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TMI Blog2018 (4) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... all details are called for including bank account, PAN, address, etc. In some cases, before grant of RC even visit is done to confirm the Place of Business of the dealer. The signatory to the application is required to attend before registration authority and sign in his presence. This itself establishes that the dealer is in existence when Registration Certificate is obtained. Subsequently, the dealer may default in paying tax or pays less tax. They do not disclose proper turnover and are found to be SUSPICIOUS. Some such suspicious dealer also pays up to clear their name. Some dealers in order not to pay VAT file Affidavit that they have issued only Hawala bills and there is no physical delivery of goods. So Hawala dealer gets scot free and purchasing dealer is required to pay up the tax. In some cases, if a dealer does not have money, he is advised to give such affidavit so that he can escape harassment from recovery. The burden in such case shifts from selling dealer to purchasing dealer to prove his case. Thus, on one hand, the purchaser is expected to pay VAT that he had already paid while purchasing the goods. On the other hand, owing to default on part of the seller, and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her appeal before us. 7. We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that assessee is engaged in the business of iron and steel trading, where normal GP rate works out at 4%.On the information received from Sales Tax Department regarding suspicion supplier, the AO reopened the assessment and added 12.5% of such purchases in assessee's income. By the impugned order, CIT(A) confirmed the addition after relying on the decision of Simit P Sheth. We found that place of business and year under consideration were different and as such gross profit margin in this case cannot be used for comparison purposes. Therefore, the ratio of these decisions cannot be applied to the facts of instant case. After going through the judgment of Simit P Sheth we found that it is pertaining to A.Y.2006-07 whereas assessee's case pertains to A.Y.2010-11. Simit P Sheth was carrying on his business in the State of Gujarat whereas the present assessee is operating in South Mumbai, Maharashtra where competition is very high. We also observe that in the case of Simit Sheth suppliers made their statement on oath to the effect that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. v. ITO [1994] 49 ITD 177 (ITAT Mumbai) 10. Reliance was also placed on the following decisions in support of the contention that simply based on the information from Sales Tax department, AO cannot make addition without making further investigation to substantiate his allegation of bogus purchase. In all the said case law, It has been held that if assessee has provided quantitative details and if sales are not doubted by AO, then addition cannot be sustained only because of non-appearance of supplier before the AO. * M/s. Imperial Imp & Exp vs. ITO (ITA No.5427/Mum/2015)[Mum.ITAT] * ACIT vs. Mahesh K Shah (ITA No.5194/Mum/2014)[Mum ITAT] * Rajesh P Soni vs. ACIT [100 TTJ 892](2006)(Ahd. Trib) * CIT vs. Nikunj Eximp Enterprises (P) Ltd., (35 Taxmann.com 384) (Bom.) * Ramesh Kumar & Co., vs. ACIT (ITA No.2959/ Mum/2014) (Mum.ITAT) * Hiralal Chunilal Jain vs. ITO (ITA No.4547/Mum/2014) (Mum.ITAT) * DCIT vs. Rajeev G. Kalathil (67 SOT 52)(Mum.ITAT) * ITO vs. Paresh Arvind Gandhi (ITA No.5706/Mum/2013)(Mum.ITAT) 11. Learned AR also placed reliance on the decision of Mumbai ITAT in the case M/s. Geolife Organics vs. ACIT [ITA No. 3699/M/2016] wherein the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. Precious Jewels Corpn. 17 taxmann.com 264 (Raj.), CIT v. Rajesh P. Soni [Tax Appeal No. 1107 of 2006, dated 27-2-2012. 11. On identical facts and circumstances, the Hon'ble Jurisdictional High Court as well as the Tribunal, Mumbai Bench, has deleted the addition made under section 69C, in the following cases:- i) CIT v/s Nikunj Eximp Enterprise Pvt. Ltd. 372 ITR 619 ii) A"CITv/s Tarla R, Shah, ITA no.5295/Mum./2013, dated 2nd February 2016; and iii) Shri Harilal Chunilal Jain v/s ITO, ITA no.4547/Mum./2014, dated 1 January 2016. 12. It is evident from the assessment order that on the basis of information obtained from the Sales Tax Department, Assessing Officer issued notices under section 133(6). As the assessee failed to produce the concerned parties, the Assessing Officer, primarily relying upon the information obtained from the Sales Tax Department held the purchases to be bogus and added 12.5% profit in addition to the normal profit declared by the assessee. Though, it may be a fact that assessee was not able to produce the concerned parties before the Assessing Officer, for whatever may be the reason, fact remains that during assessment proceedings its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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