DCIT CIRCLE-2, KALYAN vs. SHRI. DHARMU P BUDHWANI, KALYAN

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

Briefly the facts are, the assessee, an individual, is a wholesale dealer in country liquor. For the assessment year under dispute, assessee filed his return of income on 02-07-2011 declaring total income of Rs.28,28,540/-.During the assessment proceedings, the assessing officer noticed that the assessee has claimed purchases of Rs.4,42,589/- during the year from M/s Ashtavinayak Trading Co. However, he observed, as per the information available from the sales-tax department, the said party is a hawala operator and provides accommodation bills without entering into any real transaction. He, therefore, called upon the assessee to prove the genuineness of purchases made from the said party. As observed by the assessing officer, without furnishing any evidence, the assessee simply filed a reply claiming the purchases to be genuine. Further, he observed, notice issued under section 133(6) of the Act to verify the purchases also returned back unserved. Therefore, he ultimately treated the purchases of Rs.4,42,589/- as non genuine and added back to the income of the assessee. Assessee contested the aforesaid addition before learned Commissioner(Appeals). After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner(Appeals) restricted the disallowance to 12.5% of the alleged non genuine purchases. 5. I have considered the submissions of learned Departmental Representative and perused the materials on record. As can be seen from the observations of learned Commissioner(Appeals), the assessee has filed the comparative chart of gross profit ratio of four years including preceding and subsequent years. On 3 ITA 4976/Mum/2019 perusing the same, he has found that the gross profit rate declared in the impugned assessment year is higher as compared to immediately preceding year. Further, the assessee has also furnished the details of corresponding sales/distribution of the goods purchased, which are nothing but gift items such as pen stands, calculators, hand mixer, grinders, etc. Thus, being of the view that the assessee might have purchased the goods from the grey market, the learned Commissioner (Appeals) has restricted the disallowance to the profit element by estimating it at 12.5%.

Having taken note of all relevant facts arising from record, I do not find any infirmity in the aforesaid decision of learned Commissioner(Appeals). Therefore, I uphold the order of learned Commissioner (Appeals) on the issue and dismiss the grounds raised