ITO 20(1)(2), MUMBAI vs. SHRI. GOPINATH GANPAT BOLINJKAR, MUMBAI

The only common dispute in both these appeals relates to partial relief granted by learned Commissioner (Appeals) in the matter of addition made because of alleged non-genuine purchases.

Briefly the facts are, the assessee is an individual and stated to be engaged in manufacturing of engineering instruments. For both the assessment years under dispute, the assessee had filed his returns of income in regular course, which were processed under section 143(1) of the Income Tax Act, 1961. Subsequently, the assessing officer (AO) received information from the Sales Tax Department, Government of Maharashtra through DGIT Assessment Years: 2009-10 & 2010-11 (Inv.) indicating that purchases worth Rs. 9,10,636/- in assessment year 2009-10 and Rs. 17,71,807/- in assessment year 2010-11 are non genuine, as, the concerned selling dealers were found to be indulging in providing accommodation bills without real sale transaction. Based on such information, the AO reopened the assessments under section 147 of the Act. Though, in course of assessment proceedings, the assessee claimed the disputed purchases to be genuine, however, the AO was not convinced. He observed, notices issued under section 133(6) of the Act seeking information from the concerned selling dealers did not bear any result. Therefore, he concluded that though the source of purchases is doubtful, however, the assessee must have purchased the goods from unverified sources. Therefore, he disallowed 25% out of the purchases made from all the parties, except, M/s Vimal Engineering Corporation. In respect of this party, the AO disallowed the entire purchases in both the assessment years under dispute. The assessee contested the disallowances made by the AO in appeals preferred before learned Commissioner (Appeals). Partly accepting the submissions of the assessee, learned Commissioner (Appeals) restricted the disallowance to 12.5% of all the purchases, including, the purchases made from M/s Vimal Engineering Co. in both the assessment years under dispute.

When the appeals were called for hearing, no one appeared on behalf of the assessee. Considering the nature of dispute, I proceed to dispose of the appeals ex-parte qua the assessee after hearing the learned Departmental Representative and based on material on record.

I have considered the submissions of learned Departmental Representative and perused the material on record. It is evident, though, the AO has doubted the source of purchases, however, he was convinced that the assessee had purchased the goods from unverified sources in respect of all purchases except the purchases made from M/s Vimal Engineering Co. Therefore, while disallowing the entire purchases relating to the Vimal Engineering Co. he has disallowed only the profit element embedded in all other purchases by estimating at 25%. Whereas, learned Commissioner Assessment Years: 2009-10 & 2010-11 (Appeals) has restricted the disallowance to 12.5% of all purchases. It is observed, while restricting the disallowance to 12.5%, learned Commissioner (Appeals) has taken note of the applicable VAT rate on the goods purchased. Even otherwise also, in similar nature of cases the profit element is generally estimated at 12.5%. In view of the aforesaid, I do not find any infirmity in the decision of learned Commissioner (Appeals). Grounds are dismissed.

In the result, both the appeals are dismissed.