ITO WARD 2 (5), THANE vs. SMT. MALTIDEVI BIRBAL SINGH, THANE

This is an appeal by the revenue against order dated 06-06-2019 of learned Commissioner of Income-tax (Appeals)-1, Thane, for the assessment year 2010- 11.

The dispute in the present appeal is confined to partial relief granted by thelearned Commissioner of Income-tax (Appeals) in the matter of addition made on account of non genuine purchases. 3. Briefly the facts are, the assessee is an individual and is engaged in the business of manufacturing of wire draw. For the assessment year under dispute assessee filed her return of income on 30-09-2010 declaring total income of Rs.6,87,140/-. Subsequently, the assessing officer received information from the Sales-tax department indicating that purchases worth Rs.16,53,174/- shown to have been made during the year are non genuine, as, concerned selling dealers have been found to be providing accommodation bills. On the basis of such information, the assessing officer reopened the assessment under section 147 of the Income Tax Act, 1961. After calling for certain information / details from the assessee and examining them, the assessing officer ultimately treated the purchases of Rs.16,53,174/- as non genuine and disallowed the same. Assessee contested the aforesaid disallowance before the first appellate authority. After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner of Income-tax (Appeals) restricted the disallowance to 12.5% of the alleged non genuine purchases. 4. We have considered rival submissions and perused materials on record. Though, the assessing officer has treated certain purchases made by the assessee as non genuine on the basis of information received from the Sales-tax department, however, he has not disputed the sales turnover of the assessee. Thus, in the aforesaid scenario, the logical conclusion would be, in the absence of the sales, the assessee could not have achieved the sales turnover. That being the case, the entire purchases cannot be disallowed, but only the profit element embedded in such purchases can be considered for disallowance. Keeping in view the aforesaid legal principle, the disallowance of profit element made by learned Commissioner of Income-tax (Appeals) by estimating at 12.5% of the alleged non genuine purchases being fair and reasonable, is upheld. Grounds are dismissed. 5. In the result, appeal is dismissed.