NAVJEEVAN SYNTHETICS PVT. LTD.,MUMBAI vs. DCIT- 4 (3)(1), MUMBAI

The ground No.1 raised by the assessee challenging the validity of reopening was stated to be not pressed by the ld. AR at the time of hearing for which necessary endorsement has been made in our file. Accordingly, the same is dismissed as not pressed for both the years.

The ground No.2 raised by the assessee is with regard to action of the ld. CIT(A) confirming the disallowance made on account of non- genuine purchases @12.5%.

3.1. We have heard rival submissions. It is not in dispute that assessee had made purchases from certain dealers whose name had appeared in the hawala list prepared by the Sales Tax department of Mumbai and accordingly, the ld. AO had brought to tax the profit element @12.5% on the total value of purchases made from those dealers. It is not in dispute that the assessee had submitted purchase bills / invoices issued by these alleged hawala parties, purchase orders, delivery challans, details of payment, bank statements, stock records etc., before the lower authorities. It is not in dispute that the payments have been made to these parties by account payee cheques. We find that assessee is engaged in the business of manufacturing and trading in textile cloth and processing of hosiery and velvet cloth. It is not in dispute that goods purchased from the alleged suppliers have been either consumed / sold by the assessee and hence, only profit element thereon needs to be brought to tax. Since, in the instant case, the entire documentary records were duly furnished by the assessee including the proof of delivery of goods by way of delivery challans and stock records and at the same time goods having been purchased from the grey market by the assessee is also not disputed. Hence, what could have been saved by the assessee in the instant case would be only the VAT portion and little bit of incidental profit in the overall transaction. Hence, we hold that the disallowance @8% on the total value of purchase from these alleged parties would meet the ends of justice. Accordingly, the ground No.2 raised by the assessee for both the years is partly allowed.

The ground No.3 raised by the assessee for both the years is general in nature and does not require any specific adjudication.

In the result, appeals of the assessee are partly allowed.