ITO 27(3)(1), MUMBAI vs. SHRI. RAJENDRA M PAWAR, MUMBAI

This is an appeal by the revenue against order dated 04-06-2019 of learned Commissioner of Income-tax (Appeals)-25, Mumbai, for the assessment year 2011-12.

When the appeal was called for hearing no one was present for the assessee. Considering the nature of dispute, we proceed to dispose of the appeal ex parte qua the assessee after hearing the learned Departmental Representative and on the basis of materials on record.

The dispute in the present appeal is confined to partial relief granted by the learned Commissioner of Income-tax (Appeals) in the matter of addition made on account of alleged non genuine purchases.

Briefly the facts are, the assessee is an individual and is engaged in the business of trading in chemicals. For the assessment year under dispute, assessee filed his return of income on 08-09-2011 declaring total income of Rs.8,76,000/-. Subsequently, the assessing officer received information from the Sales-tax department, Government of Maharashtra, through the DGIT (Inv) that purchases worth Rs.22,90,650/- shown to have been made during the year from certain parties are non genuine, as, the concerned parties are engaged only in providing accommodation bills. On the basis of such information, the assessing officer reopened the assessment under section 147 of the Act. In course of assessment proceedings, he called upon the assessee to prove the genuineness of the disputed purchases. Though, the assessee furnished certain documentary evidences to claim the purchases as genuine; however, the assessing officer was not satisfied. Further, as alleged by the assessing officer, notices issued under section 133(6) of the Act to the concerned selling dealers returned back unserved. Thus, ultimately, the assessing officer concluded that the purchases are non- genuine. However, considering the fact that the assessee has effected corresponding sales, he was of the view that the goods have been purchased from grey market. Accordingly, he disallowed 12.5% out of the alleged non genuine purchases and made an addition of Rs.2,86,337/-. While considering the issue in appeal, learned Commissioner of Income-tax (Appeals) restricted the disallowance to 5% of the alleged non genuine purchases.

We have heard the learned Departmental Representative and perused materials on record. It is evident, what the assessing officer doubts is the source of purchases and not the purchase itself. The assessing officer was of the view that purchases have been effected from grey market. Therefore, he has disallowed only the profit element embedded in such purchases by estimating it at 12.5%. As noted by us, earned Commissioner of Income-tax (Appeals) has reduced the disallowance to 5% of the alleged non genuine purchases relying upon a decision of the Tribunal in assessee’s own case for Assessment Year 2009- 10 vide dated 16-11-2018. He has also noted that the facts in both the assessment years are identical. Keeping in view the aforesaid factual position, we do not find any valid reason to interfere with the decision of the learned Commissioner of Income-tax (Appeals). Accordingly, the impugned order of learned Commissioner of Income-tax (Appeals) is upheld by dismissing the grounds raised