RAJU & RAJU ELECTRONICS PVT LTD.,MUMBAI vs. ITO WARD 5(3)(1), MUMBAI

Having heard rival submissions and after perusal of material on record, our adjudication would be as given in succeeding paragraphs. The assessee being resident corporate assessee is stated to be engaged in trading of electronic items.

The case was reopened pursuant to receipt of certain information from Sales Tax Department, Maharashtra on the basis of which it was alleged that the assessee made suspicious purchases of Rs.5.94 Lacs from 2entities as detailed in para 4 of the order. Notices issued u/s 133(6) to these suppliers did not elicit any satisfactory response. The assessee furnished copies of purchase invoices, sales invoices & bank statements etc. However, since the assessee could not prove the movement of goods and also could not produce any of the suppliers for confirmation of transactions, these purchase were disallowed and added back to assessee’s income. 4. The Ld. CIT(A) noted that the assessee could not prove the genuineness of the expenditure and therefore, the additions were to be upheld. Aggrieved, the assessee is in further appeal before us. 5. It could be seen that the assessee was a trader and therefore, there could be no sales without actual purchase of material. The assessee was in possession of purchase invoices and the payment to the suppliers was through banking channels. The assessee also proved the disposal of purchased material during assessment proceedings. Therefore, it could be presumed that the goods were procured from grey market whereas the bills were procured from these suppliers. Therefore, to plug the leakage of revenue, we restrict the addition to the extent of 12.5% of disputed purchases of Rs.5,94,698/ which comes to Rs.74,337/-. The balance addition stand deleted.