PLYSTONE PLYWOODS PRIVATE LIMITED,KOLLAM vs. ASSISTANT COMMISSIONER CENTRAL CIRCLE 2, COIMBATORE

The effective ground of appeal in this appeal of assessee is against confirming the disallowance to the extent of Rs.8,92,227/- in respect of bought note purchases made by the A.O .

1. 3. The assessee is engaged in the manufacture of plywood located in Ernakulam. A search and seizure operation was conducted u/s. 132 of the Income-tax Act, 1961 (hereinafter “the Act”) in the case of the assessee on 21.09.2017 and it was found that the purchase of the raw materials made from local unregistered dealers (agriculturists), were without proper purchase invoices and the payments were made in cash. The A.O in the absence of documentary evidences disallowed 30% on total cost of material of Rs.87,79,192/-. On appeal, the Ld. CIT(A) found that purchases from unregistered dealer was only Rs.29,74,090/- so he confirmed 30% of such bought note purchases and restricted disallowances to Rs.8,92,227/-. The assessee is in appeal before Ld. CIT(A), had also contended that no addition could be made in the assessment order passed u/s. 153A of the Act in the absence of incriminating material, in view of decision of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd.

The Ld AR before us has submitted that there was no incriminating material found during the search, therefore in view of decision of decision of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd., no addition can be made in the order passed u/s 153A of the Act. The Ld. AR on merit has submitted that assessee’s accounts are audited and therefore adhoc disallowances is not called for. The Ld. AR has further submitted that assessee has written back Rs.8,78,891/- in subsequent year due to quality issue, therefore it amounts to double disallowances.