ITO-22(3)(5), MUMBAI vs. LATE SMT. URMILLA KANJIBHAI PATEL, MUMBAI

When the appeals were called for hearing, no one was present on behalf of the respondent assessee to represent the case. Considering

Brief facts are, the assessee, since deceased, was an individual and was engaged in the business of manufacturer and contractor in engineering goods. For the assessment years under dispute, the assessee had filed her return of income in regular course as per section 139(1) of the Act. The returns of income filed by the assessee were initially processed under section 143(1) of the Act. Subsequently, the Assessing Officer received information from the Sales Tax Department that certain purchases made by the assessee in relevant assessment years are non–genuine as the concerned selling dealers have been identified as hawala operators providing accommodation bills. On the basis of such information, the Assessing Officer re– opened the assessments under section 147 of the Act. In course of assessment proceedings, the Assessing Officer called upon the assessee to furnish certain documentary evidences to prove the genuineness of purchases. As observed by the Assessing Officer, the assessee furnished ledger account copy of the sellers, purchase bills and bank statement showing payment made through cheques. However, the assessee was unable to furnish transportation receipts, delivery challans, lorry receipts and stock register. Therefore, the 3 Late Smt. UrmillaKanjibhai Patel Assessing Officer treated the purchases as non–genuine. However, taking into account the gross profit rate declared by the assessee in the relevant assessment years, he made the addition in different assessment years as under:–

After considering the submissions of the assessee in the context of facts and material available on record and relying upon certain judicial precedents, learned Commissioner (Appeals) ultimately restricted the addition to 25% of the non–genuine purchases in all the assessment years under dispute.

Heard the learned Departmental Representative and perused the material on record. As could be seen from the facts on record, on the basis of certain information received from the Sales Tax Department, the Assessing Officer has treated certain purchases made by the assessee as non–genuine. However, instead of disallowing the entire purchases, he has restricted the disallowance to certain percentage of 4 Late Smt. UrmillaKanjibhai Patel the alleged non–genuine purchases. It is further seen from record that the assessee did furnish some documentary evidence in support of the purchases made. Further, the sales declared by the assessee have not been doubted by the Assessing Officer. Therefore, the dispute/doubt if any is only with regard to the source of purchases. For this reason alone, the Assessing Officer has not disallowed the entire purchases but has restricted the disallowance to the profit element embedded in such purchases. Learned Commissioner (Appeals), though, has agreed that the assessee has failed to prove the genuineness of purchases conclusively, however, he has only interfered with the quantum of disallowance by restricting it to 25% of the non–genuine purchases. In my considered opinion, the aforesaid decision of learned Commissioner (Appeals) is fair and reasonable, hence, needs to be upheld. Accordingly, I do so by dismissing the grounds raised