INCOME TAX OFFICER -28 (1) (2), MUMBAI vs. SHRI BALCHANDRA GOPAL SHIROLKAR, MUMBAI

The assessee is engaged in manufacturing of Fire Temple structure. The assessment for AY 2010-11 in the case of assessee was re-opened on the ground that the assessee has obtained accommodation bills amounting to Rs. 5,19,478/- from suspicious dealers. The Assessing Officer (AO) made addition of the entire alleged bogus purchases. Aggrieved by the assessment order dated 25.01.2016 passed under section 143(3) read with section 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act ’], the assessee filed appeal before the CIT(A). The CIT(A) upheld the findings of AO to the extent that the assessee has failed to discharge his onus in proving genuineness of the dealers and purchases made from them. However, the CIT(A) restricted the disallowance on bogus purchases to 12.5%.

Ms. Smita Verma representing the Department vehemently defended the assessment order. The Departmental Representative (DR) submitted that the assessee has failed to produce dealers or confirmations from them. The notices issued under section 133(6) of the Act to the suspicious dealers were received back unserved from the postal authorities with remarks “Left/Not Known/Address Incomplete”. The assessee has not furnished any document such as delivery challans, lorry receipts, stock register, etc. to prove trail of goods. The ld. DR prayed for restoring the addition as per the assessment order.

Submissions made by ld. DR heard, orders of the authorities below examined. Undisputedly, the assessee failed to discharge his onus in proving authenticity of the dealers and the purchase made from them. At the same time, it is observed that the AO has not disputed the sales turnover declared