ITO-17(3)(5), MUMBAI vs. UDAY TRADING CORPORATON , MUMBAI

When the case was called for hearing, none appeared on behalf of the respondent assessee. Therefore, I proceed to dispose off the appeal ex–parte qua the respondent assessee after hearing the 2 Uday Trading Corporation learned Departmental Representative and on the basis of material on record.

The sole issue raised in the present appeal relates to partial relief granted by the learned Commissioner (Appeals) in respect of addition made on account of non–genuine purchases.

Brief facts are, the assessee is a partnership firm carrying on business of trading in hardware, tools, ball bearing and other allied materials. For the assessment year under dispute, the assessee filed its return of income in the regular course on 23rd August 2010, declaring total income of `4,30,742. Subsequently, on the basis of information received from the Sales Tax authorities through the Investigation Wing of the Department indicating that the assessee is a beneficiary of accommodation entries provided by hawala operators through bogus purchase bills, the Assessing Officer re–opened the assessment under section 147 of the Income Tax Act, 1961 (for short "the Act"). During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases worth `29,061, claimed to have been made during the year from two parties. Further, to independently verify the genuineness of such purchases, the Assessing Officer issued notices under section 133(6) of the Act to the selling dealers calling for certain information. However, all such 3 Uday Trading Corporation notices returned back unserved. Further, the Assessing Officer was not satisfied with the evidences furnished by the assessee to establish the genuineness of purchases. Thus, ultimately, the Assessing Officer treated the purchases worth `29,061 as non–genuine and added back to the income of the assessee. Being aggrieved with such addition, the assessee preferred appeal before the first appellate authority.

After considering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals) restricted the disallowance made by the Assessing Officer to 12.5% of the alleged non–genuine purchases.

Before me, the learned Departmental Representative strongly relied upon the observations of the Assessing Officer and submitted that the assessee having failed to prove the genuineness of purchases, the entire amount representing such purchases has to be added.

Having considered the submissions of the learned Departmental Representative, I find that though the assessee may not have been able to prove the genuineness of purchases from the declared source, however, it is a fact on record that the Assessing Officer has not disputed the sales effected by the assessee. Therefore, it goes to prove that the assessee must have purchased goods from some other undeclared source. In such circumstances, as observe by different

In the result, Revenue’s appeal stands dismissed. Order pronounced through circulation in notice board under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962.