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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 24/03/2022, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2008–09.
In this appeal, assessee has raised following grounds:
“1. The learned ACIT erred in disallowing Rs. 9,80,666/- out of Purchases of Rs. 12.62.36,483/- debited to P&L Account.
Hitesh Dinkar Vora ITA No.1574/Mum./2022 2. The learned ACIT disallowed the above purchase merely on the basis of the difference between Purchases debited to P & L Account and Purchases as per VAT Audit Report, without issuing any show cause notice before making addition. 3. The learned ACIT in course of entire hearing never raise this issue and made the addition without seeking any explanation and learned CIT (A) erred in confirming the above addition.”
The brief facts of the case, as emanating from the record, are: The assessee is an individual and is proprietor of the firm, which is engaged in the business of supply and installation of electrical work. For the year under consideration, assessee filed his return of income on 30/09/2008 declaring total income of Rs. 93,95,370. During the course of assessment proceedings, assessee was asked to submit the VAT audit report for the year under consideration. Upon perusal of VAT audit report, it was found that the turnover of purchases is Rs. 12,52,55,817. Further, it was observed that in the profit and loss account submitted by the assessee, the purchases have been debited to the tune of Rs. 12,62,36,483. Accordingly, the assessee was asked to explain as to why the difference of Rs. 9,80,666 (i.e. Rs. 12,62,36,483 – Rs. 12,52,55,817) be not added to the total income of the assessee. The Assessing Officer vide order dated 18/11/2010 passed under section 143 (3) of the Act, inter-alia, made an addition of difference in purchases of Rs. 9,80,666 to the total income of the assessee, in absence of proper reply from the assessee.
The learned CIT(A) vide impugned order dated 24/03/2022, dismissed the appeal filed by the assessee on this issue, by observing as under:
“6.3 Regarding disallowance of Rs.9,80,666, out of purchases of Rs.12,62,32,483, debited to the Profit & Loss Account.
Hitesh Dinkar Vora ITA No.1574/Mum./2022 It is observed that the learned Assessing Officer has added Rs. 99,80,066/- on account of difference in VAT audit report submitted by the appellant as against the purchases which have been debited to the P&L account. The learned Assessing Officer has added Rs. 9,80,666/-Rs 12,62,36,482/- as per P&L account debited by the appellant - Rs. 12.52,55.817/- as per the VAT audit report). During the appellant proceedings in respect of above addition, though the appellant gave detailed submission in respect to of the above additions claiming that the total purchases were made which were debited to P&L account includes purchases made out of Maharashtra which were certainly not included in VAT audit report. However, the appellant could not substantiate the details of such purchases which included cash purchases from the local markets and also out of Maharashtra. The contention of the appellant is without any documentary basis and proof. In view of the above, I find that the AO is justified in disallowing an amount of Rs. 9,80,666 on account of purchases”
Being aggrieved, the assessee is in appeal before us.
Having considered the submissions of both the sides and perused the material available on record, we find that the only grievance of the assessee is against disallowance made on the basis of difference between purchases debited to the profit and loss account and purchases as per VAT audit report. As per the assessee, the amount of purchases recorded in profit and loss account includes purchases from State of Maharashtra as well as from outside the State of Maharashtra. While, the purchases as mentioned in the VAT audit report is only restricted to the purchases from State of Maharashtra. Therefore, on account of this difference in purchases arising in the case of assessee, addition has been made to the total income of the assessee. The Assessing Officer made the addition in absence of any proper reply from the assessee. While, the learned CIT(A) dismissed the appeal filed by the assessee on the basis that assessee could not substantiate the details of such purchases which included cash purchases from local markets and also out of Maharashtra. Thus, in view of the above, we deem it appropriate to remand Page | 3
Hitesh Dinkar Vora ITA No.1574/Mum./2022 this issue to the file of Assessing Officer for de novo adjudication. The assessee is also directed to provide all the details of all purchases as debited in the profit and loss account. The assessee is directed to reconcile all the purchases debited in profit and loss account with the purchases as mentioned in the VAT audit report. With the above directions, grounds raised by the assessee are allowed for statistical purpose.
In the result appeal by the assessee is allowed for statistical purpose. Order pronounced in the open Court on 21/10/2022