ACIT-22(2), MUMBAI vs. MEHTA JAISING BUILDERS, MUMBAI

The only issue involved in the revenue appeal is that whether the ld. CIT(A) was justified in restricting the disallowance @25% on account

M/s. Mehta Jaising Builders of bogus purchases as against 100% made by the ld. AO in the facts and circumstances of the case.

None appeared on behalf of the assessee. We have heard the ld. DR and perused the materials available on record. It is not in dispute that assessee is a civil contractor and builder and had derived income from business during the year under consideration. We find that the ld. AO observed that assessee had made purchases from M/s. Sudha Corporation for Rs.7,71,987/- whose name appeared in the list of hawala dealers in the records of Maharashtra Sales Tax department and based on that information, the ld. AO sought to treat the entire purchases made form such alleged hawala dealer to be bogus. Accordingly, the ld. AO added the entire purchases made from such party in the sum of Rs.7,71,987/- as bogus in the assessment. We find that the ld. CIT(A) had categorically observed that assessee had filed only certain details such as purchase bills, ledger account, bank statements etc, and no specific details that were required to establish the genuineness of purchases such as evidence of transportation of goods, entry of goods in the stock register, one to one consumption pattern of alleged purchase items, confirmation from the parties concerned etc. were filed. However, we find that the ld. CIT(A) had also observed that the construction activity had indeed taken place which goes to prove the fact of consumption of raw materials which were purchased from the alleged hawala dealer. Hence, it could be safely concluded that consumption of raw material has not been disputed by the ld. AO. We find that the ld. CIT(A) had relied on the judgment of Hon’ble Gujarat High Court in the case of Vijay Proteins Ltd., vs. CIT reported in 58 taxmann.com 44 (Guj HC) whose case was also the case of a manufacturer, wherein, disallowance of purchases was upheld at 25% of the value of the alleged purchases from bogus suppliers. We find that the ld. CIT(A) had placed reliance on this judgment and reduced the M/s. Mehta Jaising Builders disallowance of 25% on the value of purchases. The ld. DR was not able to point out whether assessee has preferred any appeal before this Tribunal against the said action of ld. CIT(A). In these circumstances, we have no other option to conclude that assessee had not preferred any appeal before this Tribunal against the action of the ld. CIT(A). Since the ld CITA had placed reliance on the decision of Hon’ble Gujarat High Court to justify his action, in these peculiar facts and circumstances, we do not deem it fit to interfere with the findings of the ld. CIT(A) and accordingly, the appeal of the revenue is dismissed.

In the result, appeal of the revenue is dismissed.