ARUN MAHADEV SAWANT,AMBERNATH vs. ITO, WARD 3(1), KALYAN, KALYAN

When the appeal was called for hearing, none appeared on behalf of the assessee. The Registry informed us that, on the previous date of hearing, the authorised representative of the assessee had filed a written request dated 10.07.2026 seeking an adjournment, and the present date of hearing was fixed in accordance with the said request. However, on the date fixed for hearing, neither was anyone present on behalf of the assessee nor was any further application seeking adjournment filed. In these circumstances, and having regard to the merits of the case, we proceed to dispose of the appeal ex parte qua the assessee, after hearing the submissions of the Ld. DR.

The assessee has taken the following grounds: “1) On the facts and in the circumstances of the case and as per the law, the addition of Rs. 23,84,202/- on account of the alleged unexplained purchase made by the learned assessing officer/Respondent and confirmed by the learned Commissioner (Appeals) being unsustainable in law may be deleted. 2) On the facts and in the circumstances of the case and as per the law, the addition of Rs. 54,02,301/- on account of the alleged unproved export loss as made by the learned assessing officer/Respondent and confirmed by the learned Commissioner (Appeals) being unsustainable in law may be deleted. 3) On the facts and in the circumstances of the case and as per the law, the disallowance of Rs. 10,25,100/- pertaining to the damaged reactor as made by the learned assessing officer/Respondent and confirmed by the learned Commissioner (Appeals) being untenable in law may be reversed.”

We have heard the submissions of the Ld. DR and carefully perused the material available on record. The grounds raised in the present appeal are adjudicated hereunder, ground-wise:

The addition was confirmed related to Ground No.1 on account of alleged unexplained purchase made by the assessee from M/s. Gharda Chemicals Ltd. The assessee filed the paper book comprising pages 1 to 216 which has been placed on record. On verification of the record of the assessee, we find that the notice u/sec. 133(6) was duly issued to the party from whom the assessee made a purchase amount to Rs.23,92,993/-. The said party was duly confirmed the purchase amount to Rs.8,791/- against the total purchase of Rs.23,92,993/-. Later on, the party had rectified the said mistake complied the notice u/sec. 133(6). Finally the Ld. AO had confirmed the addition, the balance amount to Rs.23,84,202/- (difference of Rs.23,92,993/- and Rs.8,791/-) with the total income of the assessee. During the appellate proceeding the assessee had contended the issue and stated that the party is also ready to appear personally before the revenue authorities. The party is also registered in ROC Mumbai and have duly complied all the legal provision where that the party. Wrong submission of the ledger at the first instance does not decline the fact that the assessee is not genuine purchase. The Ld. AO without considering the assessee’s submission has confirmed the addition. On the other hand, the Ld. CIT(A) had only considering the written submission of the assessee had upheld the addition made by the Ld. AO.

On perusal of the paper book we find that the assessee submitted the supporting documents related to compliance of this Ground No.1 in APB page 9 to 82 & also the confirmation of the party which is annexed in APB page 9 to 11.

The Ld. DR did not raise any serious objection to the submissions advanced on behalf of the assessee. It was, however, fairly accepted that the assessee had failed to furnish the requisite documentary evidence in support of its claim before both the revenue authorities. Accordingly, the Ld. DR relied upon and supported the orders of the revenue authorities.

We have heard the rival submissions and carefully considered the material available on record. The assessee filed its return of income, and the case was selected for scrutiny assessment. During the course of the assessment proceedings, the Ld. AO observed that the assessee had shown purchases amounting to Rs.23,92,993/- from M/s. Gharda Chemicals Ltd. A notice under Section 133(6) of the Act was issued to the said party. In response thereto, the supplier confirmed transactions with the assessee aggregating only Rs.8,791/-. The assessee contended that the supplier had inadvertently furnished an incorrect reply in compliance with the notice issued under Section 133(6), which resulted in an erroneous confirmation of the transactions. In support of its contention, the assessee produced copies of the relevant bank statements and a confirmation from the supplier, which have also been placed on record in the APB. Upon consideration of the material available on record, we find that neither the Assessing Officer nor the Ld. CIT(A) has properly examined or dealt with the documentary evidence furnished by the assessee. The authorities below have passed their respective orders without taking due cognizance of the assessee's supporting evidence. In the interest of justice and to ensure compliance with the principles of natural justice, we deem it appropriate to restore this issue to the file of the Ld. AO for a fresh examination and verification of the confirmation received from the supplier as well as the corresponding bank statements and other supporting evidence produced by the assessee. The Ld. AO shall decide the issue afresh in accordance with law after providing the assessee with a reasonable and adequate opportunity of being heard.

We find that the Ground No.2 is related to the claim of export loss amount to Rs.54,02,301/-. The assessee submitted the evidence before the Ld. CIT(A) related to the claim of the said export loss. Admittedly, the assessee was not able to submit proper evidence in support of his claim before the Ld. AO. Further, the assessee submitted the detail submission before the Bench in APB. The relevant part of the assessee’s submission related to claim of export loss amount to Rs.54,02,301/- is reproduced as below:

We heard the rival submission and considered the documents available in the record. During the assessment proceeding the Ld. AO found that the assessee made an export loss of Rs.54,02,301/- on account of damage of container at port containing goods which were to be exported to Dubai. The assessee had made a details explanation and also the payment was made to the respective parties related to this damage. The supporting evidence are duly annexed in APB page 83 to 206. We find that the assessee had a valid evidence in related to his claim. But during the proceeding the evidence was not considered by the revenue authorities. In the interest of justice and to ensure compliance with the principles of natural justice, we deem it appropriate to restore this issue to the file of the Ld. AO for a fresh examination and verification of the supporting evidence produced by the assessee. The Ld. AO shall decide the issue afresh in accordance with law after providing the assessee with a reasonable and adequate opportunity of being heard.

The Ground No.3 is related to the claim of loss/damage of Rs.10,25,100/-. The assessee submitted the details explanation in the APB page 8. The assessee mentioned that the reactor was damaged due to high pressure vacuum developed insight when the assessee was manufacturing animal nutrition (Vitamin E Acetate) as job work on behalf of the Merck Ltd. On this account the assessee incurred loss amount to Rs.10,25,100/-. The assessee treated the entire loss as a revenue expenditure u/sec. 37(1). Whereas Ld. AO treated the said expenses as a capital expenditure. The assessee further claimed that the loss of material and other related cost which were debited in the books of accounts. In support of the evidence, the assessee submitted all the supporting documents in APB page 207 to 216.

The Ld. DR argued and stands in favor of the revenue authorities.

We have heard the rival submissions and carefully considered the material available on record. We find that the assessee had claimed a deduction of Rs.10,25,100/- under Section 37(1) of the Act on account of damage/business loss. The Ld. AO, however, treated the entire claim as capital expenditure. The claim was also disallowed on the ground that the assessee had failed to furnish adequate documentary evidence in support thereof. The Ld. CIT(A) examined the issue and upheld the disallowance, holding that the assessee had failed to establish, through cogent evidence, the genuineness of the alleged business loss arising from damage to the asset. From the record, it is evident that the assessee could not produce the relevant documentary evidence before the revenue authorities. However, the said documents have now been placed before the Bench. In these circumstances, and in the interest of justice, we deem it appropriate to restore this issue to the file of the Ld. AO for de novo examination and verification of the assessee's claim in the light of the documentary evidence now produced. The Ld. AO shall adjudicate the issue afresh in accordance with law after affording the assessee a reasonable and effective opportunity of being heard.

In the result, the appeal of the assessee bearing ITA No. 2070/Mum/2026 is allowed for statistical purpose.

�ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI