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Income Tax Appellate Tribunal, “SMC BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY
The aforesaid appeal has been filed by the Revenue challenging the order dated 29th October 2018, passed by the learned Commissioner of Income Tax (Appeals)–38, Mumbai, pertaining to the assessment year 2009–10.
The dispute in the present appeal is confined to partial relief granted by the learned Commissioner (Appeals) in the matter of addition made by the Assessing Officer on account of non–genuine purchases.
2 Ali Shabir Khan 3. When the appeal was called for hearing, no one was present on behalf of the respondent assessee to represent the case. There is no application seeking adjournment either. Considering the nature of dispute, I proceed to dispose off the appeal ex–parte qua the respondent assessee after hearing the learned Departmental Representative and on the basis of material available on record.
Brief facts are, the assessee, an individual, is engaged in the business of manufacturing engineering goods through his proprietary concern M/s. Afroz Engineering Work. For the assessment year under dispute, the assessee filed his return of income on 25th September 2010, declaring total income of ` 5,76,500. The return of income so filed by the assessee was initially processed under section 143(1) of the Act. Subsequently, on the basis of information received from the Sales Tax Department, Government of Maharashtra, through DGIT (Inv.), Mumbai, that purchases worth ` 19,92,823, claimed to have been made during the year from M/s. Shreeram Steel are non–genuine as the concerned party was identified as a hawala operator, the Assessing Officer re–opened the assessment under section 147 of the Act. During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of such purchases through supporting evidence. Further, to independently verify the genuineness of such purchases, the Assessing Officer issued notice
3 Ali Shabir Khan under section 133(6) of the Act to the concerned party. However, as alleged by the Assessing Officer, no reply was received from the party concerned in response to such notice. Not being satisfied with the evidences furnished by the assessee, the Assessing Officer ultimately concluded that the purchases are non–genuine and accordingly added back entire amount representing such purchases to the income of the assessee. The assessee challenged the aforesaid addition before the first appellate authority.
After considering the submissions of the assessee in the context of the facts and material on record, learned Commissioner (Appeals) restricted the addition to 25% of the alleged non–genuine purchases.
I have heard the learned Departmental Representative and perused the material on record. It is evident, the doubt regarding the genuineness of the disputed purchases was on the basis of information received from the Sales Tax Department, Government of Maharashtra. However, the Assessing Officer has not disputed the sales effected by the assessee. Therefore, it has to be accepted that the goods have been purchased by the assessee from unverified source. In such circumstances, only the profit element embedded in such purchases can be considered for addition. Applying the same principle, learned Commissioner (Appeals) has restricted the disallowance to 25% of the non genuine purchases. Therefore, I fully agree with the decision of 4 Ali Shabir Khan learned Commissioner (Appeals). Accordingly, the grounds raised by the Revenue are dismissed.
In the result, appeal is dismissed. Order pronounced through notice board under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963, on 08.10.2020