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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the revenue. The relevant assessment year is 2009-10. The appeal is directed against the order passed by the Commissioner of Income Tax (Appeals)-30, Mumbai [in short ‘CIT(A)’] and arises out of assessment completed u/s. 143(3) r.w.s.147 of the Income Tax Act. 1961(the Act). Though, the case was fixed for hearing before the Tribunal on 03/08/2018 & 16/09/2020, neither the assessee nor his Authorized Representative (AR) appeared before the Bench on the above dates. As there is non-compliance by the assessee, we are proceeding to dispose of this appeal after examining the materials available on record and after hearing the Ld. Departmental Representative (DR).
Briefly stated the facts of the case are that the assessee filed its return of income for the AY 2009-10 on 26/09/2009 declaring total income of Rs.2,48,72,590/-. The Assessing Officer (AO) received information from the Sales Tax Department, Government of Maharashtra that the assessee had obtained accommodation entries by bogus purchase bills during the financial year 2008-09 from the following parties:-
Sr.No. Name of the Assessee Amount (Rs.) 1 Bhavesh Metal Pvt.Ltd. 7,11,842 2 Asian Metal Industries 3,12,050 3 Pakshal Steel & Engineering 6,14,974 Co. 4 Nidhi Industries 13,97,362 5 Dhruv Trading Co. 19,75,475 Total 50,11,703
During the course of assessment proceedings, the AO issued notice u/s. 142(1) dated 24/12/2014 to the assessee calling for details to be filed. In response to it, the assessee filed details vide reply dated 06/01/2015. However, the AO was not convinced with the same mainly for the reason (i)that notices issued u/s.133(6) to the above mentioned parties were returned un-served by the postal authorities (ii) the enquiry conducted by the Inspector of Income tax revealed that those parties were not existing in the given address. Further, observing that the assessee failed to file (i) stock register (ii) matching of sales vis-a-vis purchases and (iii) delivery challans , the AO made an addition of the full amount of Rs.50,11,703/-.
3. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld.CIT(A). We find that vide order dated 24/03/2017, the ld. CIT(A) directed the AO to reduce the amount of Rs.30,36,228/- being genuine, made from the four parties through the sub contractor Shri Harshal Panchal. On the balance amount of Rs.19,75,475/-, the Ld.CIT(A) directed the AO to estimate profit @12.5% and bring it into tax.
4. Before us, the Ld.DR relies on the order of the AO and submits that the same may be confirmed.
We have heard the Ld. DR and perused the relevant materials available on record. As mentioned earlier, the assessee filed reply dated 06/01/2015 to the notice u/s.142(1) issued by the AO, submitting the following:-
“1. Books of accounts are maintained on tally and a print out of the same can be produced.
2. The assessee being a contractor has different sites all over India and various items of materials of various sizes and qualities used in his business of interior decoration. The materials are accordingly purchased which are consumed at site and as such it is not possible to maintain any stock records. This is also mentioned Tax Audit Report of each year since inception as well as during the course of various scrutiny assessments from year to year and is accepted by the department. However, the stock at the factory in Mumbai is taken on 31st March every year and valued at cost which is shown in the Profit & Loss Account.
The matching of sales vis-a-vis the alleged & suspicious hawala purchases is under working and can be furnished at the time of next hearing.
The copies of purchases bills are already furnished as per letter dated 26.08.2014.
5. The delivery challans of materials purchased will be furnished as will be furnished at the time of next hearing.
6. The copy of audit report in Form 704, as per provisions of section 61 of the MVAT Act, 2004 is furnished herewith.
The Copy of Show Cause in Form 302, issued by MVAT Authorities, as per provisions of section 23(5) of the MVAT Act, 2002 is also furnished.
The Copy acknowledging the payment of Rs.282531/- for F.Y 2008-09 and no VAT demand is pending in the case of the assessee for FY 2008-09 is attached. Please note that this payment is duly recovered from Mr. Panchal Prop. Sai Steel Works.” 5.1 In the instant case, the AO, without verifying / examining the above details filed by the assessee has made an addition of the full amount of Rs.50,11,703/-.
The Ld.CIT(A), after due verification, has rightly directed the AO to restrict the disallowance to 12.5% on the disputed purchases of Rs.19,75,475/-. We uphold the order of the Ld.CIT(A).
In the result, the appeal filed by the revenue is dismissed.
Order pronounced through notice board under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963.