)


       Present for:
       Assessee by              : None
       Revenue by               : Shri Saurabh Deshpande, D.R.

       Date of Hearing       : 21.08.2017
       Date of Pronouncement : 31.10.2017

                                 ORDER

Per D.T. GARASIA, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 20.09.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

2. The brief facts of the case are that the assessee is an individual engaged in the business of reseller of Xerox Machine, copier spare parts and Xerox machine parts. During the year the Assessing 2 ITA No.40/M/2017 Shri Anil Popatlal Udeshi Officer (hereinafter referred to as the AO) found that assessee had made bogus purchases from following parties:

     Sr. Name of the party                         Bill amount
     No.                                           (Rs)

     1.    Saileela Trading Pvt. Ltd.              3,00,560/-
     2.    Sthapna Trade Impex Pvt. Ltd.           6,63,000/-
     3.    Manav Impex                             1,02,69,633/-
     4.    Riddhi Enterprises                      2,97,000/-
     5.    KC Enterprises                          3,93,750/-
     6.    Pushphar Electricals & Engineers        11,17,125/-
           Pvt. Ltd.
     7.    Kameshwar Trading Pvt. Ltd.             19,94,200/-
     8.    Takshil Trading Pvt. Ltd.               2,34,520/-
     9.    Pakshal Tradelinks Private Ltd.         4,25,250/-
     10.   Trichipuram Trading Pvt. Ltd.           8,84,000/-
     11.   Ramex Trade Impex Pvt. Ltd.             23,39,745/-
     12.   Jupiter Multitrade Pvt. Ltd.            4,50,000/-
           Total                                   1,93,68,783/-

3. The assessee was asked to produce the above parties for verification. There was no compliance of notice under section 133(6). Therefore, the AO has made the addition on account of bogus purchases of Rs.1,93,68,783/-

4. Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has allowed the claim by observing as under:

"7.12 The facts of the appellant's case are exactly similar to the above case. Respectfully following the above cited decision, and also taking into consideration that the line of business the appellant is i.e. reseller of Xerox machines and copier spare parts & Xerox machine parts where the VAT levied on the goods 3 ITA No.40/M/2017 Shri Anil Popatlal Udeshi purchased itself is ©12.5% which is the benefit the appellant is getting by obtaining the bogus bills and the appellant already offered certain percentage of profit on such purchases and also considering the fact that the AO adopted the same percentage of profit on the total purchases where the Gujarat High Court supported the estimation made in Simith Seth case i.e. 12.5%, the addition of Rs.24,21,098/- made for this assessment year by the AO, @12. 5% on the total pu rchases of Rs.1,93,68,783/-, is confirmed and appeal on this ground is 'dismissed'."

5. No one has appeared on behalf of the assessee. Accordingly, we have heard the Ld. D.R. and the Ld. D.R. relied upon the decision of the Tribunal, Ahmedabad Bench in the cases of Shwetambar Steels vs. ITO Ahmedabad and Ganesh Rice Mills vs. CIT (294 ITR

316). The facts in the present case show that assessee could not produce the parties from whom goods are stated to have been purchased. The suppliers were found to be engaged in providing bogus bill without actual dealing of goods. In this regard, the assessee has stated that they had submitted quantitative details of stock with respect of the sales with purchases from the parties during the assessment proceedings. The assessee has submitted the detail of corresponding sales in respect of the purchase from the said parties. As mentioned above the AO has never disputed or examined the aspect of sales receipts. Since the sales made by the assessee was not doubted or disputed by the AO and he has accepted the sales receipts of the assessee as it is, therefore, the AO cannot deny that purchases were not made by the assessee and the material was not used for its sales. What is under dispute is the purchases from the parties from whom bills have been taken and cheques have been issued to them.

Shri Anil Popatlal Udeshi Purchases are not in dispute but the parties from whom purchase are shown to have been made are disputed and suspicious. The AO had made the addition as some of the suppliers were declared hawala dealers by the VAT Department. This may be a good reason for making further investigation but the AO did not make any further investigation and merely completed the assessment on suspicion. Once the assessee has brought on record the details of payments by account payee cheque, it was incumbent on the AO to have verified the payment details from the bank of the assessee and also from the bank of the suppliers to verify whether there was any immediate cash withdrawal from their account. No such exercise has been done or findings recorded. There was no detailed investigation made by the AO himself. It is also found that the payments have been made by account payee cheque which are duly reflected in the bank statement of the assessee. There is no evidence to show that the assessee has received cash back from the suppliers. Merely because the suppliers did not appear before the AO or some confirmation letters were not furnished, one cannot conclude that the purchases were not made by the assessee. This view is supported by the decision of Nikunj Eximp Enterprises vs. CIT 216 Taxman 171 (Bom). To this extent, we are of the view that if the assessee has fulfilled its onus of making the payment by cheque and has supplied the addresses of the sellers then it cannot be presumed that supplier were bogus simply because the sellers were not found at the given address. There is a considerable time gap between the period of purchase transaction and period of 5 ITA No.40/M/2017 Shri Anil Popatlal Udeshi scrutiny proceedings. The AO has not brought any material on record to show that there is suppression of sales. It is basic rule of accountancy as well as of taxation laws that profit from business cannot be ascertained without deducting cost of purchase from sales. Estimation of profit ranging from 12.5% to 15% has been upheld by the Hon'ble Gujarat High Court in the case of CIT vs Simit P Sheth 356 ITR 451 (Guj.). Hence, we find no infirmity in the order of the Ld. CIT(A) and accordingly we have no alternative except to endorse the order of the Ld. CIT(A).

6. In the result, assessee's appeal is dismissed.

Order pronounced in the open court on 31.10.2017.

         Sd/-                                                    Sd/-
(Manoj Kumar Aggarwal)                                     (D.T. Garasia)
ACCOUNTANT MEMBER                                       JUDICIAL MEMBER

Mumbai, Dated: 31.10.2017.
* Kishore, Sr. P.S.



Copy to: The Appellant
        The Respondent
        The CIT, Concerned, Mumbai
        The CIT (A) Concerned, Mumbai
        The DR Concerned Bench
//True Copy//                             [




                                                  By Order



                                 Dy/Asstt. Registrar, ITAT, Mumbai.