ITO 24 (1)(5), MUMBAI vs. SHRI. DEVDAS MANJAYYA SHERUGAR, MUMBAI

Aforesaid appeal by revenue for Assessment year [AY in short] 2010-11 contest the order of Ld. Commissioner of Income Tax (Appeals)-36, Mumbai [in short CIT(A) ] dated 26/08/2019 which has provided certain relief to the assessee on account of alleged bogus purchases.

Though none appeared for assessee, however, material on record was sufficient for disposal of the appeal. The Ld. DR pleaded for restoration of assessment framed by Ld. AO. 3.1 The material facts are that the assessee being resident individual stated to be engaged in manufacturing of engineering goods consisting of molds, dies etc. was assessed for the year under consideration u/s 143(3) r.w.s. 147 on 26/02/2016. The original return filed by assessee was processed u/s 143(1). However, pursuant to receipt of certain information from DGIT (Inv.) / Sales Tax Department, Mumbai, it transpired that the assessee made alleged bogus purchases of Rs.52.00 Lacs from nine entities as detailed in the assessment order. Accordingly, the case was reopened as per due process of law and the assessee was required to file requisite details to substantiate the purchases. 3.2 In support of purchases, the assessee furnished copies of purchase bills, monthly details of sale & purchase along with bank statements evidencing payment through banking channels. However, notices issued u/s 133(6) did not elicit satisfactory response. The assessee could not produce any of the suppliers for confirmation of transactions. The Ld. AO, after considering entire factual matrix as well as in the background of various judicial pronouncements, made aggregate disallowance of Rs.41.34 Lacs which has been worked out in para-13 of the order. The disallowance was made @100% against 8 parties whereas the disallowance against one party was estimated @25%. In the alternative, Ld. AO proposed disallowance of Rs.34.21 Lacs u/s 40(A)(3) which represent purchases made from seven entities since the assessee would have made payment out of sources best known to him.