SHRI KAMLESH P DESAI,MUMBAI vs. ITO - 21(2)(1), MUMBAI

When these appeals were called for hearing, no one was present on behalf of the assessee to represent these cases. There is no application seeking adjournment either. Considering the nature of dispute, I proceed to dispose off the appeals ex–parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record.

The only common dispute in all these appeals relate to disallowance made on account of non–genuine purchases.

Brief facts are, both these assessees are engaged in the business of trading in paper and boards. The assessees filed returns of income as per the details given below:–

The returns of income filed by the assessees were initially processed under section 143(1) of the Income Tax Act, 1961 (for short "the Act"). Subsequently, on the basis of information received from the Sales Tax Department through DGIT (Inv.), Mumbai, it was found that certain purchases claimed to have been made by the assessees are non–genuine. Therefore, the Assessing Officer re–opened the assessment under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of the aforesaid purchases through supporting evidences. Since the evidences produced by the assessees were not to the satisfaction of the Assessing Officer, and further, the notices issued seeking information from the selling dealers returned back unserved, he held that the purchases are non–genuine. Therefore, relying upon certain judicial precedents, he proceeded to estimate the profit on the alleged non–genuine purchases by applying the rate of 4 Shri Kamlesh P. Desai Shri Kamlesh P. Desai (HUF)

I have considered the submissions of learned Departmental Representative and perused the material on record. On going through the orders of the Departmental Authorities, it is manifest that there is specific information received from the Sales Tax Department to indicate that certain purchases made by the assessees were non– genuine as concerned selling dealers were identified as hawala operators by the Sales Tax Department. In the course of assessment proceedings, the Assessing Officer had called upon the assessee to furnish certain documentary evidences which could not be furnished by the assessee in its entirety. Further, the notices issued under section 133(6) of the Act to the concerned selling dealers returned back unreserved. Thus, from the aforesaid facts, it is quite clear that the assessee failed to conclusively prove the fact that the purchases were made from the declared source. However, considering the fact that the assessee has effected corresponding sales, doubt was only with regard to source of purchases. For this reason alone, the Assessing Officer has estimated the profit element embedded in non–genuine purchases @ 25% which was reduced to 12.5% by learned Commissioner

In the result, appeals are dismissed. Order pronounced in the open court on 08.12.2020