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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY
अपीलाथ) -ारा/ Appellant by : Ms. Smita Verma *ितवाद, -ारा/Respondent by : None सुनवाई क. ितिथ/ Date of hearing : 04/05/2021 घोषणा क. ितिथ/ Date of pronouncement : 21/05/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-20, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 13.06.2019 for the Assessment Year (AY) 2011-12.
The brief facts of the case as emanating from the records are: The assessee is engaged in the business of manufacturing and trading of engineering equipments and allied products. On the basis of information received from Sales Tax Department, Government of Maharashtra, assessment in the case of assessee
आअसं. 6403/मुं/2019 (िन.व.2011-12) (A.Y.2011-12) was re-opened for AY 2011-12. As per the information received, the assessee has allegedly obtained bogus purchase bills from M/s Asian Steel amounting to Rs. 25,74,000/- in respect of purchase of machinery. During assessment proceedings, the assessee furnished copy of invoices, copy of LR for transportation of machinery, photographs of machine purchased and installed at factory, details of the cheque through which payment was made to the supplier of machinery, scheduled to the balance-sheet indicating addition of the assets in the block and the assessee’s claim of depreciation. The AO after examining the documents furnished by the assessee disallowed 12.5% of alleged bogus purchases and made addition of Rs. 3,21,750/-.
Aggrieved by the assessment order dated 10.12.2018 passed under section 143(3) read with section 147 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) after examining the documents on record and the facts of the case concurred with the findings of the AO to the extent of inflated cost of machinery i.e. Rs. 3,21,750/- and directed the AO to reduce the said amount from the total cost of machinery and allow depreciation on the remaining amount. Against the part relief allowed by the CIT(A), the Revenue is in appeal before the Tribunal.
Ms. Smita Verma representing the Department vehemently defended the assessment order and prayed for reversing the findings of the CIT(A). The ld. DR pointed that the CIT(A) has erred in allowing depreciation on the machinery.
Submissions made by ld. DR heard, orders of authorities below examined. In the present case, the assessee has purchased capital asset from alleged hawala operator. In assessment proceedings, the AO disallowed 12.5% from the total cost
आअसं. 6403/मुं/2019 (िन.व.2011-12) (A.Y.2011-12) of the capital asset and made addition of Rs. 3,21,750/-.Undisputedly, the assessee failed to substantiate genuineness of the supplier of the machinery. The assessee could neither furnish correct address of the supplier for the services of notice under section 133(6) nor any confirmation was filed by the assessee from the supplier. The AO disallowed 12.5% from the total cost of the machinery as inflated purchases. In other words, the AO accepted that the machinery was indeed purchased albeit the cost of machinery was inflated. Once having accepted the fact of purchase of machinery, the assessee was entitled to depreciation on the same. The CIT(A) after examining the facts has rightly directed the AO to re-compute depreciation on the machinery after reducing inflated cost. I find no error in the impugned order. The impugned order is upheld and the appeal of Revenue is dismissed being devoid of any merit.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on Friday, the 21st day of May, 2021.